Alicon Castalloy Ltd
NSE:ALICON
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
800.35
1 513.35
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Alicon Castalloy Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Alicon Castalloy Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Shah from CBR India. Thank you, and over to you, Mr. Shah.
Thank you, [indiscernible]. Good day, everyone, and thanks for joining us on Alicon Castalloy Limited's Q2 FY '24 Earnings Conference Call. We have with us on the call today Mr. Vimal Gupta, Group CFO; Mr. Shan Agarwal, Chief Marketing Officer at Alicon Castalloy; and Mr. Rajiv Gupta, Head Domestic Business of Alicon Castalloy Limited. Mr. Vimal Gupta will cover the financial performance for the quarter following which Mr. Agarwal will walk us through the operating highlights and give a granular view on [indiscernible] performance, while Mr. Rajiv Gupta will provide insights on the India business. Thereafter, we shall open the call for a Q&A session.
Before we begin, I'd like to point out that certain statements made on today's call could be forward-looking in nature, and a disclaimer to respect has been included in the earnings presentation shared with you earlier. I'd like to invite Mr. Vimal Gupta for his opening remarks. Thank you. And over to you, sir.
Good afternoon to all our investors. Thank you for taking the time out to join our earnings call. I tell that all of you have had a count to review our earnings of human which was certain. As we have indicated earlier in 2018, '19 month of peak year for the global auto industry, and we continue to evaluate the performance of the auto industry against our water market set in 2018/'19. As stated, the domestic industry performance in quarter 2 of financial year '24 has reached approximately 84% of the base set in quarter 2 of 2018, '19. For the international industry, the performance achieved in [indiscernible] September of [ 223 ] at is million level of 85% of the production level recorded during the same period in 2018/'19.
At Alicon, we continue to track ahead of our performance in '18/'19 with our revenues in the second quarter of financial year '24 reaching around 122% of the branch market set during the corresponding period in financial year '18/'19. This outperformance relative to the global and domestic auto industry has been achieved by a focus on new technologies, new geographies, additional of capabilities and [indiscernible] engineering. At Alicon, this is part of the strategic plan to take the company into a higher orbit. Our business reanimation strategy is guided by a focus on multiple revenues for growth organized into 5 pillars. This approach reflects our commitment to adapt and prior dynamic automotive landscape ensuring substances for Alicon in the year to come. These pillars are continue to scale strategic products in the IT business, addressing the opportunities from carbon-neutral technologies, including battery electric, real, hybrid electric vehicles, fuel cell and hydrogen cell technologies. Opportunities from structural parts or technology agnostic parts, which remains consistent no matter which fuel technology is used to power the vehicls.
Non-auto business encompassing opportunities from sectors such as Defense and ag Telecom, to name a few, where our competencies can be leveraged and enhance customer [indiscernible] combining products to offer our customer base one-stop solution. Investors should closely monitor several key themes that underscore our business transformation at Alicon, providing valuable insight into our progress and the evolving later of our business model. Firstly, [indiscernible] product mix is an important aspect that reflects our strategic focus. We have communicated and demonstrated a shift in our revenue mix. to include a higher share from passenger vehicle and commercial rating. This is a result of our concentrated efforts to scale up business in these segments, along with with a focus on carbon-neutral technologies and technology-agnostic parts. As growing contribution from the presenter rental and commercial vessel segment is expected to outpace 2-wheelers, thereby, [indiscernible] the product mix further.
Secondly, our customer profile is also undergoing a transformation marked by the addition of prestigious global names to our customer list. We have successfully expanded our bid to include leading global OEMs and Tier 1s, reflecting the growing status of Alicon in industry. Thirdly, the composition of our business is increasingly replaced by our expertise in design, research and development and value engineering. In the past, business base was primarily driven by reliability and cost competitiveness. Today, Alicon distinguishes itself by winning businesses based on its capabilities in innovation, technology and design. Thus, this shift underscores our evaluation and solution provider, with customers viewing us as a more than just a source of low-cost components.
As we continue to adapt and innovate, these seems serving key indicator for investors to assess our ongoing transformation and strategic directions we are pursuing. In that backdrop, I will now run through the financial performance for the quarter under review.
In quarter 2 of financial year '24, total income stood at INR 382 crores as compared to INR 378 crores in quarter 2 of financial year '23, higher by 1% on a year-on-year basis. On a sequential quareter basis, we have delivered revenue growth of 8%. This has been driven by addition of new parts and new logos. The volumes in our traditional business of 2-wheelers have been demonstrating and moderating, and the revenues from the new products have offset the decline to post a growth of 1% on a net basis.
