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's Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Mayank Vaswani. Thank you, and over to you.
Thank you, Yashashri. Good morning, everyone, and thank you for joining us on Alicon Castalloy Limited's Q4 FY '24 Earnings Conference Call. We have with us on the call today Mr. Vimal Gupta, Group CFO; and Mr. Rajiv Gupta, Head of Domestic Business of Alicon Castalloy Limited. Mr. Vimal Gupta will cover the operating highlights and financial performance for the quarter, following which Mr. Rajiv Gupta will provide insights on the domestic business as well as developments in the global markets. Thereafter, we shall open the call for the Q&A session.
Before we begin, I would like to point out that some of the statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings documents that have been shared with all of you earlier. I would now like to hand over the call to Mr. Vimal Gupta for his opening remarks. Over to you, sir.
Good morning to all our investors. Thank you for taking the time out to join our earnings call on a Saturday. I trust that all of you have had a chance to review our earnings documents, which was shared earlier. We are delighted to report the highest ever quarterly revenue for Alicon in quarter 4. Firstly, with revenues of INR 421 crores in quarter 4, we have surpassed a milestone of INR 400 crores in quarterly revenues for the second successive quarter. This has been driven by efforts to develop capabilities for some new technology platforms in the auto industry, expansion into new geographies, renewed focus on value engineering, and capability augmentation, and has been supported by positive trends in our established business lines.
In prior earnings calls, we have conveyed to investors to closely track the following key themes that underscore Alicon's business transformation for insights into our progress and evolving business model. We continue to increase the share of passenger vehicle (PV) and commercial vehicle (CV) in our product mix. This has reached to 52% of sales in FY '24 compared to 49% in FY '23.
Secondly, our customer profile is evolving with the addition of prestigious global names, including leading global OEMs and Tier 1 companies, highlighting Alicon's growth stature in the industry. Thirdly, our business composition is shifting towards expertising design, research and development, and value engineering.
Alicon now distinguishes itself by winning business based on innovation, technology and design, positioning us as a solution provider rather than just a source of low cost component. As we continue to adapt and innovate, these themes serve as a key indicator for investors to assess our ongoing transformation and strategic direction.
Now turning to the financial performance for quarter 4 of financial year '24. Total income reached to INR 421 crores, that is a 31% increase compared to INR 321 crores in quarter 4 of FY '23. When compared with total income of INR 406 crores in quarter 3, this indicates sequential quarter growth of 4%. Revenue growth has been driven by scaling up of production for new parts and new logos added recently, including many critical parts being supplied to marquee customers.
The gross margin for the quarter was 54.1% in quarter 4 financial year '24 compared to 51.6% in quarter 4 '23, higher by 250 basis points on a year-on-year basis. This is primarily due to the improving product mix and supported by positive impact from the stabilizing of alloy prices at lower levels.
There has been a sharp rise in employee cost, which are higher in quarter 4 by 33% on a year-on-year basis. About 1/3 of this increase is due to the increment, increase in minimum wage, and the new hires in line with operational growth and incremental production. The larger part of the increase is due to the impact of the ESOP cost of around INR 3.6 crores for the quarter and INR 14.4 crores for the full year period, which is a non-cash charge.
Shifting our focus on profitability. EBITDA for the quarter 4 was INR 59 crores, an increase of 78% from INR 33 crores in the same quarter of the last year. The EBITDA margin for the quarter 4 FY '24 has improved to 14% in comparison to 10.3% in quarter 4 of FY '23.
After absorbing the sharp rise in employee cost and increasing other expenses, I'm pleased to share that we have reported an improvement in the EBITDA margin by 370 basis points on a year-on-year basis, and by nearly 100 basis points on quarter-on-quarter basis. Finance cost was higher by 27% on a year-on-year basis from INR 8.6 crores to INR 10.8 crores, in line with the increased borrowings and higher interest rates.
We also witnessed an increase in the depreciation, which was higher by 25% on a year-on-year basis from INR 16.7 crores in quarter 4 last year to INR 20.9 crores in quarter 4 of FY '24.
The increase in depreciation has been driven by addition of new assets as well as leasing some machines, which have been adjusted over a period of maximum useful life of 5 years as per prevailing accounting standards. Thirdly, we reevaluated and shortened the useful life of some other assets, which has also contributed to increase in the depreciation.
Despite higher finance cost and depreciation, PBT has increased by 2.5x from INR 8 crores in quarter 4 last year to INR 27.4 crores in quarter 4 of FY '24. Profit after tax for quarter 4 FY '24 was INR 20.5 crores as compared to INR 9.7 crores in quarter 4 of FY '23, higher by 112% on year-on-year basis. On a sequential quarter, profit after tax was higher by 23% from INR 16.7 crores to INR 20.5 crores.
For the financial year '23-'24, total income was INR 1,563 crores as against INR 1,405 crores in the corresponding period last year, growing by 11% year-on-year basis. The gross margin for the full year was 51.5% as compared to 49.2% in FY '23. EBITDA for the financial year 2024 stood at INR 199 crores against INR 157 crores in FY '23, higher by 27% year-on-year basis.
Some of you would recall our prior earnings calls. We had indicated that we will increase the EBITDA margin by 100 basis points in FY '24. I am pleased to share that we have improved the full year EBITDA margin by over 150 basis points to 12.7% in FY '24 from 11.2% in FY '23 based on our reported numbers.
We continue to remain confident about the upward direction in margins given the improving product mix. There was a sharp increase in the PBT, which increased by 31% year-on-year basis from INR 62 crores in FY '23 to INR 81 crores in FY '24. Due to the tax adjustment in the prior period caused by the shift from the old tax regime to the new tax regime, the increase in profit after tax for the financial year '24 was 19% year-on-year basis, as it is increased to INR 61 crores against INR 51 crores in the last year.
