Any current/future new fundraising through debt or equity?

Harish Lakshman stated that the company is evaluating all options to reduce debt, including potential equity raise or asset monetization (like land sales), but nothing has been decided yet. There is no clear indication of any immediate planned fundraising through debt or equity as of the November 10, 2023 call. Discussions around solutions for debt reduction are ongoing, and the management will share details with investors when decisions are made. Current focus is on generating cash from improved business performance to repay debt without committing to new fundraising.

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

Group-level investment of approximately Rs. 1,000 crores over the next 2-3 years, mainly toward occupant safety division (airbags, seatbelts, inflator, webbing plants) under the PLI scheme. New webbing plant started production last month; inflator plant starting production next month, with gradual ramp-up. Mexico greenfield facility planned for steering and linkage business to capitalize on USMCA benefits; investment quantum undecided, expected to start in Q4 FY 2023-24. Rane Madras plans CAPEX of Rs. 70-90 crores annually for capacity expansion across rack & pinion, linkage, and casting

Future growth expectations in sales/revenue/volumes?

The group expects continued growth driven by strong demand across major vehicle segments and from international customers. Export sales growth is robust: Rane Madras exports growing at 25-30%, with around 60% of exports directed to North America. The steering division at Rane Madras aims for 12-13% market growth and plans capacity expansion, with Rs. 70-90 crores in annual CAPEX. New business wins include Rs. 110 crores per annum from domestic/international customers and Rs. 175 crores EPS business in the NSK JV. Occupant safety business revenue grew 27% this quarter; investments in inflator/w

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

Group revenue grew 16% YoY; double-digit growth of 12-13% expected going forward. Export growth strong at 25-30%, likely to continue at same rate, aiding overall margin improvement. EBITDA margins for steering business expected in 11-12% range; focus on improving margins across divisions. ZF Rane and Rane NSK JVs show PAT volatility due to one-off items; margins expected to improve but PAT may remain variable short-term. Occupant safety (airbags/seatbelts) business growing; Rs. 1,000 crore investment planned over 2-3 years for capacity and backend integration, targeting higher exports.

Rane Holdings LtdQ2 FY24Finance

Rane Holdings Ltd Q2 FY24 Earnings Call Analysis

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

Price: ₹1,437.9P/E: 26.1Market Cap: ₹2.1K CrSector: Finance

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

The group expects continued growth driven by strong demand across major vehicle segments and from international customers.
Export sales growth is robust: Rane Madras exports growing at 25-30%, with around 60% of exports directed to North America.
The steering division at Rane Madras aims for 12-13% market growth and plans capacity expansion, with Rs. 70-90 crores in annual CAPEX.
New business wins include Rs. 110 crores per annum from domestic/international customers and Rs. 175 crores EPS business in the NSK JV.
Occupant safety business revenue grew 27% this quarter; investments in inflator/webbing plants expect margin improvements.
Cautious optimism on sustained growth post-festive period; customers maintain guidance up to Q4.
New Mexico assembly plant expected to start operations in 2025, expanding North American footprint.
Overall, the group targets double-digit growth (12-13%) driven by export expansion and operational improvements.

Margin guidance

Category 2

Group revenue grew 16% YoY; double-digit growth of 12-13% expected going forward.
Export growth strong at 25-30%, likely to continue at same rate, aiding overall margin improvement.
EBITDA margins for steering business expected in 11-12% range; focus on improving margins across divisions.
ZF Rane and Rane NSK JVs show PAT volatility due to one-off items; margins expected to improve but PAT may remain variable short-term.
Occupant safety (airbags/seatbelts) business growing; Rs. 1,000 crore investment planned over 2-3 years for capacity and backend integration, targeting higher exports.
Margin improvement focus includes localization initiatives, operational efficiencies, and export mix enhancement.
Debt reduction planned via operational cash flows; evaluation ongoing for other solutions including asset monetization.
Cautiously optimistic outlook post-festival season; growth momentum dependent on macro-economic factors.

See what Rane Holdings Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

Harish Lakshman stated that the company is evaluating all options to reduce debt, including potential equity raise or asset monetization (like land sales), but nothing has been decided yet.
There is no clear indication of any immediate planned fundraising through debt or equity as of the November 10, 2023 call.
Discussions around solutions for debt reduction are ongoing, and the management will share details with investors when decisions are made.
Current focus is on generating cash from improved business performance to repay debt without committing to new fundraising.

Order book

- ZF Rane has ongoing conversations and optimism about export opportunities but no major export orders secured yet. - Rane NSK's order book remains active with a large order from a domestic OEM; management expects growth and profitability improvement over medium term. - New business wins include: - Rs. 110 crores per annum from various domestic and international customers (Rane Madras and light metal casting). - Rs. 23 crores from commercial vehicle steering gear products including Rs. 3 crores for EV applications (ZF Joint Venture). - Rs. 175 crores per annum for Electric Power Steering (EPS) from domestic customers in UV segment (Rane NSK). - Discussions ongoing for a new small assembly plant investment in Mexico with one customer committed but final investments and order size yet to be determined. - Post-festival sales period (Nov-Dec) will be a key metric to gauge demand stability and order flow. Overall, order buildup is steady with cautious optimism amid geopolitical and economic challenges.

See what Rane Holdings Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes

Group-level investment of approximately Rs. 1,000 crores over the next 2-3 years, mainly toward occupant safety division (airbags, seatbelts, inflator, webbing plants) under the PLI scheme.
New webbing plant started production last month; inflator plant starting production next month, with gradual ramp-up.
Mexico greenfield facility planned for steering and linkage business to capitalize on USMCA benefits; investment quantum undecided, expected to start in Q4 FY 2023-24.
Rane Madras plans CAPEX of Rs. 70-90 crores annually for capacity expansion across rack & pinion, linkage, and casting businesses.
Ongoing discussions to optimize real estate by relocating in-city plants to unlock value, no immediate plans yet.
Strategic focus on localization and export growth through partner collaboration, especially for occupant safety products.
No immediate plan for further US investment; focus on margin improvement and capacity utilization.

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