IZMO LtdQ3 FY24
IZMO Ltd
Q3 FY24 Earnings Call Analysis
Management growth scorecard
Revenue
Category 2
Margin
Category 1
Fundraise
N/A
Order
N/A
Capex
Yes
2 of 3 growth signals are positive.
Full analysisRevenue guidance
Category 2- →IZMO targets 25%-30% year-on-year average growth over the next 2-3 years.
- →FrogData is projected to grow organically by 50%-75% year-on-year for the next two years.
- →IZMO Micro expects revenues of INR5-10 crores this year and INR30-50 crores next year, with long-term capability up to INR200 crores.
- →Geronimo acquisition revenue expected to increase to approximately INR25-30 crores over three quarters next year.
- →Focus remains on expanding in automotive sector with new products like System-in-Package (SiP) sensors and EV- and regular automotive-related innovations.
- →Gaming vertical with Sony engagement may see customer additions in the next financial year.
- →Greater SaaS model adoption and price increments (20%-25%) expected to improve revenue and margins organically.
Margin guidance
Category 1- →FrogData is targeted to grow 50%-75% year-on-year for the next two years with strong client traction and customer additions.
- →Pricing increments of 20%-25% are expected across divisions, likely improving EBITDA margins.
- →Overall company growth guidance is around 25%-30% year-on-year average for the next 2-3 years.
- →EBITDA margins took a hit due to Geronimo acquisition costs but are expected to improve by next financial year as costs are rationalized and revenues from acquired businesses kick in.
- →IZMO Micro is expected to generate INR30-50 crores revenue next year with gross margins of 30%-40%, and potential for up to INR200 crores top line post-capex.
- →PAT growth reflects exceptional items like property sales; core PAT margins and EPS should improve with operational scaling and cost management.
- →Growth assumptions are organic and do not rely on fundraise; company has sufficient liquidity for growth.
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Fundraise plans
- →No immediate plans for equity fundraising; FrogData divestment postponed to achieve better valuation.
- →Current internal liquidity sufficient to fund growth and investments.
- →Capex for semiconductor business planned around INR 5 crores this year and next, funded from internal reserves.
- →No borrowing or debt planned for upcoming investments.
- →Company prefers to invest capital in growth areas like semiconductors rather than shareholder buybacks.
- →Promoters have increased holding through warrant conversion but no mention of new external equity raising.
- →Overall, growth is targeted through organic means without reliance on new equity or debt fundraising in the near term.
Order book
- The order book details or pending orders are not explicitly quantified in the transcript.
- However, Sanjay Soni mentions a "very strong pipeline" and "very good traction with clients" for FrogData, suggesting a healthy inflow of orders.
- The company has added about 100 new customers in the US and 40 in Europe in Q2 FY25, indicating strong demand.
- IZMO Micro has already signed two large automotive customers and is in talks with several more, including their biggest customer in France.
- Geronimo revenue is expected to grow significantly, with an estimated INR 25-30 crores over three quarters, implying a growing order backlog.
- Overall, the company expects strong organic growth across divisions, backed by ongoing contract wins and product adoption.
No direct numeric order book values were provided in the call.
Capex plans
Yes- →Planned capex for FY25: Around INR 5 crores this year and a similar amount next year for the semiconductor business, focusing on specialized System-in-Package (SiP) technology, which is IP and technology-driven rather than capital intensive.
- →Total capex on IZMOMicro expected to be INR 15 crores over two years (INR 10 crores in FY25 and INR 5 crores in FY26).
- →No immediate plans for asset divestment; last divestment was in previous quarters.
- →No buyback planned as management prefers to deploy funds into growth opportunities like semiconductor business and acquisitions.
- →Continuous investment in R&D at around INR 20-25 crores annually to drive new products and technologies.
- →Acquisition of Geronimo completed in June to expand geographic reach and client base.
- →Organic growth in FrogData without requiring capital raise currently.
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