In terms of CapEx, we have spent around INR 30 crores during the quarter 4 and the aggregate of INR 114 crores during the financial year. This is largely due to machinery for production as well as the investment into new product development and for our maintenance capacity. Given the heightened level of activity at present, this is slightly ahead of our target CapEx deployment of around INR 90 crores integrated in the start of FY '24.
Coming to the outlook. Looking ahead, we envisage revenue growth of around 15% in FY '24-'25, which results into total income moving from INR 1,560 crores in FY '24 to around INR 1,800 crores in FY '25. This is predicated on the healthy pipeline of SOP from the new product and the new customers. Further deferment of volumes during FY '24 will now contribute to the revenues in FY '25.
Thereafter, we are poised to take the business to newer heights as we aim to deliver a revenue of over INR 2,200 crores by '25-'26. This equates to a CAGR of over 15% over a period of 3 years. Our confidence stems from the new orders which we have received and discussions with the customers on new technologies and solutions.
We believe we have a strong runway for growth, as passenger vehicle penetration in India is still very low at 32 units per 1,000 people, whereas China has reached a level of 223 units per 1,000 people or 7x of India. Countries like Germany, Japan and U.S. are at penetration level that is 20x better than that of India. Thus India will remain a strong growth market for a while and other countries will offer opportunities that are a combination of growth and replacement.
In addition to the above growth of the vehicle market in India, it is estimated that by 2030-'31, the split of passenger vehicles will be 60% of ICE, 25% hybrid, and 15% battery electric. This indicates that the ICE remains relevant and will continue to grow. Hybrid also provides compelling opportunities, as does the EV or carbon neutral opportunity. Alicon is in a sweet spot as it is well positioned with high content for vehicle in all 3 technology verticals.
Even as indications remain that core level growth will be substantial, we are also excited by the opportunity ahead for commercial vehicles given the projected spend on infrastructure and the trends in organization.
To give you a glimpse of how we are already capitalizing on these opportunities, I would love to share that we are witnessing a significant traction in EV volumes and are engaged in crucial projects to boost our production capabilities. For example, the eAxle prototype we developed for JLR, we will enter mass production this quarter from our plant in India.
This product has enhanced our technological capabilities and enriched our [indiscernible] in offering incremental production. The market is also shifting towards hybrid technology and I'm pleased to report that we are leading this transition. Our cylinder heads for Toyota are designed specifically for their hybrid models, reflecting our advanced position in this technology.
As hybrid technology gains broader acceptance, we anticipate further volume increase. OEMs like Maruti are also embracing this trend. Our strategic focus on future-ready technology and innovation has positioned us ahead of the crowd in EV space, and we are now applying the same approach to hybrids. Additionally, our concentration on critical components, particularly in the EV sector has allowed us to secure significant contracts, setting us apart from competitors in this segment.
We also anticipate further traction from global customers such as Dana, MAHLE and Danfoss, even as domestic 2-wheeler customers are showing initial sign of revival in demand. In addition to the growth from the increased volume, and therefore, revenue, we also expect to deliver an improved margin profile. We have already mentioned our aspiration to take the EBITDA margin to around 14%. This we have already delivered in quarter 4 of financial year '24 itself.
Lastly, we are looking to drive efficiencies across our balance sheet and in working capital, which will contribute towards enhanced return basis too. On that thought, I would now like to hand over to Mr. Rajiv Gupta, who will talk about development in the domestic business and share highlights for the global business.
Thank you, Vimal ji. Greetings to all of you. In quarter 4 FY '24, auto dispatches for the domestic industry showed an improved performance, especially the 2-wheeler segment, which witnessed healthy double-digit Y-o-Y growth. This includes 10% growth in the passenger vehicle segment in quarter 4 on year-on-year basis, 26% growth in the 2-wheeler segment on a year-on-year basis, and 1% degrowth in the commercial vehicle on year-on-year basis.
Within the passenger vehicle segment, there is clearly dominance of UVs with both customer interest and market shares steadily rising. Importantly, we are witnessing a trend by customers, who were on the fence with regard to purchasing of EV, now consecutively shifting to hybrid or ICE vehicles. This is starting to positively impact demand for additional products.
In quarter 4 FY '24, the retail volume of commercial vehicles saw a marginal decline. We believe this is largely due to a shift towards higher tonnage trucks, resulting in increased payload capacity, but impacting the volume of LCV and MCVs. Further, 2-wheeler trend to witness a pickup in volumes ahead of the election given the on-ground activities required to be undertaken across the country. The outlook for 2-wheelers is expected to be positive in FY '25 too, as traction is shifting from EVs to ICE products.
Coming to some of the key business programs this quarter, for Maruti as indicated in the prior quarter, we witnessed ramp-up in the volumes during the quarter, as one of the cylinder heads we supply moved into start of production. Further, cylinder head for another model completed a validation stage and is then set to go in SOP in quarter 1. The volume for both cylinder heads combined will provide significant volume increase in FY '25 from Maruti Suzuki. Further, we will also be supplying to their Gujarat plant next year.
With respect to the supply of cylinder heads to Stellantis, which commenced in quarter 3, it has now moved into mass production in quarter 4. As we had indicated, these will be for domestic market and will also be assembled and exported to Europe. Stellantis is seeking to create an engine manufacturing hub in Hosur in India, and Alicon is a single-source supplier of the cylinder heads for those engines. As anticipated, volumes have shown an initial pick-up in quarter 4, and we are set for a complete ramp-up in FY '25.
