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Igarashi Motors India LtdQ1 FY18

Igarashi Motors India Ltd Q1 FY18 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹437P/E: 79.5Market Cap: ₹1.3K CrSector: Auto Components

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 2
  • The company expects steady growth driven by integration of Agile and Igarashi platforms.
  • Revenue CAPEX is anticipated to increase from 7-8% to 10-11% of revenue over 3 years, indicating investment for expansion.
  • Comfort motors segment growth is expected mainly volume-driven, not margin expansion.
  • The return on capital for comfort motors will initially be lower but is expected to improve as volumes increase.
  • Agile saw a 65-70% forecasted volume increase, though Q1 profits showed higher expenses.
  • The Indian automotive market is estimated at 2.5 to 3 million pieces annually; growth depends on customer demand.
  • Growth pillars include reducing reliance on torque actuator motors (TAM) from 90% to under two-thirds post-merger and increasing non-automotive business.
  • Semi-organic growth through engineering and manufacturing competencies worldwide is being actively explored.

See what Igarashi Motors India Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

Based on the content on page 20 of the document: - There is no explicit mention of any current or planned fundraising through debt or equity. - Discussions focus on CAPEX increasing from 7-8% to 10-11% of revenue due to growth and technological investments, especially post-merger. - There is mention of techno-managerial efforts and product growth but no direct indication of raising funds. - The merger between Agile and Igarashi involves a selective bonus issuance as part of the Scheme of Amalgamation, maintaining public shareholding at 25%, but this is related to share restructuring rather than new equity fundraising. - No clear statement on seeking new debt or equity capital has been provided in the referenced transcript.

See what Igarashi Motors India Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes
  • Current CAPEX trend: Historically 7%-8% of revenue; expected to rise to 10%-11% due to increased automation needs.
  • CAPEX outlook is cautious given current market signals; growth expected over a 3-year compounded basis rather than yearly jumps.
  • Capacity setup includes approx. 3 million units for wastegate and EGR actuators already in place.
  • Brushless DC motors (BLDC) capacity being developed with significant investments; investment per capacity is higher than brush DC motors.
  • Strategic partnerships with three Asian partners (Taiwan, Korea, Japan) for BLDC motor vertical integration, including PCB population in-house.
  • Semi-organic growth explored through leveraging engineering/manufacturing competence and aiming to expand manufacturing footprint in India.
  • Increasing emphasis on developing intellectual property (IP) ownership in comfort actuator motors.

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Margin guidance

Category 3
  • The company intends to grow earnings and sales with a focus on EPS growth as volumes expand, particularly in the comfort motors segment (Page 20).
  • Return on capital for comfort motors expansion is targeted between 22%-25%, though this may need recalibration as the segment matures (Page 20).
  • Growth will largely come from volume increase rather than margin expansion, especially in areas where IP ownership is partial (comfort motors) (Page 20).
  • The merger with Agile is expected to contribute significantly to revenue and profit growth, supporting earnings expansion (Page 7, 14).
  • Semi-organic growth opportunities are being actively explored, representing about one-third of the future business mix, which could positively impact profits (Page 5).
  • The company expects to maintain above-average growth but will recalibrate targets as market dynamics evolve (Page 12).
  • Investment in technology and product diversification (e.g., brushless DC motors, new platforms with Bosch) supports future profitability (Page 20).

Order book

The provided transcript does not explicitly mention the current or expected order book or pending orders for Igarashi Motors India Limited. However, some relevant insights include: - The company is working on brushless DC motors with several partners in Taiwan, Korea, and Japan. - Capacities for wastegate and EGR motors are already set up for about 3 million pieces. - There is a focus on expanding comfort motors and maintaining margin profiles. - They expect growth driven by volume rather than margin expansion in comfort motors. - CAPEX is being moderated due to market signals but aimed at automation and quality improvements. - The Agile merger will bring combined FY2018 financials; Agile is growing from 1 million motors in FY2016 to an expected 6.5 million in FY2018. - The company is actively engaging with multiple Tier-1 customers, indicating ongoing and future order traction. No specific numeric order book values or pending order quantities are disclosed.

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