As a result, we have [indiscernible] a slight increase in the utilization level of plants in India and Europe, which operated at the utilization level of around 6% to 7% in quarter 2.
The gross margin for the quarter, which was [ 5.1% ] in quarter 2 of FY '24 compared to 48.6% in quarter 2 of FY '23, is higher by 143 basis points on a year-on-year basis, largely due to both available product mix. There has been also a slight contribution from the stabilizing of alloy prices at a lower level.
There has been a sharp rise in employee costs, which are higher by 18% year-on-year basis and 4% over the immediately preceding quarter. This is due to the increase in [indiscernible] as well as the effects of the increments, which have kicked in from April onwards. We have made investments in automation and process improvements for more efficient manufacturing, and this will enable us to mitigate the impact of rising power cost. While the absolute number will continue to increase, we will see reduction as opposed to sales.
Further, there is the impact on [indiscernible] cost of around INR 3.7 crores for the quarter and INR 7.05 crores for the half year, which is a noncash start. The most substantial part of the [indiscernible] cost is being charged to the P&L this year and largely equal installments over all four quarter. From next financial year onwards, there will be an [indiscernible] cost on account of ESOP team, it will be largely [indiscernible].
Other expenses were lower on a quarter-on-quarter basis as we have focused on cost-cutting initiatives at all levels of the organization.
Moving on to profitability. [indiscernible] EBITDA for the quarter stood at INR 47 crores against INR 43 crores in the corresponding quarter last year. Despite the sharp increase in employee cost, EBITDA margin for quarter 2 of financial year '24 has improved to 12.3% as compared to 11.5% in quarter 2 of FY '23. I'm pleased to share that we have reported an improvement in the EBITDA margin by 80 basis points on a year-on-year basis, and by nearly 104 basis points on quarter-on-quarter basis.
Importantly, if we adjust the non-cash charge-offs for the ESOP cost, the adjusted EBITDA margin is 13.3% this quarter. This is an increase of over 180 basis points on a year-on-year basis.
Some of you would recall our prior earnings calls, where we have indicated that we will increase the EBITDA margin by 100 basis points in FY '24. We have done more than that in the first half itself and are poised build on this through the year. We remain confident about the general of [indiscernible] margin given the improving product mix.
Finance cost was higher by 39% on a year-on-year basis from INR 7 crores to INR 10 crores, in line with the higher interest rates. Some parts of this rise is due to high interest rates, which are now expected to be and gradually reduce from the next year. In terms of quantum of that, we have repaid some debt this year quarter from the operational cash flow and the handover will be to continue to repay debt in order to reduce the overall debt by on a quarter-over-quarter basis, which will help us to reduce the finance cost. We also witnessed increase in the depreciation, which was higher by 16% on a year-on-year basis from the INR 160 crores in the quarter 2 last year to INR 18 crores in quarter 2 FY '24. The increase in depreciation has been driven by 2 factors. One was taken some machines -- we have taken some machines on lease. And as we are accounting according to -- based on the accounting standards, we have [indiscernible] life of 5 years, which resulted in a higher depreciation cost. Secondly, we reevaluated the...
[Technical Difficulty]
Ladies and gentlemen, please stay connected, the line for the management drop. Participants, please stay connected while we rejoin management back on the call. ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.
So as the result of higher finance costs and depreciation, profit after tax for quarter 2 FY '24 stood at INR 14.51 crores and number to 15.34 crores in quarter 2 FY '23, lower by 5% on a year-on-year basis. On a sequential quarter, profit after tax was higher by 53% from INR 9.5 crores to INR 14.5 crores. For the half year ending September 23, the revenue was INR 737 crores as against INR 722 crores in the corresponding period last year, growing by 2%. The gross margin during the first half of the '24, stood at 50.2% as compared to 48.1% in first half of '23. So EBITDA for the first half of '24 stood at INR 87 crores against INR [ 25 ] crores in the first half of '23. So that is higher by 7% year-on-year basis. Profit after tax for the first half of '24 stood at INR 24 crores against INR 26 crores in the first after last year.
We have had strong performance from the portfolio of cash flows. Operating cash flow increased to INR 80 crores for the half year ended September 23 compared to INR 34 crores in the prior period. Again, we [indiscernible] this towards repayment of borrowings, payment of dividend and the CapEx front. We have deployed around INR 50 crores during the first half, which is in line with our [indiscernible] CapEx deployed for the INR 90 crores in '24.