The outlook for 2-wheeler volumes is also increasing, and with the election expenditure, combined with outlook for a normal monsoon indicates that the ruler demand may sustain. In that light, we anticipate that our key 2-wheeler customers will increase their requirements.
While we have indicated a focus on 4W business and higher value add products, we remain steadfast in enhancing volumes in the 2-wheeler in order to split our assets and operate our installed capacities at optimum levels. We also see some revival in momentum of the non-auto with the increasing spend of the government infrastructure and defense and the renewed vigor of Make in India campaign.
As you may be aware, over the last several years, we have been supplying aluminum wheels to enable light weighting of the battle tanks. With a healthy level of demand witnessed for our products catering to the defense sector, we have added 2 parts for the wheels to be supplied over next 3 years. These pertain to regular size tanks as well as for the larger tanks, as we have indicated in last quarters.
In the global business, we have shared that the prototype of eAxle Jaguar Land Rover was approved and supplies were ramped up in quarter 4, which has contributed to the upward momentum during the quarter. The production of the battery housing of Jaguar Land Rover is also progressing well, and the production at the Illichmann facility was at the peak volume during the quarter.
For Daimler, we have a significant long-term package under development, which was added in quarter 3, for which we expect approvals in quarter 1 and quarter 2 of this year. Supplies are set to commence from 2026, continuing until 2035. Thereafter, we have added further orders in quarter 4 FY '24, comprising of 6 parts from Daimler.
With these developments, the global business contribution to 28% of the total revenue during the quarter 4, which is significant improvement compared to 21% of quarter 4 last year. For the full year, global business was 25% during FY '24, compared to 22% in the prior financial year.
The share of international business is set to improve further, as during the quarter 4, we added 12 new parts from 4 existing customers in the quarter. This includes 2 parts from the carbon neutral or EV, 2 parts from the non-auto, and 8 parts from the ICE. Of these 12 parts added, 2 parts pertain to the domestic business and 10 parts for the global business.
The new business added is in line to our strategy of a higher value add, as 94% of the business added in quarter 4 pertains to 4 wheelers. On a geographical basis, 94% of the new business added during the quarter is for the global market.
For the full year, we have added 50 new parts from 17 customers, thereto in keeping with our strategy, as 95% of the business added for the full year '24 pertains to 4 wheelers. On the geographical basis, 85% of the new business added during the full year is for the global markets.
Globally, prominent customers such as Dana, Danfoss, Taco, and MAHLE are set to scale up the volumes. Further, we have noticed an increase in number of inquiries from global customers, and we see buyers from U.S., Europe, indicating interest to source larger quantities of products from Alicon.
There is a clear shift in the minds of global customers and we see increasing recognition of Alicon as a partner and customer of choice for critical parts in their upcoming projects. Our recent successes with one of the global OEM, where we were able to produce a key part for them with a unique solution in a reliable and cost-effective manner, enabling them to avoid large investments required under the traditional approach.
This solution will aid them in enhancing the performance of the vehicle. These successes enable creation of the partnership beyond that of simple supplier relationship, which creates opportunities to participate in the future projects.
In terms of operating landscape, we see normalcy returning in Europe, electricity and gas prices are stable, and probability has also improved. In terms of raw material, aluminum prices have been less volatile than in past. During the quarter 4 '24, Alicon has booked new orders aggregating INR 150 crores. With this, our total new order booking has touched to INR 9,150 crores, which is executable over a period of 6 years from 2023-'24 up to '28-'29.
On this note, we can open the floor for questions.
[Operator Instructions] We'll take our first question from the line of Raghunandhan N. L. from Nuvama Institutional Equities.
Congratulations to the team for a wonderful set of numbers. Vimal ji, Rajiv ji, congratulations. Firstly, to Rajiv sir, if you can share the segmental mix for FY '24, 2-wheeler, PV, CV?
Yes. So coming to '24, for the full year for last year, the total sales, if we talk about contribution -- yes, so 2-wheelers was 40% of the total pie, passenger vehicles were 33%, commercial were 19%, and non-auto were 6%.
Got it, sir. And sir, when you look at exports, roughly, would CV, PV be 50-50 in exports? What could be the broad mix?
Somewhere same figures, but we'll review and get back to you on this.
And what would be the EV share, sir, in FY '24?
EV was 12%.
Wonderful. And in terms of the revenue outlook, if I heard it correctly, INR 1,850 crores for FY '25 and INR 2,200 crores for FY '26. Would that be right, sir?
For '25, it is INR 1,800 crores.
Okay. And the new orders to be executed as highlighted, so Maruti, JLR, Toyota, PSA, Dana, MAHLE. These would be the main OEMs, sir, driving the new order execution?
Then Danfoss.
Danfoss as well. And ESOP sir for FY...
And then the growth of the 2-wheeler also that is going to support.
Got it. In 2-wheeler, any major OEM, sir, from whom order inflows have been strong?
So mainly, the drivers -- you'll see that this Honda Motorcycle, so they are doing very well, and you must have seen that they have surpassed the number of Hero. So yes, we are the almost single source. Approximately, we are supplying 88% to 90%. Our share of business is there.
So there, it will grow. And Hero is also growing, maybe in the pie not, but the overall numbers are growing. So they are approaching and we are seeing the good inflow of the orders. I mean, the order book is increasing. On month-on-month basis, there is increase in the volume from Hero also.
And particularly from Honda, the content for vehicle is larger than other OEMs. And that's a good sign where the Honda volumes are increasing. This year also, they are talking about more than a double-digit growth. So that's a positive sign where we are working to materialize in this financial year.
And would this also include the new EV of Honda, because there again, content will increase for you?
