Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Standalone business net sales grew by 13% year-on-year, indicating strong domestic demand.
- EBITDA margin improved to 14%, a 450 basis points increase compared to the previous year.
- Net profit for KOEL standalone increased by 90% year-on-year, reflecting strong financial performance.
- The Industrial segment grew approximately 8% year-on-year, driven by strong demand from construction OEMs.
- The distribution and aftermarket business recorded a 10% year-on-year growth, showing enhanced service capabilities.
Negative Points
- Quarter-on-quarter decline of 11% in standalone business net sales due to prebuy volumes in the previous quarter.
- B2C segment declined by 13% due to a planned plant transition, impacting sales.
- International business in the B2B segment saw a slight decline, with challenges in the power gen side due to changing power scenarios in key markets like South Africa.
- Working capital increased by INR69 crore, indicating gearing up for future demand but also reflecting higher inventory levels.
- B2C segment registered a loss before interest and tax of approximately INR6 crore, indicating challenges in maintaining profitability.
Q & A Highlights
Q: How is the demand outlook for the Optiprime series in the high horsepower segment?
A: Rahul Sahai, CEO B2B Business, stated that there is significant interest from customers, and they have gained traction with several high horsepower orders. The value proposition is clear, and they see a defined space for the Optiprime series in the market.
Q: With the upcoming BS V norms, how is the prebuying for the industrial segment, especially for construction equipment vehicles?
A: Rahul Sahai mentioned that they do not expect significant prebuying as the engines go into equipment, and OEMs are limited by the amount of stocking they can do. The margin profile is expected to remain similar due to competitive forces.
Q: What is the strategy for Arka Fincap, and is there a plan to hive it off into a separate entity?
A: Gauri Kirloskar, Managing Director, explained that they will monitor the granularity of the book, risk spread, and return on equity. While there are no immediate plans to hive off Arka, they will consider logical steps as the business grows.
Q: Are there any changes anticipated in the Power Gen segment for H2, and can pricing be maintained?
A: Rahul Sahai indicated that they are closely monitoring market dynamics as more players enter the CPCB IV market. While they are optimistic about demand picking up, it is premature to comment on pricing and margin changes.
Q: How is the competitive intensity in the Power Gen segment, and are smaller players affecting KOEL's market share?
A: Rahul Sahai noted that competition is mainly from established players, and they have not seen smaller players significantly impacting market share. The focus remains on maintaining their position in key nodes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