Coming to the outlook. We delivered a steady performance in the first half of the financial year, with revenues higher by 2% year-on-year basis. However, for the second half, we see improvement in the revenues given the healthy pipeline of SOP from the new product and the new customers. As the second half of the prior year was muted, the growth rates are also set to improve, enabling us to end the year with revenue growth of 10% to 12% for the full year. Thereafter, we are poised to take the business to new heights as we aim to deliver a revenue of over INR 2,200 crores by '25, '25 [indiscernible] equates to CAD of over 16% for a period of 3 years. Our confidence stems from the new orders, which we have received and [indiscernible] on the new technologies and solutions. This will be a combination by an improved margin profile, and we aspire to take the EBITDA margin to around [ 40% ] of this, we have already reported an EBITDA margin of 12.3% in quarter 2 FY '24. And adjusting for onetime aspect of ESOP cost, this is 13.3%.
Lastly, we are looking to drive the efficiencies across our balance sheet and in working capital, which will contribute towards enhanced return issues to. On That note I...
[Technical Difficulty]
Participants [indiscernible]. the line for the management drooped again. Thank you for your patience. We have the line for the management reconnected Sir, you may go ahead.
We have sustained the positive momentum from the first quarter, performing well in both new markets and with the introduction of new products. Despite a mixed industry backdrop, characterized by segment experiencing both positive momentum and challenges, we are pleased to report encouraging revenue growth, particularly on a sequential quarter basis. For Toyota, where we supply the lender head to their hybrid models, we have witnessed a ramp-up in volumes during the quarter, and our production is running in full swing to make the increased demand. We also supply cylinder head to [indiscernible] India, which is assembled and exported to Europe. In the quarter, the volumes have picked up for India market, and it will further increase in quarter 3, quarter 4 as we commence supply for the European version. Supply of [indiscernible] head to Maruti Suzuki have also increased during the quarter. The sales and production will increase further in quarter 3, quarter 4 with the start of supplies to [indiscernible].
During the quarter, we added 9 new parts from 5 customers, including 1 new logo. This includes 3 parts from EV or carbon neutral, 4 parts from ICE and 1 part from non-auto, and 1 part from the structural segment. Of the 9 parts are -- 9 part are for international business and 1 part is for domestic business.
In carbon-neutral business, we added another part from Danfoss for the European market and have also [indiscernible] an order for auto business from JLR to support EXL series business awarded last year. In the ICE segment, we further added new parts for the European markets through Tata Autocom. We have also had a significant breakthrough in the European market with a [indiscernible], our Tier 1 supplier to Ferrari.
In the non-auto business, we have added business in the existing portfolio and are in active discussions with the existing customers for further additional of parts. In technology-agnostic business, we added 1 more structural part for JLR, which will be supplied to their plant in U.K.
During quarter 2 FY '24, Alicon has booked new orders aggregating INR 187 crores, which is our total order book has reached to INR 8,687 crores, which is [indiscernible] over 6 years from 2023, '24 up to 2028, '29. The other aspect to highlight is the improving product mix. 99% of our new business won is for the global market in 4-wheelers, which is aligned to our long-term [indiscernible].
With the prospect for global auto industry improving during the quarter, we are expecting better level of activity through the remainder of the financial year. The commencement of supply for these orders, along with the start of production across our aggregated order bookings, will contribute to enhanced revenue momentum.
Our commitment to value creation extends to increase the value addition mix for our products in the 4-wheeler and the commercial vehicle segments. In carbon-neutral technology, we are actively exploring opportunities to expand the [indiscernible] and portfolio with existing customers. Our primary focus continues to be on passenger vehicles, commercial vehicles and export opportunity, where we see significant potential for value addition. Further, we are actively engaged in strategic initiatives and at further enhancing our operational excellence. We have partnered with painting vendors at Delhi and Pune to provide more [indiscernible] solutions and assure quality to our customers.
We have enhanced our machining capability at our Shikrapur facility with installation of advanced equipment, enriching the competency, which enable us to enhance customer wallet share and grow the proportion of value addition. To this end, we are also actively recruiting experts in casting machining, strengthening our global teams. On that note, I have completed the operating highlights, as [indiscernible] has got other emergencies, so I will now cover development on our international business.
The international business has delivered an encouraging performance in the backdrop of continued inflationary pressure and deteriorating geopolitical [indiscernible]. Energy prices have stabilized at slightly lower levels and energy availability has also improved along with minor improvement in alloy prices, which is encouraging to our customers. European operations are gradually emerging from the challenging situation witnessed last year. There has been a mixed trend with some of our customers ramping up production due to improving demand, while other customers are facing challenges to ramp up the activity levels due to constraints in supply chain based on other ventures. This is expected to ease in quarter 3 and quarter 4, leading to improved volumes.