In this financial, there's only marginal numbers at the last quarter. But as mentioned, we don't intend to enter in that segment as the opportunity with the 2-wheelers is very less, which I've explained in previous calls. The content for vehicle for aluminum in a 2-wheeler is less and there we have mentioned that we would like to shift to passenger and commercial.
Got it, sir. And sir, for ESOPs, it was INR 14.4 crores in FY '24. What is the expectation for FY '25?
It is around INR 4 crores.
Got it. And given that for margin outlook, if I take for FY '25, there is some increase in freight cost because of Red Sea issues. There is some aluminum price increase. Would you expect all this to be passed through, and we should be able to, say, sustain 14% or increase from here?
Yes. These are the things, like the freight rate is always a pass through cost. So maybe like we have seen for '23-'24, our overall full year margin is around 12.7%. So that I was explaining, because now our target is to reach 14%. Actually, we were targeting to reach -- cross 14% by '25-'26. But now we are expecting that maybe in this year, full year, we will hit this 14%.
That's wonderful to hear, sir. And CapEx, what would be the expectation for FY '25? And what would be the areas of spend?
Mainly that now this year, we will have a bigger CapEx. So approximately, at this moment, the estimation is around INR 150 crores. So the main reason is that now we have to build up the capacities for the new orders, especially for the eAxle. The major part will go to the JLR eAxle capacity building up. Because only the common machines are very less.
So these are the bigger parts, bigger machines. Then their quality requirements, their processes. And then we have to build up the capacity for the PSA. Almost robotic lines we have to put. These are mainly for the new projects. As well as then maintenance CapEx is there. Then we are more focused -- because if you have seen our P&L, I have also explained the manpower cost.
Because major hit is coming especially in the Maharashtra on the minimum wage side. So there is a huge increase that we have seen in the last year also. Again, we have seen some increase in this year, already started. So the focus is coming too for the automation. So now some part of the CapEx we have kept for the automation of the processes to control our -- to bring the cost of this manpower under control.
Understood, sir. And what would be our capacity in tonnage terms, sir?
Capacity utilization you're talking about or the total capacity?
Utilization is around 70%, as you mentioned in the presentation. But would it be right to look at capacity in tonnage terms or that would not be meaningful?
Around 50,000 plus, we can say that in capacity terms.
Got it, sir. And last question to Rajiv sir. Rajiv sir, would you have the machining mix for FY '24?
Yes. So machining...
FY '23-'24, sir.
61%.
61%. And this should only increase, right, going ahead?
Yes, [indiscernible]. Because the [indiscernible], only we are doing the 2-wheeler cylinder at. All other products, maybe some parts for the 4-wheeler cylinder we are doing half machining. But whatever the business we are adding, that is fully machine parts.
We'll take our next question from the line of Jyoti Singh from Arihant Capital Markets.
Vimal sir and Rajiv sir, congratulations on the good set of numbers, and also executing orders in a decent way. So just wanted an update on the order book side. What are targets going ahead? How we are targeting to execute till '29? And also, how big is the opportunity in Maruti? Only we are supplying cylinder head or any other part also, if you can update?
So till the time Rajiv gives the explanation about the order book. So for the Maruti, first, we have started the cylinder heads, right? And that is a very big opportunity, I'd say, because at this moment, this is only a start. So one model we are supplying to them. And second is almost now we have got the validation. So that will be a ramp-up we will see in this year.
And new model they are coming up. So maybe I think they are developing for the hybrid. So that is going to be really what we see that major breakthrough for the Maruti. So they will announce shortly. So there also hopefully we will have that cylinder head, which is Alicon. So that is a big opportunity on this side.
For other parts, maximum parts, they are doing the high pressure. Some parts, they have approached us. So we are in assessment that what parts we can do, like already we are doing from engine mounting brackets and maybe some manifolds or some other parts, structural parts, they have approached us.
So at this moment, we are assessing that how we have to deal with this. Maybe in the next quarter, we will come out with what finally we are going to do with them. And now Rajiv is going to explain about the order book.
Yes. Further, to add on Maruti, we see a good opportunity with the hybrid acceptance by the customers. Like you are aware that we are supplying and we are single source for the Toyota 2 models, 1.7 and 2 liters. So this same platform will go to the Maruti Grand Vitara and Invicto. So there we see a good volume generation. And together, they are working on a lot of hybrid models. So we see an incremental volumes for the existing volumes going forward. So that is, again, a good addition for Alicon.
Now talking about order booking, yes, it is going quite well. And last year also, we have achieved sales of around 97%, 98% of what we have planned. So roughly around INR 770 crores in order bookings what we have planned. And this year, we are aiming to a sale of around INR 1,200 crores from the new business.
The momentum is going good, as I've stated in the past also, like whatever additions we have done till date. So around 83% of business is from the 4 wheelers and around 56% is from the global customers. And in the total chart, around 22% is also from the non-auto. And even if I split the hybrid, that's more than 8% in hybrid on the order booking what we have generated.
So this means we are touching all the avenues, so that we can take leverage of all the segments going forward. And the order bookings, we have now a clear booking of around INR 9,150 crores from '23-'24 to next 6 years till '28-'29. So there also we're strong on execution and utilizing the orders what we have and converting to sale.
We'll take the next question from the line of Yash Dalal from Sushil Financial Services.
Firstly, congratulations to the management for reporting your highest ever quarterly revenues for second successive quarter. My first question is, what is the volume growth in Q4, because revenues have slightly increased this quarter, where EBITDA margins have risen to 14% from 13% last quarter if we don't account for ESOPs and onetime expenses. So what is the fall in realization this quarter due to raw material price fall?
