Rajratan Global Wire LtdQ1 FY23Auto Components

Rajratan Global Wire Ltd

Q1 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

→Indian tyre business projected to grow by 10% in FY24 based on key customer plans (MRF, CEAT, Apollo). (Page 18)
→India market expected to grow from 65,000 tons to 165,000 tons by 2030, driven by economic growth and tyre industry expansion. (Page 14, 6)
→Company targeting 70% capacity utilization in Thailand with minimum 40,000 tons sales (up from 30,000 tons last year). (Page 17, 3)
→Total production guidance for FY24: India around 70,000 tons (up from 60,000 tons), Thailand minimum 40,000 tons. (Page 3, 18)
→New Chennai facility (60,000 tons capacity) expected to take ~3 years to reach full utilization, contributing to future growth. (Page 14)
→Growth accompanied by strategy to maintain/increase volume even if it requires price adjustments, with a long-term focus on market share. (Page 4, 6)

Category 3

→The company projects overall EBITDA margin around 18% consolidated for FY24.
→Earnings growth guidance for FY24 remains in the same ballpark with 15%-20% business growth.
→EBITDA margins in Thailand expected to improve to around 14-15% from the current 8.5%-9% due to higher volumes and better prices.
→India business is projected to grow around 15% in volume, targeting about 70,000 tons production in FY24.
→The company aims to balance volume and price competitiveness to sustain profitability despite competitive pressures.
→Expansion in capacity (e.g., Chennai plant) will gradually contribute to higher volumes and profits over a 3-year horizon.
→Overall optimism expressed for growth both in India and Thailand markets, with strategic steps to improve capacity utilization.
→Bottom-line growth expected, supported by stable or softening raw material costs and improving market demand.

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→No explicit mention of any current or immediate plans for new fundraising through debt or equity is found in the provided transcript.
→Discussions focus more on capex and production scaling rather than raising new funds.
→Capex plans include INR160 crores total commitment for Chennai plant production start, mostly funded internally or ongoing commitments.
→Capex in Thailand is minimal going forward (INR5-7 crores max).
→No clear indication of equity fundraising or new debt issuances was discussed in the Q&A or management statements.
→The company appears to be managing its growth and expansions through internal cash flow and previously committed capital expenditure budgets.

Yes

→In Q4, despite price drops, volumes were low due to late implementation of pricing changes.
→The company has a good and improved order book for Q1.
→Gradual volume increase planned: approx. 8,000 tons in Q1, 10,000 tons in Q2, and 10,000-12,000 tons in subsequent quarters.
→Targeting a minimum sales volume of 40,000 tons from Thailand's increased capacity (60,000 tons).
→Indian business expects at least a 10% volume increase from key customers like Ceat.
→Efforts underway to reduce imports from Vietnam and Malaysia by adding approx. 10,000 tons in business.
→New approvals in Thailand are ongoing, with conscious pricing decisions to retain market share.
→Despite competition, the company is focusing on volume over pricing to maintain and grow market share.

Yes

→Rajratan has committed a capex of INR160 crores to start production at the new Chennai facility; around INR135 crores already spent with another INR30-40 crores pending (Page 10).
→Further capex to come in the next year to scale up the Chennai plant (Page 10).
→Minimal capex planned for Thailand as most expansion is completed; possible small investments of INR5-7 crores for midrange machines if market demand is buoyant (Page 10).
→The Chennai expansion is part of a long-term plan to supply 15% of global demand with a low-cost competitive advantage (Page 8).
→Focus on digitalization and operational excellence like TPM certification target by 2025 to improve efficiency, implying strategic investments in technology and process improvements (Page 8).
→No major disruptive technology change expected in bead wire; ongoing improvements in product quality (Page 17).

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1Rajratan Global Wire Ltd

Rev 3Mar 3

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