Nelcast hosted a conference call on Oct 31, 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 Q2 F24, growth was driven by increase in overall sale volumes to 22,953 Tonnes compared to 22,090 Tonnes in Q2FY23. Increase was due to good performance in Medium & Heavy Commercial Vehicle (M&HCV) and Export segments.

EBITDA margin grew driven by increase in revenue contribution from exports and normalization of raw material prices. Moreover, company has shifted its focus to premium products, which are margin accretive.

In H1FY24, the largest share was contributed by M&HCV making up 37% of the total revenues, followed by Tractors 23%, Exports 34%, Railways 3%, Off-highway equipment 2%, and Others 1%.

On the export front, company crossed Rs 100 crore milestone and clocked Rs 130 crore, which was a growth of over 58% on a YoY basis. Management expect UAW strike in the US to have a mild impact on export performance in Q3FY24, however this segment will maintain growth on back of strong order book.

Some products that were scheduled to launch in the current year will now happen in FY25, given the OEM’s decision to delay their model launch by six months. Therefore, company expect a significant boost in exports in the next financial year.

In H2 FY24, company expect growth driven by steady demand in M&HCV and exports.

In Q2 FY24, EBITDA/kg was Rs 14.9 compared to Rs 13.5 in Q2 FY23, up by 11%. Improvement in EBITDA/kg was due to increase in volume and increased contribution from exports.

In H1 FY24, EBITDA/kg was Rs 13.5 compared to Rs 12.9 in H1 FY23, up by 5%.

Company expects raw material prices to remain stable at current levels.

With construction activity picking up, company expect strong demand for tippers and hence, a significant contribution from the M&HCV segment in the coming quarters.

Tractor Performance remained subdued and is expected to remain subdued in the next couple of quarters.

Company is planning a capex of about Rs 20-30 crore per year for next couple of years.