Salzer Electronics Limited: Q3 & 9M FY25 Earnings Call

February 17, 2025 · 3 min read

Earnings Call Transcript Analysis Report #

Revenue: Q3 FY25 revenue increased by 26% YoY to INR 341 crores; 9M FY25 revenue increased by 24% YoY to INR 1,043 crores.
EBITDA: Q3 FY25 EBITDA (excluding other income) increased by 16% YoY to INR 36 crores, with an 11% margin; 9M FY25 EBITDA (excluding other income) increased by 25% YoY to INR 105 crores, with a 10% margin.
PAT: Q3 FY25 PAT increased by nearly 15% YoY to INR 16 crores; 9M FY25 PAT increased by 70% YoY to INR 58 crores, with a 6% margin.
Guidance: Projecting a 20% revenue increase across existing businesses and a minimum of 11% EBITDA margin by FY26. Smart Meter segment expected to contribute INR 600 crores to INR 700 crores to revenues.

Smart Meters: Received first order for smart meters from India’s largest AMISP and dispatched the first order of INR 5 crore in Q3 FY25. In advanced discussions with at least 6 other AMISPs.
EV Charging: Invested in Ultrafast Chargers, acquiring a 30% stake through Kaycee Industries Limited. Target to manufacture and sell 1,000 DC fast chargers in FY26.
Kaycee Industries: Top line grew 7% in 9M FY25 to INR 38 crores; EBITDA grew 30% to INR 6 crore; PAT at INR 4 crore in 9M FY25.
Export Growth: Exports to the Americas grew 25% YoY, Asian countries grew 92% YoY, and Europe grew 36% YoY in the quarter. Export share of revenue was nearly 31%, a growth of 60% YoY.

Switchgear Industry: “The Switchgear industry is experiencing a very significant transformation, driven by digitalization, AI and environmental sustainability initiatives.” Indian industrial switchgear segment projected to grow at approximately 8% during 2024-2029.
Government Initiatives: Programs like Saubhagya and UDAY are creating favorable conditions.
Wire and Cable Industry: Supported by increasing demand in commercial and residential sectors, along with the introduction of smart switchgear solutions.

Smart Meter Implementation: “Customers are also facing significant delays, and other issues.” Public opposition and field problems are impacting the pace of implementation.
Saudi Arabia: “Getting a space in Saudi Arabia is quite difficult, because of the heavy demand that they are seeing for space.”

Revenue Growth: Anticipating strong revenue growth and projecting a 20% increase across existing businesses in FY26.
Smart Meter Contribution: Smart Meter segment expected to contribute around INR 600 crores to INR 700 crores to the revenues.
EBITDA Margin: Targeting a minimum of 11% EBITDA by FY26 through operational efficiencies.
ROCE Target: ROCE target is to be 18% over the next couple of years.

Smart Meter Strategy: Focusing on selling to AMISPs rather than bidding at the DISCOM level.
Nuclear Industry: Acknowledged the nuclear industry market size for CAM switches is small, but highlights Salzer’s technical capabilities.
EV Charger Revenue: Expecting INR 80 crores to INR 90 crores from EV chargers, projecting 1,000 DC fast chargers.
Capacity Utilization: Wire and Cable at around 60% capacity, Switchgear at around 70% capacity, and Building Products at around 65-70% capacity.
Debt Levels: Debt levels might increase due to working capital requirements for smart meters and CapEx investment.

Confident: Expressed confidence in adapting to evolving dynamics and achieving strategic objectives.
Restrained: Acknowledged delays in the smart meter business and reduced revenue projections.

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