So raw material prices, actually, the improvement in the margins is due to that I explained 2 reasons. One is the change in the sales mix and another is the settlement of the alloy prices, because in quarter 4, those were on the lower side. So that is the reason we can see the improvement in the margins. So major driver is the sales mix, what we say. And we have started some new parts, like JLR prototype we have started. So those supplies were there.
Okay. Okay. So also, you mentioned that INR 1,200 crores for FY '25 is coming from the new business. So the old will come down to INR 600 crores. Is this mainly because we've dropped the noise parts?
Ideally, all the products have a life cycle, depending upon how the model is accepted by the industry or by the consumers. But yes, some is end of SOP, some is the customers are booking every type with new technologies, upgrading their models, so that also is contributing. And second is, yes, with the direction where we shifted our focus and leverage to passenger and commercial.
Okay. Just a couple of more questions. So also, there is an INR 8 crore written-off. What exactly is that? And is it onetime?
So these are some old receivables. So maybe we already provided earlier, but only written off in this part, because we are running a big business of maybe now we are talking about INR 1,800 crores sales. So it is not going to happen that only there will be 0 write-offs. Maybe some small amounts will continue, but it is a business, so I cannot commit it will be 0, but I cannot say that it will be INR 8 crores. It can be INR 2 crores, INR 3 crores. So it is a part of the business.
Okay. And just the last question. What about your technology of friction stir welding. By when should we start seeing the benefits of this new technology?
This will happen in the quarter 3 of this year. So ideally, yes, we are a little aggressive. Even our customers are aggressive with this model, but some changes in the model they have executed. So with that, we are expecting this to defer by a quarter. But yes, we will start supplying some samples in quarter 3 and thereafter ramp up in the next year.
We'll take our next question from the line of Aditya Chheda from InCred Asset Management.
Congratulations on great numbers. My first question is on the subsidiary business. We've seen a significant improvement. If you can talk about how the business has been in subsidiary business? And how do you see that moving forward as we have a healthy growth rate? If you can share some outlook on the subsidiary business? That's my first question.
So for the subsidiary business, maybe in this year, we have seen a good growth. And maybe in the current year also, '24-'25, definitely, we will have good numbers. But there are 2 reasons for this growth. One is that, okay, for their existing business, so that is growing, because especially like battery housing for Samsung that go to JLR, or some volumes on the 2-wheeler like KTM and BMW. So all these volumes have gone up.
On the other side, the development of our JLR product is also happening in Europe, so in Illichmann. So that piece has also booked in '23-'24, and maybe because this year also we have supplies of the prototype casting to JLR customer. So this year also, we see the good numbers for our company, Illichmann, in Europe.
But the coming years, so we should not expect a big growth, because we just want to use that place for our development center, as an engineering center. Because like for this product, we have hired technical people from Germany or designers, tooling, all these things.
So we are more focused how to use that technology from the European suppliers, those engineers available from Germany or some other countries. So that is the base. So when we talk about the numbers to converting the numbers, so don't think there will be a big jump in the coming years in Europe. Because definitely this business will shift to India. And the mass production will happen in Alicon India.
So basically, the intention is finding new technologies in the market. They hit first Europe, U.S.A., China, and we see a lag; after 2, 3 years, it comes to India. So the idea is to be early in that market. So we use Illichmann model that way. And that also supports to our customers and we are very close when I talk about global regions.
And second is, we see there are a lot of development experts, good technologies across Europe. So it's easy for us to get those know-how. So a lot of learning we have added with this development, and yes, we have noticed, we have got a benefit of sales in quarter 3 -- I mean, in quarter 4, and we will definitely add in quarter 1.
But going forward, our intention is, any large volume or mass production better keep in India, so that even the customer gets the benefit of the cost.
My next question is on the machining capability. How much are we outsourcing as of today? And whether incremental volumes would require more outsourcing, and whether that impacts the margin overall? If you can comment something on the machining capacity outsourcing?
For the machining, approximately 60% is in-house and 40% we have outsourced. And now we are building more in-house the capacities, because some customers, those are coming with the new parts. So they look for the in-house machining. So generally, due to their quality requirements and the control on the product. So in-house capacity building will be more in the coming years. So that is the one of the reason for increasing our CapEx in this year.
Right. So we are expecting this mix to remain at 60-40, or because we see a very high growth in the...
I think the in-house will increase, but we will try to -- because whatever we are doing in-house if something we can outsource, because we need the consent from the customers also. We need to derisk the capacities. Otherwise, maybe some volumes are down. So our all in-house capacity utilization will go down.
We'll take our next question from the line of Chirag from White Pine.
Just 1 question. Your gross margins even sequentially have seen a significant jump and single largest reason of EBITDA margin expansion. So if you can just elaborate a bit more on this, it would be helpful. Because suddenly what happened in Q4 that the value added happened. So is it a normalized gross margin for -- this should be the base for '25? Or how should we look at it?
Generally, gross margins are driven by many variables. First is the sales mix, how it is moving, that which parts. Then the processes on this product, like machine parts or raw casting. Second and the important factor is the aluminum prices also. Like what we are seeing that upward trend in the aluminum prices. Maybe in the last 2, 3 months, we have seen 8% to 10% increase in the prices.
So then it definitely will increase the material cost percentage to sales. And on the other side, we see that there is an increase in the volume of the raw casting, especially the 2-wheelers, because we are seeing a good jump in this year of '24-'25 in the 2-wheeler also. So that is also going to drive our gross margins.
But what you are saying that this year it is good, where we have seen very, say, improvement in the gross margins. But maybe I think that will establish between 48% to 50% -- means, margins between 52% to 50%, that range, that we'll move.