As explained earlier, in the global business, we have added 8 new parts from 4 customers this quarter, including 1 new logo. We have added a part of [indiscernible] Systems, a prominent Tier 1 supplier to Ferrari. This is landmark logo addition and enriches our customer profile, further which will carry significant weighage with prospective customers of the international business. The lower business contributed to 20% of the total revenue during the quarter and 21% during the half year, which is higher than the contribution during the prior fiscal year.
To further enhance the contribution, we have strengthened our teams with involvement of personal [indiscernible] experience in project engineering, toolmaking and single components to add their know-how to our operations. Further, we have added a machine of larger size, which can manufacture parts up to 2 meters in length, enhancing the capability of the European operations.
The outlook has improved as against the initial expectation of [indiscernible] in quarter 2 FY '23, there has been around 4% growth in volumes in the global auto industry. Further against the growth forecast of 4% to 4.5% is the global auto industry in calendar year 2023, the revised forecast now indicate growth of 4.5% to 5%.
On this note, I would like now to hand over to Mr. Rajiv Gupta, who will cover the development in the domestic business for the quarter.
Thank you, Mr. Chan. Good afternoon, everyone. In quarter 2 FY '24, the domestic totable market was stagnant, that was 1% growth year-on-year. On overall basis and witnessed mixed trends categorized by 6% growth in the passenger vehicle segment, 9% growth in the commercial segment and 2% degrowth in the 2-wheeler segment. Within the passenger vehicle segment, we are witnessing highlighted interest in UVs with the market share steadily rising. Other categories within PV segment continue to face sluggish demand. The domestic 2-wheel industry was expected to benefit from higher volumes on the account of festive season. [indiscernible] to withdrawal in June '23 has impacted the volumes of the electric 2-wheelers, which have supported volumes of ICE. The entry-level motorcycles continue to see pressure and there has been growth in the premium end of the motorcycle segment. However, scooter segment has been flat.
The domestic commercial vehicle industry volumes continue to do well, and there was increase of 9% year-on-year in the segment on the account of good momentum in the infrastructure and construction segment as well as steady growth in the economic activity, as indicated by GST collections. In carbon-neutral segment, we have witnessed ramp-up in volumes of the motor housing for Taco, given the increased sales of Tata Motor's electric vehicles. We also supply motor housings component to [indiscernible], first switch mobility, Navistar, Tata Motors, which also witnessed strong demand during quarter 2. There has been start of production for HB1 [indiscernible] housing, which is supplied to Danfoss for the USA market. As explained by Mr. Shyam, earlier on new business, we have added 1 part from existing customer in the domestic business. This is for the supply of cylinder heads for the heavy duty trucks, which commenced sales during the quarter. Further, the supply of these for the [indiscernible] is ongoing. We also are working on cylinders for the next year sales for these products. On this note, we can open the floor for questions.
[Operator Instructions] The first question is from the line of Saurabh Jain from Sunidhi Securities.
My first question is which are the major SOPs that are scheduled to start contributing during the second half, particularly in Q3 and Q4? And if you would be able to quantify that, that would really be helpful.
Last quarter, you had mentioned that Maruti, we are expecting a good jump from Q3 onwards, and Toyota was also supposed to relook at the capacities following the launch of high rider and [indiscernible]. Similarly, PSA also following the commencement of their new facility at Bangalore. So everything looks on track?
Yes. So like for you. For the domestic market, we saw a lot of momentum in the last quarter. Like for the Maruti, which we highlighted, the cylinder head what we developed. So in the last quarter -- I mean, the end of last quarter, we got an entry to the Gujarat plant, which was planned. So this will now materialize in quarter 3. And you will notice Maruti cylinder head volumes will increase. Second good thing happened was on the PSA, the cylinder head back 1.5 years ago. So initially, we started for the Indian market. And now we got an entry to the Europe French market. So this is also a good point. What we noticed the sales are going to trigger in quarter 3 and quarter 4. So these were 2 major aspects. Again, yes, Toyota the models are doing quite well. A long waiting period is there. And also, thereafter, these platforms going to Maruti and also [indiscernible] with a volumes are picking up. So yes, in quarter 3 and quarter 4, we see good volumes for Toyota.
