Release Date: January 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Greaves Cotton Ltd (BOM:501455, Financial) reported strong financial performance with consolidated revenues of INR751 crores, reflecting a 13% growth in standalone revenues.
- The Electric Mobility Division gained traction, delivering INR184 crores in Q-3, supported by new product launches.
- The company has diversified its revenue streams, with 64% of its business now coming from B2C segments, showcasing a strategic pivot towards customer-centric growth.
- Greaves Cotton Ltd (BOM:501455) maintains a strong financial position with near zero debt and cash reserves of INR503 crore, positioning it well for future growth.
- The company is expanding its product portfolio with new strategic investments in technology development, brand building, and high-growth areas, including electric mobility and fuel-agnostic solutions.
Negative Points
- The Excel control linkage segment experienced a 7% decline in revenue year-on-year, attributed to a flat or tepid OEM industry and export volume reductions.
- The company faces challenges in the electric two-wheeler market, with industry-wide declines impacting sales despite improved product competitiveness.
- There is a dependency on regulatory changes, such as the CPCB four norms for gensets, which require significant product upgrades and can impact market dynamics.
- The hydrogen engine, while a promising concept, is still in the early stages and faces challenges related to hydrogen availability and total cost of ownership.
- The company is navigating a competitive landscape in the CNG engine market, where established players like Bajaj dominate, requiring strategic positioning to increase market share.
Q & A Highlights
Q: How does Greaves Cotton plan to achieve its ambitious target of INR 15,000 crore revenue by 2030?
A: Akhila Balachandar, CFO, explained that Greaves Cotton has transformed from a single product diesel engine company to a diversified multi-product company. The company has achieved a healthy CAGR of 18% from FY '22 to FY '25, which supports their confidence in reaching the target. The strategy includes both organic growth and potential inorganic opportunities.
Q: Can you provide insights into the new products launched by Greaves Electric Mobility and their market potential?
A: Narasimha Jayakumar, CEO of Greaves Retail, highlighted the diversification into construction equipment and light construction equipment like mini excavators and scissor lifts. These products are part of their fuel agnostic strategy and aim to capture the growing market driven by urbanization and infrastructure investments.
Q: What is the strategy for expanding the presence in the CNG engine market, given the competition from established players like Bajaj?
A: Narasimha Jayakumar, CEO of Greaves Retail, stated that the company is focusing on a fuel agnostic approach, developing engines and powertrains to match the future fuel mix. The strategy involves risk mitigation and preparing for a growing market by offering a comprehensive portfolio that meets industry needs.
Q: What are the growth prospects for the non-auto business segments, and how do you plan to balance the auto and non-auto revenue mix?
A: Akhila Balachandar, CFO, mentioned that all segments are expected to grow, with a focus on diversifying revenue streams across multiple applications. The company aims to reduce dependency on a single application and sees growth in gensets, auto demand, and non-auto applications, supported by India's economic growth.
Q: Can you elaborate on the aerospace segment and other precision engineering opportunities?
A: Nagesh Basavanhalli, Non-Executive Vice Chairman, explained that Greaves Cotton is preparing for opportunities in aerospace by qualifying their plant for high-quality manufacturing. The company is also exploring adjacencies in railways, defense, and marine sectors, leveraging their precision engineering capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
