Suprajit Engineering conducted their concall for Q2 FY 22
"With past acquisitions remain successful despite of challenges, mgmt is confidence enough to perform in the same manner with current acquisition"
Here are the conference call highlights 🧵👇
"With past acquisitions remain successful despite of challenges, mgmt is confidence enough to perform in the same manner with current acquisition"
Here are the conference call highlights 🧵👇
Business Updates:
• Demand of passenger vehicles remain muted.
• ICE shortage and commodity shortage perplexed the predictability.
• Cost has been passed on to certain customers.
• Plant expansion at Narsapura will be operational this year.
• Demand of passenger vehicles remain muted.
• ICE shortage and commodity shortage perplexed the predictability.
• Cost has been passed on to certain customers.
• Plant expansion at Narsapura will be operational this year.
Industry Updates:
• Mgmt don't expect raw material and chip shortage issue to be resolved till March 2021. FY23 is expected to be more stable than that of volatility this year.
• Customers are not prone to consistent increase in price, hence price rise remain challenging.
• Mgmt don't expect raw material and chip shortage issue to be resolved till March 2021. FY23 is expected to be more stable than that of volatility this year.
• Customers are not prone to consistent increase in price, hence price rise remain challenging.
Segments Updates:
- Pheonix Lams is facing cost pressure. In gas area, prices are shot up.
- Cable division is facing raw material issue and freight issue.
- SENA volumes are fixed up again and looking for price rise to customer.
- Pheonix Lams is facing cost pressure. In gas area, prices are shot up.
- Cable division is facing raw material issue and freight issue.
- SENA volumes are fixed up again and looking for price rise to customer.
STC:
• Holding about 15 patent. Business is expected to pick, and is expected to contribute significant growth in future.
• Margins in STC is expected to be double digit rate.
• Holding about 15 patent. Business is expected to pick, and is expected to contribute significant growth in future.
• Margins in STC is expected to be double digit rate.
LDC:
• Transaction was about 42Mil (Debt free & cash free basis).
• Projecting for 100Mill revenue with double digit EBIDTA.
• Closing of deal will be done in Q4.
• This will open the scope of Suprajit in Mexico, Europe (global geographies)
• Key customer: Tesla
• Transaction was about 42Mil (Debt free & cash free basis).
• Projecting for 100Mill revenue with double digit EBIDTA.
• Closing of deal will be done in Q4.
• This will open the scope of Suprajit in Mexico, Europe (global geographies)
• Key customer: Tesla
Margin:
• Margins in SENA are expected to maintained than that of pre-covid level.
• LDC will take a year or so for cleaning, post to that good margins will be reflecting in the nos.
• Price increase comes with a lag, hence QoQ margins is not comparable.
• Margins in SENA are expected to maintained than that of pre-covid level.
• LDC will take a year or so for cleaning, post to that good margins will be reflecting in the nos.
• Price increase comes with a lag, hence QoQ margins is not comparable.
Acquisition & CAPEX:
• With acquisition of 45 Mill dollar, mgmt generally goes for 50:50 for borrowing:self funded. (Same for CAPEX)
• CAPEX of 125 cr (for 18 months) to be allocated for building & machinery. 1 is for Narsapura project and another is for after market project.
• With acquisition of 45 Mill dollar, mgmt generally goes for 50:50 for borrowing:self funded. (Same for CAPEX)
• CAPEX of 125 cr (for 18 months) to be allocated for building & machinery. 1 is for Narsapura project and another is for after market project.
Other:
• Debt level is reduced to 316cr in Q2, which 327cr in Q1.
• Co. is also putting solar panels to most of the plant, as a part of CAPEX.
• Focus remains both on organic and inorganic growth (acquistion) as well.
• Debt level is reduced to 316cr in Q2, which 327cr in Q1.
• Co. is also putting solar panels to most of the plant, as a part of CAPEX.
• Focus remains both on organic and inorganic growth (acquistion) as well.
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