And on the global front, yes, we see volumes are ramping up. For Tata Autocom, Visa for the Europe market [indiscernible] what we added. And also, volumes are picking up for customers like [indiscernible] and Daimler, which we developed. And Dana, yes, also, we see the volumes are picking up as the numbers are increasing, and they're also trying to add new OEMs for the existing part. So here, we see a good momentum.
So sir, this like beta. So total there is increase in the number, but definitely for the Maruti as well as for the PSA. That was almost little nill till quarter 2. So that will give you a big jump in the numbers for the coming quarter quarter-quarter 3 and quarter 4 the top line.
Sir, would it be possible to quantify the contribution, which is already scheduled for Q3, Q4 from SOP new SOP?
so basically a total view past what we added will contribute to roughly around 40% to 45% of our total sales in quarter 3. So when we talk about the contribution is like we take an example of Maruti. So in this hopefully...
[Technical Difficulty]
Participants please stay connected. The line for the management dropped.
Participants, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.
Yes. So the major jump what we are noticing from quarter 2 to quarter 3 is; one, there is Maruti from roughly around roughly around INR 3 crores to INR 4 crores to it's jumping now to around INR 10 crores to INR 12 crores.
So also, we are noticing a good jump in Dana and PSA. Toyota, at this moment, yes, they have touched around 80% to 90% of the numbers. So we are eventually waiting for the other suppliers to cope up with the capacity, and thereafter, the volumes might increase.
So majorly would be in Q4? Is it -- would it be a fair assumption?
Yes. Because on a quarter-on-quarter basis, we will see a good jump in Q3 as well as in the Q4. So because when -- for the full year like in first half, it is almost flat, maybe around 2% growth against the quarter 2 of the last year. But we are expecting around 10% to 12% growth on a year-on-year basis for the full full year basis. So in spite of taking the impact of this because you see that at this moment, the [indiscernible] prices are so down. So that has also given an impact of around 4% on the overall growth. So in spite of taking that impact, so we are expecting to grow by [indiscernible] 10% to 12% for the full year.
And also in quarter 3, we know there are planned shutdowns. So because of steel seasons, the ratio OEMs will not be operating 5 to 7 days. So there -- yes, there's a dent to sales. But as we have added new parts, this will help us to cover up this gap.
Okay. That was helpful, sir. So what was the mix of 2-wheelers and 4-wheelers during the quarter? And if you could comment about the status of our CapEx plan? My other questions about top line growth and margins for the full year have been answered. So that's all from side first.
Thank you, for the contribution. One moment. Two-wheeler contributed 43% of the total sales in quarter 2. The passenger contributed 29%, commercial contributed 20%. So that was the momentum. So we did well compared to our previous numbers. Eventually, we noticed we are increasing in our [indiscernible]. So if I club 4-wheeler and commercial -- I mean, passenger and commercial, we noted we -- that's near about 49%, which is a good sign.
And sir, if you could comment about the status of our CapEx plan?
So the CapEx side, for the full year, we had a plan approximately 90 crores. So hopefully, already 50% is already done in the first half. And the second half, we have to complete this CapEx because it is related to the -- we have to install the capacities for the new businesses. So for the full year, the INR 85 crores to INR 90 crores, we will do the CapEx for that.
Next question is from the line of Raghunandhan N.n L. from Nuvama.
And there's 2 briefings for the entire Sir, firstly, taking us to 10% to 12% growth for FY '24. The revenue number comes to INR 1,540 crores to INR 1,570 crores roughly. How would the breakup be between regular business and SOP?
So the new business will contribute to around 45% and 55% will be from the regular business.
Thank you, sir.
[indiscernible] the new leases started going up. So year-on-year basis, we will see [indiscernible].
Got it, sir. That's very helpful. And in terms of export performance or overseas business performance ...
Sorry to interrupt. Raghunandhan there is a little of bananas from your line.
Is it better now? Hello.
Can you move to a different location, please.
Yes, I'll do that. SP1 So in terms of the export performance in the first half, the performance is broadly in line with the overall revenue performance.
Yes, it's in line. If you see we just highlighted...
[indiscernible] 21%.
Global numbers were around 21%, yes. But if you see because at this moment, a lot of OEMs have started consolidation center where they're pretty material from India and they are exporting outside to the other locations. So if I club those avenues also, I mean, those things also, it will jump to around 31%. Like, for example, Daimler, which we are exporting to U.S., it's going directly, but which we are exporting to Europe is going through the logistics center and Chennai. So if I club those [indiscernible] also my global is increasing, and this is increasing with the parts what we added, like Daimler, JLR, Taco for the Sweden market and so on. So these are some of the push, which is helping us to increase our contribution in global, which where we are aiming. Because we know if you see the trend of the market also being understood. The Indian automotive still is stagnant. We just noticed a growth of 1%. But if we see the global numbers, it was up by 5%, especially if we talk about regions like Europe, regions like North America, the volumes are picking up. So these regions we want to materialize. So these are some of the aspects where we are working with directions.
