Any current/future capex/capital investment/strategic investment?

PPAP Automotive has made a capital investment of around INR 18.5 crores in the electric vehicle (EV) battery business, targeting INR 100-125 crores in revenue at 90% capacity utilization. The company has invested INR 30 crores to set up a new commercial tool room plant at Surajpur, Uttar Pradesh, with an annual capacity of about 100 molds. Future capacity expansion in the battery business is conditional upon business viability and customer trust; current focus remains on utilizing existing capacity. Capex spending in the automotive industry is expected to rise in line with OEMs, supporting gro

Future growth expectations in sales/revenue/volumes?

The company targets revenue growth higher than the past 3 years' CAGR of 12.5%. The battery pack business expects 40%-50% year-on-year growth starting this year. Capacity utilization in the EV business is expected to reach 90% by the end of next year, potentially generating INR 100-125 crores in revenue. Aftermarket vertical has grown over 50% this year and is expected to continue strong growth. The commercial tool room segment is building a strong order book and aims to contribute positively this year. The company is developing over 250 new parts for 28 vehicles, indicating robust f

Future growth expectations in earnings/operating earnings/profits/EPS?

PPAP Automotive expects revenue growth higher than the 12.5% CAGR seen over the last 3 years, driven by new model launches and premiumization trends. EBITDA margins are expected to improve gradually, with a long-term target of around 13%-14%, up from current low single-digit margins impacted by raw material cost pressures. The joint venture company and lithium-ion battery vertical are anticipated to start contributing positively, improving consolidated profitability. The EV battery business aims for 40%-50% year-on-year growth and double-digit margins once scale is achieved. Capacity utilizati

Current/ Expected Orderbook/ Pending Orders?

Commercial Tool Room vertical currently has an order book of 62 tools for the year. Discussions are ongoing for an additional 27 tools, with a capacity to produce 100 molds per year. Lithium-ion battery vertical has a strong order book that will start supplies from August 2023 (current quarter) onwards, expected to positively contribute. Core automotive business is working on developing over 250 new parts for 28 new vehicles planned for production starting March next year. Electric vehicle segment has business with over 10 OEM customers planning launches in the near future, including Maruti, H

PPAP AutomotiveQ1 FY24Auto Components

PPAP Automotive Q1 FY24 Earnings Call Analysis

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

Price: ₹228P/E: 85.6Market Cap: ₹349 CrSector: Auto Components

Management growth scorecard

Revenue

Category 3

Margin

Category 1

Fundraise

N/A

Order

Yes

Capex

Yes

3 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

The company targets revenue growth higher than the past 3 years' CAGR of 12.5%.
The battery pack business expects 40%-50% year-on-year growth starting this year.
Capacity utilization in the EV business is expected to reach 90% by the end of next year, potentially generating INR 100-125 crores in revenue.
Aftermarket vertical has grown over 50% this year and is expected to continue strong growth.
The commercial tool room segment is building a strong order book and aims to contribute positively this year.
The company is developing over 250 new parts for 28 vehicles, indicating robust future demand.
Launch of new models like Honda Elevate and more business from major OEMs like Maruti, Honda, Tata, MG, and Mahindra supports volume growth.
Export initiatives are being developed, potentially adding to revenue streams within 1-2 years.

Margin guidance

Category 1

PPAP Automotive expects revenue growth higher than the 12.5% CAGR seen over the last 3 years, driven by new model launches and premiumization trends.
EBITDA margins are expected to improve gradually, with a long-term target of around 13%-14%, up from current low single-digit margins impacted by raw material cost pressures.
The joint venture company and lithium-ion battery vertical are anticipated to start contributing positively, improving consolidated profitability.
The EV battery business aims for 40%-50% year-on-year growth and double-digit margins once scale is achieved.
Capacity utilization for the EV segment is targeted to reach about 90% by the end of next year, supporting top-line growth of INR 100-125 crores.
Price hikes, indexation with raw material costs, and improved supplier negotiations should support margin expansion.
Aftermarket and commercial tool room verticals are growing strongly and expected to add to profitability.

See what PPAP Automotive management said on margin guidance — free account, 30 seconds.

Fundraise plans

The transcript provided does not mention any current or future plans for fundraising through debt or equity. Key points related to finances and investment are: - The company discussed capital expenditure, including an INR 18.5 crore investment in the EV battery business and INR 30 crore in the commercial tool room vertical. - Expansion of capacity or new investments will be considered only if there is sufficient business confidence and long-term customer trust. - No explicit references were made to planned fundraising via new debt or equity issuance. - Focus is on optimizing and utilizing existing capacities and improving margins through operational efficiencies and better pricing. In summary, there is no disclosed plan for new fundraising through debt or equity in the transcript of the earnings call.

Order book

Yes

Commercial Tool Room vertical currently has an order book of 62 tools for the year.
Discussions are ongoing for an additional 27 tools, with a capacity to produce 100 molds per year.
Lithium-ion battery vertical has a strong order book that will start supplies from August 2023 (current quarter) onwards, expected to positively contribute.
Core automotive business is working on developing over 250 new parts for 28 new vehicles planned for production starting March next year.
Electric vehicle segment has business with over 10 OEM customers planning launches in the near future, including Maruti, Honda, Toyota, Tata, MG, and Mahindra.
Aftermarket vertical expanding with presence in 100+ cities and plans for export customers starting by year-end.
Overall, strong traction across verticals with focus on ramping up capacity utilization and entering new markets.

See what PPAP Automotive management said on order book — free account, 30 seconds.

Capex plans

Yes

PPAP Automotive has made a capital investment of around INR 18.5 crores in the electric vehicle (EV) battery business, targeting INR 100-125 crores in revenue at 90% capacity utilization.
The company has invested INR 30 crores to set up a new commercial tool room plant at Surajpur, Uttar Pradesh, with an annual capacity of about 100 molds.
Future capacity expansion in the battery business is conditional upon business viability and customer trust; current focus remains on utilizing existing capacity.
Capex spending in the automotive industry is expected to rise in line with OEMs, supporting growth.
The company is careful and strategic with capacity expansion, investing only when long-term sustainability is clear.

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