Okay. You are saying on annualized basis, it will be in the range of 50% to 52%?
Yes, yes.
But sir, what happened in Q4 specifically? Because Y-o-Y, I understand. Even Q-on-Q, there is a sharp jump in gross margin.
As I explained that the sales mix. So some big volumes we have supplied where our gross margins are higher, that we have supplied to the customers. And another is that I'm saying that in this quarter, aluminum prices were at the low end.
Okay. Or is this the impact of any year-end negotiation or conclusion with respect to your pass-throughs from OEMs? Because generally, we have seen your Q4 margins tend to be significantly better, gross margin. So is there any -- whatever hike you are expecting from your OEMs that settled in Q4, and hence this is a general phenomenon?
No, no. Very small impact, because it is there, but not so big. Because generally, for the aluminum, what we have seen that 60% aluminum bike is already settled by the customers. So they finalize the price with the suppliers, they allocate the suppliers. And the settlements are on month-on-month basis. And for other customers also, they do on quarter-on-quarter basis.
So this happens, what you are saying, that when the settlements are on a yearly basis or they delayed the quarterly basis. Maybe it is set on quarterly basis, but they have delayed for 2 or 3 quarters. So that is what happens. But generally, I have not seen such kind of impact.
Okay. And sir, 1 last question. You indicated that you are putting it to use INR 150 crores CapEx this time to add new machining capacities for different type of products. In the order book that you have today, and future order book that you're anticipating, would you be needing any similar huge CapExs given that different type of products would come in, or this is now for next 2, 3 years, it will be again normalized CapEx?
No, this year is the biggest CapEx we are going to have, because we have to build up the infrastructure. You know that when we are going for the high volume for this JLR piece and PSA. So one is that only increasing the machines, the capacities, and another is the complete installation of the infrastructure, the technology.
So this year, we are doing this like when eAxle or for PSA, infrastructure installation is there, but after that when volume will grow, so we have to just add the machines, discussing the capacities, or maybe just increase our -- because in this -- like take example, for a year, they talk about 100,000 pieces.
So I cannot put up the capacity for each process of 100,000. Maybe one capacity I have to put maybe 200,000, because it's not possible to do, too big there. So in turn when we increase the capacity from 100,000 to 150,000 or 200,000, so I have not to put the complete infrastructure. So only just balancing -- so I have to balance the capacity for each process.
We'll take our next question from the line of Anirudh Shetty from Solidarity Investment Managers.
I had 3 questions. So my first question is, we are seeing a lot of traction in the global markets, and we're growing at a pace much faster than the end industry. So just wanted a sense of which are the large competitors that we have or the large -- who are the biggest competitors in the aluminum casting business, which currently is really dominating this industry?
And if you can talk about some of the plus 1 tailwinds that we're seeing, whether it's from China or from Europe or more outsourcing. Just wanted to understand what is driving this strong traction that we are seeing?
Okay, talking about the global competition, there are competitors, but those are segment-wise. Like there are specific firms who are into 4 wheeler cylinder head manufacturing, like Jai Hind is there, [indiscernible] is there, then [indiscernible] is there. So many more are there in that segment.
But with Alicon, what is -- I mean, what is one of the USPs with Alicon is we have a variety of parts and that differentiates us with other competition, where today OEMs are working into multiple technologies, be it ICE, hybrid, or be it EV, or look for a structural part. So they are also aiming to reduce the supplier base, yes, because that's the cost. Hunting a supplier is a cost for them.
So that's the reason for long term they are looking for partners who can give solutions into various verticals. And also, they see the strength of that supplier. How much is the capacity, how much is their experience in this industry, how early they are with technologies, and how much is their presence globally. So these are, again, plus factors which support us.
Yes, we also noticed some customers are shifting from China and they are opting to India. Even recently, we're noticing customers are shifting from Ireland to India. So that also is a new thing which we are noticing. So we are ready for that. And for customers also to approach is very easy, because you have seen our customer base, lot of customers that we have.
We have already delivered a few parts in the past. For them also to add or to interact is very easy. So we are ready for that, and we are looking to materialize the opportunities which we are getting recently.
So it is mainly that like Alicon is the largest foundry in India, as an independent foundry, because all other major foundries, those are in the umbrella of the OEMs. And also the observation like Rajiv has shared that we are seeing recently that the sourcing of casting, aluminum casting is shifting from China, from Europe, from U.S. to India. And this [indiscernible] with what we are seeing that Alicon first.
And we are not so big company as per the requirement globally. So that is a big opportunity what we are seeing opening up for Alicon in the coming future. As well as when we are talking about what you have asked about the competition. So in India, so as the independent foundry, we are the largest one. So competition is less, because all others are under the umbrella of OEMs, and they're supplying to their parent companies.
And at a global level, our share is very less. So there is no meaning at this moment saying it's a competition. And when we become a large company and then a big supplier at global level, then the question of the competition comes. So whatever we are getting the businesses, and the OEMs that they are shifting the sourcing, so these are the big, big opportunities what we are seeing here.
Got it. And just a follow-up question on this. Right now, globally, there's cost pressures that were there. Everyone would want to work with good quality, but also a low-cost player. So when we benchmark ourselves to say a Chinese player or a player from the Europe, U.S., what is the cost difference for us versus them?
There is a cost difference. One is little [indiscernible] on the aluminum, as they are the largest producers of aluminum. Second is, yes, they also offering to large scale. But with Alicon, one is we are in this industry since long, and we work with customers since inception of the design.