Got it, sir. And this 31% this year, approximately, how would the same number be last year?
Last year, it was 27%.
Got it, sir. That's good to hear. And in terms of share of EVs, how does that stand currently within the revenue and also within the order book?
[Technical Difficulty]
Participants, please stay connected. the line for the management dropped. Management, you may go ahead.
Apologies for the network issue. So I was talking about the intern context for the for the EV market. There, we noted a good jump in with Tata Motors, the volumes are picking up. Dana, which we highlighted and also the new part is going into our sales. So but still, if you talk about contribution, we touched 7% this quarter, which we compare with the last year quarter 2, it was around 3.5%. So we got a good jump in quarter 2.
And Raghu, the important thing that I would just would like to highlight for the -- when we are talking about the EV side. So like the last 1 year back, we have announced that we have got an EXL business from the JLR. So this is the most complicated part in the EV. So for that, in this quarter, we have already started the development and prototype castings already done. And we are so much -- we are happy to inform you that in the first shot, we have developed a very good costing and all members of JLR team, they were surprised how this has happened. So we have used the best technologies from the Europe designers, the tool [indiscernible]. So on whatever the best possible resources were there at the global level.
So those who are being used to do those parts. So such kind of new technologies we are bringing into Alicon group.
One is bringing, second is improving. So they were really amazed to see how the first initial samples quite came so impressive. So even on JLR there. And now they are getting more confidence and also these developments are being spread to other customers. across global and domestic customers. So we know very well these developments will further attract a lot of customers like we started in another round of discussions with some other customers, which may be in the coming quarters, we'd like to share with you. But yes, a promising development, which is now materialized and people are noticing. So that's a good sign for Alicon Group and for other team members.
Congratulations on this progress on XL. Just continuing the point which you said, given that this EXL housing actually reduces the weight, if you go for separate housing, the weight will be higher and this EXL was supposed to -- EXL housing would reduce the rate by 7 kilos, if I remember correctly. So if you can talk about opportunities with other customers?
So Raghu actually, at this moment, we cannot disclose the names. But I just tell you that all big global players, they are in discussion with us. And they are -- they themselves are [indiscernible] us for these parts. The final order or alloy in our hand, then only we can disclose the name.
Got it, sir. [indiscernible] all the best there. Sir, in terms of the -- in terms of the full year margin, so first half, if I look at it, adjusted EBITDA margin is about 12.8%. So if I take the adjusted margin, which is at 12.8%. How do you see the outlook for the full year?
So for the -- like the first year -- first half in rand. So second half also, we see some further improvement in the margins. So overall, I think -- because you see that adjusted -- there was a big cost is coming up, that is the [indiscernible] of the ESOP cost. So because that is going to be cost in this year and after next year, we will not be there. Even we removed this impact. So in quarter 2, we have seen approximately 30.3% EBITDA margin, if you remove the effect of the ESOP. So definitely for the second half, we are looking at at least the same level of much better than this. And like we have [indiscernible] in earlier earnings calls, so year on -- from this, the journey has already started for the improvement in the margins as well as change in the sales mix. So like the impact of the new businesses has started coming from the quarter 2. And we believe that on a quarter-on-quarter basis, you will see the improvement in the margins as well as the impact of the sales mix.
After taking this INR 14 crore full year impact of ESOP, how much ESOP cost is expected for next year?
very nominal amount. I think INR 2 crores or INR 3 crores, not much.
And what would be the -- my last question, what would be the total debt reduction target for the current year?
So you know that we are also having such CapEx. And for the new businesses, we will reverse the CapEx, but we are expecting at least like in first 6 months, there is a reduction [indiscernible], but around INR 5 crores. But for the full year basis, at least we are expecting between INR 25 crores to INR 35 crores reduction on full year basis.
Next question is from the line of Yash Dalal from [indiscernible] Financial.
Yes. Firstly, congratulations on a good set of numbers and improved margins. And I have a couple of questions First to begin with, what is the fall in realization this quarter due to the raw material price fall? And correspondingly, the revenues have gone up, so there must be a very strong volume growth. So if you could just guide us on the same?
