Nelcast hosted a conference call on May 19, 2023. In the conference call, company was represented by, Mr. P. Deepak -Chief Executive Officer & Managing Director and Mr. S.K. Sivakumar- Chief Financial Officer.

Key takeaways of the call

In FY23, M&HCV segment reported growth of 47% YoY while tractors were up 24% YoY driven by recovery in the automotive industry and healthy rural economy respectively.

Company surpassed its export revenue guidance and generated Rs 329 crores from exports in FY23, a growth of 49% YoY.

In Q4 FY23, YoY growth was driven by increase in volumes, company clocked 20,620 Tonnes compared to 19,389 Tonnes in Q4FY22, representing 53% growth in exports.

Management expect new launches to contribute materially in the upcoming quarters. These new launches are expected to help grow exports by 20% and improve margins in FY24.

Management guided double-digit top line growth in FY24, on the back of growth in its M&HCV segment due to increased infrastructure spends, pick-up in export markets due to strong order backlog and marginal growth in tractors.

Company expect sales volume to grow by 10-15% in FY24 and export revenue to grow 20%.

In FY23, the largest share was contributed by M&HCV making up 39.4% of the total revenues, followed by Tractors 29.3%, Exports 26.2%, Railways 3.1%, Off-highway equipment 1.7%, and Others 0.3%.

EBITDA margin was impacted due to lower volume, slowdown in tractor segment and increased operating cost. Going forward, management indicated margins are expected to improve.

In FY23, EBITDA/kg was 11.3 compared to 9 in FY22. Company expects to achieve significant improvement in EBITDA/kg in Q1 FY24.

In Q4 FY23, EBITDA/kg was 9.7 compared to 10.5 in Q4 FY22.

Company expect tractor growth to be marginally lower due to slow growth in the rural economy, however its margin is expected to improve.

Automotive Industry is expected to grow strongly in FY24 driven by increased demand for tippers due to increased infrastructure spends by the government. Tippers contribute significantly to company’s top line and have a high casting content. Therefore, growth momentum is expected to continue in FY24.

In Q4 FY24, capacity utilization was around 54%.

Company’s 60% of the power requirement is met through renewable sources.

Board of Directors have recommended a dividend of Rs 0.40 per share of Rs 2 paid-up for the financial year 2022-23. The record date is 28th July 2023.