Permanent Magnets LtdQ3 FY23Electrical Equipment

Permanent Magnets Ltd

Q3 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 3

→The company anticipated 20% to 25% sales growth for FY24 but now expects growth to be slightly lower, around 7-7.5%, due to some pushouts of EV orders.
→Growth in energy meters is showing good traction and may positively impact overall revenue.
→The EV and automotive segment constitutes about 37% of revenues, with 90% of that from EVs, indicating a strong future market opportunity.
→The energy meter segment, including smart meters, accounts for about 43% of revenue, with expectations of increased demand linked to government replacement programs, although implementation may take longer.
→The modules business is expected to grow as projects progress, gradually increasing its revenue share over the next few years.
→New projects, including quantum magnetic assemblies, are expected to contribute from FY25 onward.
→Overall, the company remains positive about growth despite current market and order delays.

Category 3

→The company initially targeted a 20-25% growth for the current year but now expects growth to be slightly lower, around 7-7.5%, due to push outs of orders from the EV segment.
→Despite some slowdown concerns in the EV market globally, the company remains optimistic about recovery and does not foresee a significant adverse impact on its overall business growth.
→Growth in the energy meter segment, especially domestic, is showing good traction, potentially contributing positively to future earnings.
→The company is expanding into higher value-added products like smart meters and modules, which are expected to increase their revenue proportion and margins over the next few years.
→Investments in plant and machinery are increasing costs currently, with benefits anticipated from fiscal year 2025 onwards.
→The commissioning of a new subsidiary manufacturing magnetic assemblies is expected to start contributing in the near term.

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→There is no specific mention of any current or planned fundraising through debt or equity in the provided transcript.
→CAPEX plans for the current year are about Rs. 15-18 crores, mainly for alloys and other projects, with no detailed mention of funding sources.
→For next year, no CAPEX items are planned as of now, but additional equipment may be added depending on capacity fulfillment.
→The company is focusing on expanding capabilities rather than directly indicating the need for external fundraising.
→No explicit statements on raising funds through equity or debt have been provided in the call excerpts.

Yes

→Energy metering order booking has started with listed companies showing order books of Rs. 19,000 to Rs. 20,000 crore.
→The total replacement program for smart meters by the government might take longer to implement than originally planned.
→Orders are being executed by companies that have won the tenders, with a slight increase in demand observed.
→On the EV side, there are some push outs and concerns about slowing growth globally, causing some delays.
→Multiple projects in different stages of feasibility, price approval, and prototype submission are progressing.
→The ramp-up of new projects like module assembly and quantum magnetics is ongoing, but revenue projections depend on execution timelines.
→Overall, while push outs may impact short-term growth, the pipeline for FY25 and beyond remains strong with positive outlook.

Yes

→Current year CAPEX plan is about Rs. 15 crore to Rs. 18 crore, including Rs. 8 crore towards alloy segment and the balance towards other projects.
→Additional CAPEX planned over the next years on land and building for new factory setups.
→No specific CAPEX items planned beyond land and building at present, but equipment additions may happen depending on capacity requirements and project-specific needs.
→Alloy business has installed two furnaces for vacuum induction process; one more furnace for ribbon manufacturing installation expected within two months.
→Plans to expand capabilities in alloy production targeting nickel, cobalt, molybdenum, super alloys.
→JV in neodymium magnets phase currently funded solely by PML, with expected additional investment in coming months.
→CAPEX for JV expected to enable ramp-up with main revenue anticipated in 2024-25.

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