So like spend for the half year. So maybe, overall, we don't see any improvement in the numbers because there is definitely -- you understand that impact of [indiscernible] prices. So it is impacting approximately 4% overall impact. So when we take for the full year, and convert it into that, so around 10% to 12%, we are talking about improvement in the number means revenue numbers as well as we take around 4% impact of the [indiscernible] prices. So approximately 15% to 16% growth in the numbers -- in the volume, we can say.
So that I think in our earlier calls, we discussed about forecast for the year of 2023, '24, so same thing we have expense, we are also expecting a growth of around 15%.
So these are the lines -- these are numbers are in line with that.
Okay. Okay. So also, sir, you mentioned about EBITDA margins, the ESOP adjustment is INR 13.3 crore for the quarter. Can this be sustained? And what are the factors contributing to it?
Are we on track for EBITDA of 15% by FY '26?
So that is, I think, [indiscernible] giving a what you're asking me to give me the [indiscernible] so that I think you are the good people as an investor, you can understand that it will work out. But definitely, we are focused on this and what we were talking about for the improvement in the margins. So that's [indiscernible] explaining to [indiscernible]. So this journey has started for improvement in the margins as well as the improvement in the top line based on the new order [indiscernible] in the sales base so where we are focused.
So we are coke on the track of on our strategy.
Okay. Okay. And so I just want to understand, recently approved you approved a new ESOP scheme. So what kind of cost would be incurred going forward for the same?
So actually, I tell you that about the new ESOP scheme, it is a small scheme, around 300,000 shares. We have taken the approval. But it is not to be granted because this we have kept for the future. because now we are growing bringing new technologies. So we have to hire some good technical people in the company or maybe some senior level people. So -- and we are having young generation in the company, so who are going to perform in the coming years. So for them, we are [indiscernible] shares. And still not granted, so grant will happen maybe in the next 6 months, but it would not be for the full quantity, maybe 25%, 30% of this.
And the surprising is also a maximum limited the discount of 25% against the market. So cost, I don't believe that there will be a big cost of this in the P&L.
Okay. Okay. Understood. And just last question was regarding the traction with new products, any scale-ups or developments?
Also, last time you mentioned the new fictional welding technology. Is there any kind of traction are you seeing there?
Thanks for the question. So for the friction steel building, as we mentioned, it is very, very robust process for new EV. And as we all are seeing that all the OEMs, Tier1s, they are investing heavily on the electrification, and we are also getting lots of inquiries from new Tier 1s on this [indiscernible]. So in the coming quarter, you will see lots of further order booking with the friction steel welding. And even we have got the further volume increase with the existing customer. So we are seeing a good traction with this.
And yes, the great important thing to understand in this FSW. So this is a patented technology. And we have -- because I will not disclose the name of some [indiscernible], but I had personal discussion with the big global players, and they were shocked to see that such kind of technology you are having. And they are so much interested to start the partnership with us for the government of their new parts with the FSW technology. And it is only for Alicon that how we move -- how fast we move in this technology as well as with the new opportunities that like for -- it is another vertical for Alicon for high-pressure digesting, as we see. Earlier we have discussed a lot of about this [indiscernible] process. So that [indiscernible] challenge for us. But now as -- now we have started as a contact menacing. Maybe in the coming period, we will go and install some capacities in-house for the production of high pressure. So that is another avenue for the growth and a lot of demand is there. So that's another opportunity we have opened up and FSW is the main supporter for this.
[Operator Instructions] Next question is from the line of Aditya Chira from Inked Asset Management.
Sir, my first question is on the revenue guidance for FY [ '26 ]. so my question is, what are the key macro assumptions that we are making when we are thinking about this revenue guidance, which you mentioned earlier in the call today?
That's my first question. And if any key risks you would like to highlight in potentially under achieving this target?
So here, basically, our drivers would be the shift what we are talking, reducing our dependence in [indiscernible] because we also know with the EV introduction and the other avenues available in the market, definitely, the volumes of ICE will come down into below or maybe the [indiscernible] segment. So basically, here, what we are going to do is we are going to enter, increase our portfolio in passenger and commercial. And also, we are increasing our portfolio into critical A-class parts, like, for example, cylinder heads. I belive cylinder head is being manufactured at OEMs in-house, for example, Maruti, Toyota, Honda cars as and so on. But at this moment, now OEMs are starting off loading this capacity, and they are coming to -- and they are associated with some technical experts who are manufacturing this A class part.
But they came -- like Toyota, they came to us. So the developments and the major trend in our additional cylinders is now supporting Alicon to communicate other existing or prospective customers of an avenue, which Alicon can support.
