Mazda LtdQ2 FY24Industrial Manufacturing

Mazda Ltd

Q2 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Revenue guidance

Category 3

→Food Division: Expected 15-20% year-on-year growth; targeting ₹60 crore annual turnover within 3 years at full capacity.
→Engineering Division: Current capacity can generate ₹250-260 crore revenue; expected moderate growth of 10-15% annually, potentially 20%.
→New Products: Smart Rod anticipated to drive significant growth, with early orders from large clients like Coca-Cola; potential exponential growth if widely adopted.
→Ready-to-eat segment: Under development, expected market launch in 6-8 months, focusing on mass-market rather than niche products, maintaining current profitability with volume focus.
→Sales Strategy: Expansion in Indian market with state-wise approach; 10-15 new clients added yearly through exhibitions and digital efforts; exploring broader product applications to increase volume.
→Challenges: Market competition intense, price-sensitive environment due to reverse auctions; focus maintained on quality and timely deliveries to sustain growth.

Category 3

→Engineering Division expects moderate growth of 10-15%, potentially up to 20% annually in 2-3 years with new product acceptance, leading possibly to exponential growth.
→New products like Smart Rod Systems, advanced evaporation systems, and chemical-free CIP solutions could boost growth by 20-25%.
→Current manufacturing can generate revenue up to ₹250-260 Cr in Engineering; expansion may require larger setup.
→Food Division targets 15-20% year-on-year growth, aiming for ₹60 Cr turnover within 3 years at full capacity.
→EBITDA margins expected to be maintained steady in food division; moderate profitability with focus on volume rather than niche products.
→Depreciation impact expected to stabilize over next 3-4 years as topline grows, improving bottom-line performance.
→Order book steady around ₹115-130 Cr; growth dependent on securing new large orders, especially in solar industry.

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→There is no explicit mention of any current or planned fundraising through debt or equity in the transcript.
→The company mentions being "well-positioned financially" to make investments, especially for expanding food division capacity and engineering capacity.
→No specific plans or timelines for raising funds via debt or equity are discussed during the meeting.
→Focus seems to be on organic growth and using existing financial strength for capacity expansion.
→The chairman and senior management emphasize operational upgrades and new product development funded through internal resources rather than external fundraising.

→Current order booking stands at approximately Rs. 115 to 120 crores.
→Domestic orders, including spares for vacuum systems, total Rs. 70 crores.
→CR (Croll-Reynolds) / Export orders for vacuum systems amount to Rs. 7 crores.
→Additional orders include air pollution control equipment (Rs. 3.5 crores), evaporators (Rs. 34 crores), and spares (~Rs. 1.5 crores).
→Delivery cycle: Vacuum systems take around 3 to 4 months; evaporators take 4 to 5 months.
→Order booking has historically ranged between Rs. 90 to 120 crores over the past five years.
→Currently, 23 solar industry orders worth Rs. 31 to 35 crores are under negotiation, expected to convert to substantial orders.
→Market is highly competitive with intense pricing pressure and reverse auctions, affecting order growth.

Yes

→Current manufacturing setup for Engineering division can generate revenue up to ₹250-260 Cr without substantial additional infrastructure investment (Page 23, 18).
→Space and land available at current facility for any future capacity expansion (Page 18).
→No significant maintenance CapEx as the division mainly involves fabrication without sophisticated machinery (Page 18).
→Ongoing R&D and product development investments in new technologies like Ion Exchange Membranes, hybrid MVR/TVR Evaporation Systems (patented), high gravity-based air pollution control equipment, and chemical-free cleaning solutions (Page 23, 6, 8).
→Investment in building a specialized marketing team and hiring engineers to support new product lines (Page 8, 17).
→Considering production expansion in FMCG/food segment depending on growth but currently focused on optimizing existing capacity (Page 15, 23).
→Exploration in hydrogen technologies and diesel elimination mentioned but no detailed CapEx plans disclosed (Page 6).

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