Key takeaways of the call

Order book for RE division, at end of December 2020, was more than Rs 330 crore that would get executed in the next 6-8 months.

Sales volume of tractors (AMP) and Construction Equipment (CE) in Q3FY21 was up by 26% and 20% respectively to 31562 units and 1254 units.

AMP division in Q3FY21 operated at 100% capacity.

Market share of the company in tractors for Q3FY21 and 9mFY21 stood at 11.6% (down from 11.9% in Q3FY20 but up from 9.8% in Q2FY21) and 10.7% (down from 11.2% in 9mFY20)respectively.

The tractor market continues to be strong on back of positive macro-economic factors and strong rural cash flows. Agriculture demand for tractors and farm mechanization is witnessing a continuous growth. It is hopeful of a sustained momentum as it see strengthening in farm and rural economies.

The supply side situation for AMP is normalizing and is no longer expected to be a bottleneck to meet demand. However rising inflation continues to be a worry.

Farmtrac : Powertrac sales ratio in Q3FY21 was at 39:61 (as against 39:61 in Q3FY20 &43:57 in Q2FY21)

Indian Railways is still not running its full operations, due to unprecedented COVID-19 pandemic situation and has done revision in the production plan, affecting fresh order tendering and order inflow. But the company have seen pick up in order inflows during December 2020 and expect that tendering process will get back to pre-Covid level by end of Q4 of current fiscal.

The positive development in the construction equipment space is encouraging. And the company is optimistic of better environment ahead for business recovery in the Construction Equipment segments as well.

AMP EBIT margin at a high of 20.1% in Q3FY21 is largely due to the function of operating leverage, favourable product mix and cost efficiencies

The Government's efforts on Covid vaccination will further infuse confidence across sectors and will provide further impetus to the economy.

CE market share for 9mFY21: Cranes 37.4%; compactors 7.8% and BHL 1.4%.

Of the 9mFY21 CE revenue about 63% came from cranes, 9% compactors; 16% from BHL and balance spares and traded goods.

Sales volume of CE for 9mFY21 was down by 24% but the served industry down by 3.1% in 9MFY21 with reference to last year. For 9mFY21 period, the BHL industry was up by 1.7%; Crane industry down by 27% and Compactors industry up by 2%.

In Q3FY21 BHL industry up by 11%, compactor up by 27% and Cranes industry up by 28%

Capacity utilization of CE division in Q3FY21 and 9mFY21 was at about 52% and 29% respectively.

RE Q3FY21 margin was impacted due to high share of NPD products with lower margin as well as one-off provision towards GST rate differential in respect of orders executed post Sep'19. In Q3FY21 the contribution of NPD to RE revenue was 69% with conventional stand at 31%.