TVS Electronics LtdQ3 FY24IT - Hardware

TVS Electronics Ltd

Q3 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

N/A

0 of 2 growth signals are positive — mixed outlook.

Revenue guidance

Category 3

→Revenue growth is expected driven by new business initiatives like EMS and R&D investments.
→Q2 FY25 revenue was ₹105 crores, a 13.4% YoY increase; H1 FY25 revenue was ₹216 crores, up 18.6% YoY.
→Products and Solutions grew 8.3% YoY in Q2, 19.1% in H1; Customer Support Services grew 27.5% YoY in Q2, 17.4% in H1.
→EMS business is in early stages with investments made (₹15 crores CAPEX), revenues expected to start flowing after client onboarding in coming quarters.
→R&D investments and EMS hiring are about 75-80% complete; future hiring aligns with business growth.
→Investments in growth initiatives are 2-3% of revenue focusing on long-term expansion.
→Market segments like auto electronics, IT peripherals and solar O&M are targeted for growth.
→Management emphasizes long-term growth and expects improved results as initiatives mature.

Category 3

→Company is investing significantly in growth areas like EMS (Electronic Manufacturing Services) and R&D, which currently impact margins but are expected to yield better results long-term.
→EBIT margins slightly declined due to increased personnel costs linked to EMS and R&D initiatives.
→Long-term ROE target is around 15%, consistent with past performance.
→Focus on customer support services (CSS) growth, especially in IT, banking, and solar sectors, aiming for profitability improvements.
→New EMS line operational with ~75-80% hiring completed; further additions will align with business growth, expecting revenue flow once clients onboard.
→Capital investments totaling ~15 crores in EMS line, with no additional CAPEX planned for FY'25 unless required by business growth.
→Management commits to quarterly updates on progress and business developments.
→Overall revenue grew 13.4% YoY in Q2 FY25; EBITDA and net loss reflect ongoing investments for future scale-up.

Get access to all 5 sections — revenue, margin, fundraise, orderbook, and capex — for TVS Electronics Ltd and 1,400+ other companies.

→In the short term, TVS Electronics plans to manage funding requirements through internal accruals.
→For the long term, the company may consider fundraising options if needed.
→Fundraising could include raising fresh debt or equity, but no immediate plans were specified.
→The company also mentioned no current plans for large CAPEX this year, relying on existing resources.
→Any future decision on fundraising will depend on business growth and requirements.

→The management did not disclose specific details on current or expected order book during the call.
→Discussions on client onboarding in the EMS business are ongoing but no concrete client names or order details were shared.
→The company is actively pursuing EMS clients and expanding capabilities but is cautious about sharing sensitive customer or order information.
→Any material client wins or certifications will be disclosed to stock exchanges and through press releases as per SEBI norms.
→Efforts are on for order inflow, with CapEx already done to support EMS growth.
→No exact timeline or order backlog figures were provided; the company emphasized engagement and planned updates in future calls.

→FY’25 CAPEX: No additional CAPEX planned currently; future CAPEX decisions will be based on business requirements (Page 12).
→Last year spent ₹15 crores on setting up the first SMT (Surface Mount Technology) line including factory infrastructure such as nitrogen gas pipes and compressors for EMS (Page 11).
→Over last 2 years, approx ₹40 crores invested in growth-related CAPEX including new offices and digitization (Page 9).
→Future CAPEX expected to be regular business CAPEX focused on growth and expansion, not large-scale (Page 9).
→Any large future CAPEX or fundraising will consider internal accruals first; long-term fundraising (debt or equity) may be considered if required (Page 9).
→EMS capacity expansion is possible within current factory premises, no immediate need for new facilities (Page 11).

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