And so we have considered those avenues. Like, for example, Maruti we're doing cylinders in house. and now they are comfortable to offload. So you can imagine market leader Maruti, 40% to 45% of the share they're holding in India. And if they are being comfortable off loading the capacities to Alicon, so this talks about the trust, faith and the relationship that we have with these customers.
So these are some parts which we are [indiscernible], yes, which will support us as a sales driver for domestic market. And also for global, as I explained, the avenues, what we have done in the EV market, particularly like the EXL. So I believe you see, we know very well. I mean, our customers are keeping an eye on our developments. For example, [indiscernible] they're keeping an eye, they're dialing up, they're visiting out facilities, a they're interested to understand where we are on this facility. So that once it's proven, they will immediately go back to the management, and they can revert back with their opportunities. So we know very well.
These are some avenues and that's the reason we have listed down very clearly the customers, the products, the region, the opportunities and so on. So if you see on marketing side, regular visits to customer, regular travels overseas is being done, explaining the know-how, explaining the advanced development and explaining how we can support our customers. So it's the -- I mean, the actions will definitely fetch us to an incremental benefit going forward in a long run.
So [indiscernible] overall is some that's when we were talking about on what basis -- what are the assumptions on this. So main assumption is that whatever the new businesses we have introduced, we have got the orders. So that should happen. And because the [indiscernible] should happen there. And second is the delivery [indiscernible] of those parts. So those are the main things. But secondly, on the other side, because generally, we lay a very conservative numbers. So on the other side is that we have not -- these numbers are totally based on the orders we have received. So nothing is based on that -- any business, which is under discussion. So that is a part of safety we can say that will add up.
And second is, on the existing business, if you remove our -- the new businesses, new parts from the existing business, so in our planning, we have taken the decline that this business will go down especially on the 2-wheeler side. If that will perform even flat, so that will support us as a plan B, we can say, to deliver the numbers. So in this fashion, we have developed these plans. So hopefully, that we should be able to deliver these numbers what we are talking.
Got it. So fair inference would be how fast the EV is going to grow? And how much of the portfolio these OEMs will be willing to outsource to players like us, right?
Right.
Got it. Two bookkeeping questions. One, despite a marginal reduction in [indiscernible], there is a spike in -- margin spike in interest cost. So has that inched up for us?
What?
on the interest cost, it has risen marginally despite the margin reduction in debt. So the interest cost being higher for us recently?
No. In the future, we are expecting to go down because when this tax reduction will happen because now the improvement in the cash flow we have seen from the month of September because there was a little more utilization and CapEx are happening. So that's the main one CapEx are actually. So we have to invest. So -- and we have to grow. But on the other side, we are taking a lot of actions to control our interest cost, especially some on -- because you see that -- because [indiscernible] is also there. So some increase in the [indiscernible]. So we are finding more opportunity and renegotiate some terms with the customers. So definitely, in the coming quarters, we will see the reduction in the debt cost. So because we have identified the 2 major areas of the cost increase in this quarter [indiscernible] in the 6 months. One was on manpower cost as well as on the inter st cost.So management is fully focused how to control and reduce the costs. So on the manpower side, 1 part to already explained about the ESOP cost. Second is about a minimum wage increase given by the Maharastra government. So we are taking a lot of action to control this and to reduce it.
And the second is on the [indiscernible] side, to address how to renegotiate sometimes with the customers as well as focus on how to reduce our debt.
Got it. So the average cost of debt is 12% a fair assumption for us in line with what...
Between 10% to 10.5% because our interest cost, you are taking based on the [indiscernible] but it depends on the -- on day-to-day utilization.
Got it. My last question is on the, how much is the machining work in-house versus outsourced?
For this year, we're expecting machine would be around 65% to 67%. And this will jump to around 70% to 75% by -- 70-30.
[indiscernible] is the approximately 70% and now to 30%.
Got it. And for the growth here and I think a fair influence is that we'll have to do more outsourcing over the next 2 to 3 years, right?
Yes, yes.
Got it.
Also adding a in our city as well as because the 100% we should not do in-house. So we have that balancing between the out source.
As there are no further questions, I will now hand the conference over to the management of closing comments.
So thank you. I hope we have been able to answer all your questions [indiscernible]. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CBR India. I would take this important to wish all of you a very happy Diwali and a [indiscernible] New Year. Thank you once again for taking the time to join us on this call, and we look forward to interacting next quarter. Thank you very much.
Thank you very much. On behalf of Alicon Castalloy Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.