So during the design, we see if we can reduce the rate of the part, so that we can pass on some benefit to our customers, that is 1 where we play. And also, as we are into multiple process, like we are into gravity and low pressure. So we evaluate, during design time, which process will give better results in terms of productivity or better results in terms of yields. With that, we submit the proposal and customer is accepting.
And third is, our partner Enkei Corporation is also having plants across 19 countries. And they're also in this industry since long with the same process. So continuously we get upgraded with the support. Even our team members frequently go to their location, they come down to our location, and continuously we're upgrading our operations, so that we support our customers.
So with that, even customers are now preferring us over Chinese since the combination, and more is about the volume game what we can support to our customers.
This is one part that -- one is that China maybe [indiscernible] that we are very much competitive against China, but because of some political reasons, we are shifting to India. On the other side, when we talk about the Europe and the U.S., so this is not only the cost side. The only cost benefit they are having in shifting to India. That is one-off effects of the cost.
But we are also seeing the challenges of the supply from their local suppliers, like the quality, the volumes, because the distinct suppliers, they are not ready to increase their capacities, maybe do the financials, whatever the challenges they are having.
So these are the main factors for shifting. But Alicon is able to supply the volumes, we are able to supply the quality, and we are able to maintain the stock and maintain the just-in-time supplies throughout their requirement. So these are the major benefits they are having when they look to buy from India as well as from the Alicon.
Got it. And just 1 final question is, we want to, over time, increase our return on capital employed to 20%. You've already explained your EBITDA margin trajectory. I just wanted to understand the balance sheet metrics a little better. How do you see the asset turns. At what asset turns and what net working capital days do we kind of hit this 20% mark?
So mainly that asset turn definitely now, because one is the existing capacities, because immediately for the existing, so we cannot change. Maybe some improvements in the productivity, that can happen. But for the new product, like we are explaining, where we have the high value, means the high weight of the casting, higher value addition. So that is giving a good asset turnover ratio in the coming business, whatever we are adding.
So this asset turnover gives a slow growth. It cannot jump from -- maybe I'm at 1.8 or 2, so suddenly next year I will see a 3. It's not going to happen. But slowly, it will improve year-on-year basis, we'll see that growth. Because when we are talking about the ROC. So ROC major driver is that how we are controlling.
One is definitely from this side, because controlling the investment. Second is more focus on this part of the margins. And the working capital, maybe you must have seen that year-on-year we are reducing our number of days working capital.
And hopefully, in this year also, you will see further improvement, because we are more focused how to reduce our inventories, and now because we are seeing the growth in the exports, so how to reduce our debtor days, receivable days. So definitely, this year we see a further improvement in the working capital cycle.
Is there any number that we have in mind in terms of target ratio that we want to target on the working capital?
So maybe 8 to 10 days, because I think we are near to about 7 to 8 days in the net. I'm not having the data correctly, but I've just the idea that based on we are distributing this. So maybe I think 7 to 8 days at least we are targeting further reduction in this year.
We'll take our next question from the line of Pritesh Chheda from Lucky Investments.
My question is with respect to this PV clients, which is Maruti, Kia, Toyota, Stellantis. What kind of incremental business is expected based on the schedule that you have for FY '25 and FY '26? And what was it in FY '24? Just for me to understand and collaborate with the 15% top line growth number that you have shared.
So yes, for this financial, that is '24-'25, we see an opportunity to grow with the passenger vehicle segment. So like PSA will give us...
You can give combined, it's okay. I don't want customer-wise. I want a combined number, if you have that, that's also okay.
So roughly around INR 180 crores to INR 200 crores we will get with Maruti, PSA, Toyota, and also global customers in the past what we added recently, like MAHLE and Taco.
Okay. This is incremental?
Yes, this is incremental. And...
And In FY '26?
FY '26, further to this, Jaguar will be added. Like this year also, Jaguar, the eAxle what we developed, and another part, a battery tray, [indiscernible]. That will go into sample submission and queue for validation, but major ramp-up will come in next year, and that would be adding around INR 150 crores addition to this.
And further, we are expecting another cylinder head from Maruti to add in ongoing ramp-up in next financial, followed by some additions with existing customers like Danfoss.
So you are saying INR 180 crores in FY '25 incremental, and then another incremental of INR 150 crores in FY '26. That's how it is, right?
So '25-'26, further to this will be a domestic customer PSA, which will go into ramp up at the peak.
So actually I said is that when you are going to mix up the reason with the '23-'24, so approximately, the incremental at this moment, because from the big numbers we know, because some existing capacity will also grow. So INR 200 crores, we are seeing that incremental from there. And approximately INR 500 crores to INR 550 crores in the '25-'26 from base of '23-'24.
So what is '23-'24 number for PV? INR 1,600 crores top line, how much is PV?
PV would be around 44%.
44%. So this number, incremental INR 500 crores will get added? Now I don't understand, sir, what you want to highlight actually.
Actually, we have also not understood...
Sir, you mentioned about a lot of these programs from different customers. So I wanted to know incrementally or, let's say, point to point. Now 44% of your business today is PV. So in INR 1,600 crores, 44% is [indiscernible], which is, let's say, closer to about INR 700 crores business. This INR 700 crores business will be added by another INR 500 crores over the next 2 years, by virtue of whatever price will be less?
Just a second. So I'll tell you. This year, our PV was 39% of the contribution and 2-wheeler was 32%. Next year, PV will grow to -- I mean, this year, '24-'25, PV will go to 44%. So a big jump will be seen with the additions of the parts like Maruti, PSA, Toyota, and even Jaguar we are talking. And thereafter, in '25-'26, PV will touch to 46%, another 2% will lag, with ramp-up of the Jaguar Land Rover and other customers.
