Modison LtdQ2 FY23
Modison Ltd Q2 FY23 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹455P/E: 15.2Market Cap: ₹1.6K CrSector: Electrical Equipment
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
N/A
Order
Yes
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 3- Since FY'20, the company has witnessed about 55% absolute growth, translating to approximately 15% CAGR.
- Growth is largely volume-driven; silver volume increased from 26 Kg to 32 Kg (25% volume growth) over three years.
- LV segment expects high double-digit growth with CAGR exceeding 15%; HV segment also to grow but at a steadier pace.
- Capacity expansions planned: LV to reach at least 50% capacity utilization; HV capacity to increase by over 20%, minimum 30%, but HV growth is gradual due to market dynamics.
- Market size: HV around US$15-20 million (expected growth); LV about US$150 million with 35% market share.
- Revenue growth potential tied more to market demand than capacity constraints.
- Company projects revenue of Rs. 500 crores by 2025 and Rs. 1,000 crores by 2030.
- Growth driven by customer consolidation and entry into global value chains boosting exports.
See what Modison Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
The transcript does not explicitly mention any current or future fundraising plans through debt or equity. However, relevant points include:
- CAPEX for expansions in LV and HV factories is budgeted around Rs. 25 crores, suggesting internal funding or planned investments.
- The company plans medium to long-term capacity expansions but did not specify funding sources.
- On expanding expertise to other metals, the company has positive plans but has not declared or formulated specific values or announcements yet.
- Any major new plans or expansions are subject to internal decision, board approval, and regulatory processes before public announcements.
- No direct mention of raising funds through debt or equity in the excerpts provided.
Hence, there is no clear information on any current or future fundraising via debt or equity from the available transcript.
See what Modison Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- Current CAPEX budget is around Rs. 25 crores, covering both Brownfield (Low Voltage) and Greenfield (High Voltage) expansions, expected by FY'23 end.
- Low Voltage expansion includes upgrading facilities to handle older and new RoHS-compliant contact series (AgCdO and AgSnO2-2), running production in parallel.
- High Voltage capacity will increase by at least 30%, although demand growth in HV will be slower; CAPEX is for medium to long-term investment.
- Historically, maintenance CAPEX is about Rs. 3-4 crores annually, with total CAPEX averaging Rs. 5 crores mostly for plant, machinery, and R&D equipment.
- Future strategic investment plans include expanding expertise beyond silver to other metals like copper and tungsten, though specifics are not yet finalized or publicly disclosed.
- Growth-related CAPEX is driven by market demand and global footprint shifts, especially with major global companies shifting production to India.
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Margin guidance
Category 3- The company targets revenue of Rs. 500 crores by 2025 and Rs. 1,000 crores by 2030, indicating strong growth ambitions.
- Since FY'20, about 55% absolute growth achieved (approx. 15% CAGR), mainly volume-driven.
- EBITDA margin expected to normalize around 12-14% in a steady state considering product mix (LV and HV).
- Operational improvements (Lean Six Sigma, productivity gains ~15% YoY) and higher inventory turnover support margin expansion.
- Volume growth especially in the LV segment (high double-digit CAGR above 15%) will contribute to earnings growth despite low margins there.
- Material price volatility, especially silver, impacts margins temporarily; normalized margins and operational parameters remain strong.
- Expansion in metal engineering beyond silver (copper, tungsten) planned, potentially boosting growth and diversification.
- Earnings growth is expected to outpace market growth due to higher market share and operational efficiencies.
Order book
Yes- The company has ongoing expansions in both LV (Low Voltage) and HV (High Voltage) segments expected by FY'23 end.
- Capacity is expanding, but revenue growth is primarily market-driven, not capacity-constrained.
- In HV, capacity will increase by at least 30%, while growth in orders is expected to be gradual; HV market share is about 80%.
- LV segment is experiencing high double-digit growth (CAGR >15%).
- Customer consolidations (with big players like Siemens, Schneider, Hitachi acquiring smaller companies) have strengthened the company's position.
- The company is engaging with three to four customers in value-added product segments, indicating growing orderbook in higher-value offerings.
- First export order for silver salt was booked recently, with several other export inquiries in advanced stages, suggesting expanding orderbook in precious material compounds.
- No specific orderbook numbers disclosed but growth trajectory and order intake appear strong and expanding.
How does Modison Ltd rank vs peers in Electrical Equipment?
Pro featureThisModison Ltd
Rev 3Mar 3
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What Modison Ltd's management said in earlier quarters
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