ZF Commercial Vehicle control systems India hosted a conference call on Jan 31, 2024. In the conference call, the company was represented by Mr P Kaniappan – Managing Director and Ms Sweta Agarwal– Chief Financial Officer.

Key takeaways of the call

India''s GDP is expected grow by 7.3% in FY24 driven by strong domestic demand. However, management indicated that rural demand may remain weak impacted by uneven monsoon and delayed sowing.

In Q3 FY24, Commercial vehicle segment witnessed growth supported by strong replacement demand and increased Government spending.

Management expects growth to continue in Q4 FY24, however in FY25 M&HCV growth will remain flat due to higher base and rising freight rates.

Aftermarket segment registered 10.2% YoY growth in Q3 FY24 driven by various new initiatives.

Trailer segment grew by 32% YoY in Q3 FY24.

In Q3 FY24, exports stood at Rs 204 crore. Management expects exports to grow in Q4 FY24 driven by new product launches by its key customers. However, ongoing red sea situation will increase lead-time by three weeks.

Company is shifting focus on margin accretive products to increase profitability.

In Q3 FY24, company’s sales to OEM stood at about Rs 483 crore, up by 19% YoY.

Company expects new business from sale of electronic stability control system to buses, electronic braking system applications, electronic compressors and driver assistance systems.

Company expects ESC regulation to come in truck segment also, which will further provide tailwinds to company’s products.

Capex for 9M FY24 stood at Rs 130 crore. Management guided similar capex in FY25.

Company’s content per vehicle improved in EV buses due to electronic braking systems. ESC regulation will also help increase content per vehicle.