Automotive Axles hosted a conference call on Nov 10, 2023. In the conference call the company was represented by, Dr N Muthukumar –India Leader: Cummins - Meritor, Mr Nagaraja Gargeshwari – President & Whole Time Director, Automotive Axles and Mr S Ranganathan – Chief Financial Officer, Automotive Axles.

Key takeaways of the call

In FY24, management has projected 3% growth in MHCV and LCV Production.

Ashok Leyland (company’s biggest customer) gained additional market share by 3% in FY23 compared to FY22 and targets 35% in FY25. This auger well for company.

In Q2 FY24, company’s cost saving initiatives and softening in commodity prices led to improvement in margins.

Company plans to expand its business with various customers, with the introduction of more innovative products. Company has many new Products in Pipeline such as- MT 160 Tandem Axle, TLB Solo HR Axle, and 12i Solo Axle etc. These products are designed such that that total cost of ownership for the customer is reduced.

Going forward, product development shall be a key focus area for the company to increase content per vehicle and expand market reach.

USA has agreed to reduce metal import tariff from India. Steel prices are expected to increase due to increase in exports.

Increased government spending on public transport, Voluntary Vehicle Scrappage policy and increased Infrastructure spends by the government are positive triggers for the industry. Ocean freight is also recovering to pre covid levels, which is a positive sign.

Company expects to benefit from increasing sophistication of vehicles (including production of alternative fuel-enabled vehicles), Fast-growing domestic/overseas market, and increase in installed capacity of many OEMs.

Company intends to outpace the industry growth by increasing market penetration through new products, growth in exports, and increasing tonnage per axle.

Company intends to focus on Industry 4.0 & other digitisation initiatives, along with improvement in conversion and material cost performance.

Company expects to meet 80% of power consumption requirement through renewable energy by 2028. Currently, company derives 40% of power through renewable energy.

Capex for FY24 is expected to be between Rs 10-20 crore, which will mainly be for maintenance.

Company’s capacity utilization is between 70-75% for both brakes and axles.

Company is working closely with its customers using the latest technology solution and e-Axle, to support electric vehicle manufacturing.

Company intends to capitalize on export business opportunities, as OEMs in Europe are looking for low cost manufacturers for sourcing subassemblies.