Earnings Call Transcript Analysis Report #
Financial Performance #
Key Financial Metrics #
Total Income Growth (Consolidated) #
- Q3 FY25: 9.27% YoY.
- 9M FY25: 10.34% YoY.
EBITDA (Consolidated) #
- 9M FY25: Margin at 10.1%, an improvement from 9.6% in 9M FY24 (a 50 basis points improvement).
- EBITDA margin projection for FY25: ~10.45%.
Joint Ventures (Collective) #
- Total Income (presumably 9M FY25): 270 crores.
- Average EBITDA margin: 12.5%.
- All JVs PAT positive in Q3 and 9M FY25.
Debt #
- Net Debt: 673 crores.
- Gross Debt: 708 crores (Standalone: 284 cr, Indian Subsidiaries: 100 cr, Overseas Subsidiaries: 324 cr). Cash balance: 35 crores (India level).
- JV Debt: ~8.5 crores (not included in consolidated debt).
CAPEX #
- 9M FY25: ~173 crores.
Overseas Subsidiaries Losses #
- EBIT Level Loss (9M FY25): 17.35 crores.
- EBIT Level Loss (Q3 FY25): 10.78 crores (consolidated impact).
Comparison with Previous Periods #
- Outperformed peers in Q3 FY25 revenue growth.
- EBITDA margin improved by 50 bps in 9M FY25 YoY.
- Two-wheeler and OHV segments outperformed industry growth in 9M FY25; four-wheeler segment saw a decline for Sandhar.
Revised Guidance or Forecasts #
Revenue FY25 #
- Projecting around 4000 crores.
Revenue FY26 #
- Target of 4,500 crores remains achievable.
EBITDA Margin FY25 #
- Target of ~10.45% (50 bps improvement YoY).
EBITDA Margin FY26 #
- Target of 10.50% to 10.95% (another 50 bps improvement from FY25).
Debt Reduction #
- Expectation of ~100 crores repayment in the next financial year (FY26) from generated cash flows.
Areas of Growth or Decline #
Growth #
- Two-wheeler segment (Sandhar +17.58% vs industry +13% in 9M).
- OHV segment (Sandhar +6.9% vs industry +5.3% in 9M).
- Joint Ventures.
- EV battery chargers.
- Sheet metal business showing good traction.
Decline #
- Four-wheeler segment (for Sandhar, while industry grew 2.72% in 9M).
- Overseas business (sustained losses).
Strategic Initiatives & Business Updates #
Major Strategic Announcements #
- Focus on deleveraging the balance sheet and generating free cash flows.
- Continued diversification of product portfolio, expanding customer base, and increasing content per vehicle.
- Emphasis on ESG and Sustainable Development Goals (SGD) to attain carbon neutrality.
New Products, Services, or Markets Discussed #
EVs #
- Commercial production of battery chargers has started with positive market response and increasing customer base.
Smart Locks #
- Production and supplies started to “two of the biggest names.” Traction building with other customers, with volumes expected to pick up.
Hyundai Mirrors #
- Project delayed by Hyundai; products currently under testing. SOPs expected around July/August.
Significant Operational Changes #
- All joint ventures are PAT positive, driven by “focused cost control, localization efforts, enhanced business synergies.”
- Consolidating operations to improve ROCE and ROI.
Ongoing or Completed Projects #
Pune Expansion (Cabins, Fabrication, Die Casting) #
- Expected to commence commercial production by end of March 2025.
New Lines (General) #
- Lines ready, but volumes expected in Q1 FY26 due to customer-side testing delays.
Sheet Metal #
- Four new manufacturing facilities set up in the last 3-4 years. Capacity utilization at 80-85%. Routine CAPEX for balancing equipment, no major inorganic CAPEX expected.
Romanian Plant #
- Stabilized after delays due to Ukraine war; expect much larger manufacturing capability consumption in the coming year (FY26).
Market & Competitive Landscape #
Insights about Industry Trends #
India Macro #
- Projected FY25 growth revised down to 6.4% due to weaker manufacturing and slower corporate investments. RBI also lowered forecast.
Auto Segments (9M YoY) #
- Two-wheeler industry grew 13%, Four-wheeler +2.72%, OHV +5.3%.
EV Market #
- Some slowdown observed, but Sandhar sees traction due to localized solutions. Uncertainty remains with alternatives like hydrogen being explored by some OEMs (e.g., BMW).
Export Market (Europe) #
- Demand is weak, impacting overseas business. Green shoots are reportedly being seen.
Competitive Positioning Statements #
- Sandhar outperformed industry growth in the two-wheeler (17.58% vs 13%) and OHV (6.9% vs 5.3%) segments in 9M FY25.
- Confident in sustaining and growing momentum despite challenging conditions.
- Not facing a shortage of orders despite industry slowdown.
Market Challenges or Opportunities Mentioned #
Challenges #
- Weaker overall economic growth in India, slowdown in Europe, potential US tariffs, EV market uncertainties.
Opportunities #
- “China Plus One” strategy benefiting Indian exporters. Increasing content per vehicle, product diversification, EV components, smart locks.
Comments about Market Share or Positioning #
- Gaining market share in exports despite overall weak demand in Europe.
- Increasing wallet share with existing customers through new components.
Risk Factors & Challenges #
Concerns or Challenges Acknowledged by Management #
Macroeconomic Headwinds (India) #
- Slower GDP growth, weaker manufacturing, slower corporate investments, inflation, anemic capital flows, record trade gap.
Overseas Business Performance #
- Operations in Europe sustained losses due to low demand and slowdown.
Four-Wheeler Segment Decline #
- Sandhar experienced a decline in this segment despite modest industry growth.
EV Market Uncertainty #
- While seeing traction, the broader EV adoption path and competition from other technologies (e.g., hydrogen) pose a question mark.