So what we're talking about is 5% jump as a contribution from the PV. So that translates to approximately INR 100 crores. And in '26-'27, that jump is 7%, that translates into approximately INR 150 crores, INR 160 crores.
Okay. Okay. And sir, second question on the margin side. So when your mix changes, is it neutral to your margins? Is it incremental? Is it superior? How does it play out, both in gross margin and EBITDA?
No. That's the sales mix change, because mainly we are more focused to bring whatever the new businesses we are adding up. Those are mainly from the 4-wheeler side. So there definitely the margins are on the higher side. So that is happening. And that is the reason that is giving an improvement in the -- quarter-on-quarter we have seen that improvement in the margins.
Okay. And on your capacity utilization side, you mentioned that you're utilizing around 65%, right?
Around that, yes.
And what is the maximum that you use your assets? Is it 85%, is it...
If we do the maximum utilization, that can go up to 85% to 90%, because the 10% to 15% you have to keep for the volume fluctuation. But this will never happen, because this will move in this range between 70%, 75%, because in 1 quarter, maybe 1 customer goes down, another customer goes up. So it is not like that all are -- we are running on the same line. So we have different lines. So one line, utilization is more. When we are talking about 70s, maybe one line is having 90% utilization, maybe another line is having 60% utilization. So totally depends on the customers, how they are behaving.
So when you add your revenue from whatever growth rate that you have mentioned at about 15%, so basically, you will end up, in the next 3 years, adding another INR 700 crores, INR 800 crores of business. So with this INR 700 crores of incremental business, what is the CapEx that you will do?
INR 700 crores, the additional maybe approximately, I think, INR 250 crores to INR 300 crores, in that range we will go.
This will include both maintenance and growth CapEx?
Yes, yes.
We'll take our next question from the line of Rohit Suresh from Samatva Investments.
Sir, my first question is, so recently there was an interview by this New York Jaguar, and they're planning to scale down their EV volumes and focusing more on the hybrid part. So do you see any -- how will that impact our overall Jaguar orders, because if I'm not wrong, we're supplying eAxle as well as some battery housing to the EV partner. So what will be the impact? And are we also supplying any parts for their hybrid vehicles right now?
Yes, even we feel this traction coming up in EV vehicles, the pure EV, which they have launched. Not just Jaguar, but from other global and domestic customers, we're noticing this shift, and this is also a point which we are taking up with them aggressively, because these big parts are having huge investment in that for a reason.
First thing we got to support is to do investments phase-wise. Traditionally, investment was to be 100%, and then we need to make it ready. But for this scenario, they have understood and they also agree to do investment phase, right.
And second thing is, at Alicon, we can produce -- I mean, in 1 machine, we can produce a variety of parts, be ICE, be EV, or be a hybrid. So our machines are universal. So that derisking also we do, and we map very clearly. If the volumes are fluctuating, definitely we have ease to shift the capacity to other projects.
Sir, but the difference. So what my understanding is, for the EV part, we're doing eAxle, we are doing battery housing. These are critical components, right? So for the hybrid, apart from cylinder heads, are we doing anything else? Or is it purely cylinder heads right now?
Purely cylinder heads and other engine parts, and more is a structural part where we have opportunity. Like for Jaguar, it's a soft frame. Very critical part. Soft frame are very critical part of hybrid to support a big portion in the vehicle. So there also we supply a lot of -- for Jaguar all the models, we supply to soft frame. So there also, we see the opportunity to grow with this customer. But yes, hybrid also we see that we have good traction. And second is even customers know our strength in this area and they also are easing to leverage that opportunity.
Okay. Sir, on your order book, I had a couple of questions. So if I'm not wrong, of the INR 9,000 crores of order book, around 30% is in the EV segment, right? So how much of that will be -- if you could give me customers, so how much will be Jaguar and our top 2, 3 customers mix?
I need to just see customer wise. I don't have the data handy. I'll tell you the major one is Jaguar, yes. That would be comprising to around 10% to 15%. Then it's Toyota, then it's PSA, then it's Maruti, big ones when we see among the list.
So what I suppose that see okay maybe you can get in touch with us directly, because so much granular information it is. At this moment, it is not available with us. So we can talk about that. You can either approach to CDR or directly to us.
Got it. Sir, then on the non-EV part, so what is our focus? I guess, so there are a lot of parts that we are doing, non-EV part. So what will be our key focus areas in the non-EV part? So will it be non-auto? Will it be structural parts? Some understanding on that?
Yes. On the non-EV, one is the A class part where we focus. One is the cylinder head, which is a good opportunity and -- 1 is cylinder head for domestic as well as the global market. Second is similar, which is going to the hybrid variant, cylinder heads. There are a lot of engine parts also we supply for the global market, where we get good volumes. So that is also an area where we focus. Then is the structural parts, which we have just mentioned in the last page.
And then is, for the commercial, we supply good chunk. Right now it's also around 20% of our sales from commercial. So major is from the global market, where we see good volumes. One is the engine. Second is also the radiators of a truck, which the requirement is of a cap tag, which is made in our process. So there also we have good volumes. There are ideally 4 players in this market making those cap tags, and we are associated with all 4 customers in that segment. So there also we see a good volume.
And second is, a big customer, Daimler, which you have noted in our previous calls also. So the new developments, we are participating actively with them. And the recent engine what they have just developed, which is from '26 to '35. So we got this opportunity to develop all major parts of the engine in aluminum with them. So that also we added recently.
Ladies and gentlemen, we will take that as the last question for today. I now hand the conference over to the management team for closing comments. Over to you, sir.
Thank you. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call, and we look forward to interesting next quarter. Thank you very much.
Thank you. On behalf of Alicon Castalloy, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.