Lumax AutoTechnologies Ltd

NSE:LUMAXTECH

Earnings Call Transcript 2023-Q1

[Operator]

Ladies and gentlemen, welcome to the Q1 FY '23 Earnings Conference Call of Lumax Auto Technologies Limited.

This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Anmol Jain, Managing Director of Lumax Auto Technologies Limited. Thank you. And over to you, sir.

[Anmol Jain, executive]

Thank you. A very good afternoon, ladies and gentlemen. A very warm welcome to our Q1 FY '23 earnings conference call. I hope you all are safe and healthy. Along with me on this call, I have Mr. Deepak Jain, Director; Mr. Vineet Sahni, Lumax Group CEO; Mr. Sanjay Mehta, Director and Lumax Group CFO; Mr. Vikas Marwah, CEO; Mr. Naval Khanna, Director, Lumax Management Services; Mr. Ashish Dubey, CFO; Mr. Ankit Thakral from Corporate Finance team; and Ms. Priyanka Sharma from Corporate Communications, along with SGA, our Investor Relations adviser.

The results and presentations have been uploaded on the stock exchange and the company's website. I do hope everybody has had a chance to go through the same.

Let me begin with some industry insights followed by operational and financial performance for Q1 FY '23, and then we will open the floor for question and answers.

As we all witnessed that auto industry has been going through a tough phase for the last 4 to 6 quarters on the back of shortage of semiconductors, rising commodity prices on account of inflationary environment and supply chain disruptions due to geopolitical tensions. However, we have been seeing an uptrend in the volumes beginning this calendar year.

As the economy is stabilizing, we have been witnessing consistent performance across all the sectors in the last 3 quarters, be it the 2-wheeler, 3-wheeler, passenger cars or CV segment, which actually gives us confidence that the overall economy and mobility industry is on a revival and in fact on a growth trajectory. The July month numbers reported by various OEMs are also encouraging, and the future looks optimistic on the back of upcoming festive season and monsoon progressing well for the rural markets to perform much better.

I would also want to highlight that the industry is fast evolving with integration of newer technologies and a big shift in consumer preferences. We at Lumax are constantly upgrading our products as per the changing industry dynamics.

Let me take you through the business update for the quarter ended 30 June, 2022. We witnessed resilience in our performance and our consolidated revenues for Q1 FY '23 stood at INR 422 crores as compared to INR 261 crores in Q1 FY '22, a growth of 62% on a year-on-year basis.

Our consolidated revenues were up by 1% on a sequential quarter basis. I am happy to share with you that your company is sitting on a healthy order book of around INR 600 crores. Majority of it is new business and out of which approximately 70% to 80% is of joint ventures, which is in line with the earlier guidance given of the joint ventures achieving almost 1/3 share of the total consolidated revenues.

The company is also in continuous talks with customers for EV business and is expected to receive business nominations of the same in the forthcoming quarters. The stand-alone entity caters to Integrated Plastic Modules, aftermarket business, Chassis and swing arm for 2-wheelers, trailing arm for 3-wheelers under the metallic business and 2-wheeler lighting. The stand-alone entity has contributed 70% of the total consolidated revenues for Q1 FY '23.

Lumax Mannoh Allied Technologies, the 55% subsidiary which manufactures manual and automatic gear shifter systems and has the market leadership position, contributed 15% to the total consolidated revenue. The company has started its production at Bengaluru facility from 1st April, 2022.

Exports business of automatic gear shifters for the global platform is on track and is performing well. We are also working in tandem with a joint venture partner to increase our reach to newer markets globally. Lumax Cornaglia Auto Technologies, the 50% subsidiary manufacturing air intake systems and urea tank commanding 100% share of business with Volkswagen and Tata Motors contributed 7% of the consolidated revenues. The company had received business nomination for plastic tanks from one of the major OEMs, the SOP of which is expected in Q4 of FY '23.

Lumax Metallics Private Limited, the 100% subsidiary, manufacturing seat frame contributed 6% to the total consolidated revenues. During the quarter, on May 3, 2022, the company has filed the draft scheme of merger with NCLT of its 100% subsidiary, Lumax Metallics Private Limited with the company for efficient utilization and synergy of resources. The appointed date of merger will be April 1, 2022, subject to necessary regulatory approvals.

Lumax Alps Alpine India Private Limited, a 50% subsidiary for the manufacturing and sale of electric devices and components, including stocks were related to the automotive industry has contributed 2% to the total consolidated revenues.

I'm happy to share some details on the new launches made during the quarter, having your company's products. In the passenger vehicle segment, we launched the automatic gear shifter system for Maruti Brezza and Mahindra's new Scorpio and automatic and manual gear shifters for the Toyota Highrider. We have also launched Air Intake Systems for the Volkswagen Virtus and the PSA C3 model.

Now I would like to hand it over to Mr. Sanjay Mehta, Director and Group CFO, to update you on the operational and financial performance of the company.

[Sanjay Mehta, executive]

Good afternoon, everyone. I will just brief on the operational and financial performance for Q1 FY '23. For Q1 FY '23, integrated plastic modules contributed 21% of overall revenue, followed by aftermarket at 19%, shifters at 15%, gear shifter at 15%, lighting products at 10%, emission at 7% and others at 13%. 2 and 3-wheeler contributed 38% to overall revenue, passenger car at 24%, after market at 19%, CV at 8% and others at 11%.

With respect to financial highlights, the consolidated revenue stood at INR 422 crores for Q1 FY '23 as against INR 261 crores last year, up by 62%. We have been able to deliver the stellar growth on the back of addition of wallet share among our existing products in new launches and addition of newer customers.

EBITDA margin stands at 11.5% for Q1 as against 7.2% for Q1 FY '22. Absolute EBITDA for Q1 stood at INR 48 crores, a growth of 160% on a year-on-year basis. PAT after minority interest for the quarter stood at INR 22 crores as compared to INR 3 crores in the Q1 FY '22. The CapEx incurred during Q1 is INR 10 crores, including INR 3 crores on account of leasehold assets.

With this, we open the floor for questions.

[Operator]

[Operator Instructions] The first question is from the line of Abhishek Jain from Dolat Capital.

[Abhishek Jain, analyst]

Congratulations, sir, for a good set of numbers in a tough time. Sir, you have your order book of around INR 600 crores. So how much is from replacement and how much from the new products?

[Sanjay Mehta, executive]

So out of the INR 600 crores, approximately close to 25% would be a replacement and almost 75%, which is majority of it will be new business.

[Abhishek Jain, analyst]

So out of the 75%, where you got the maximum business, in which segment, sir?

[Sanjay Mehta, executive]

So actually, all the segments , as I mentioned, out of the INR 450 crores, almost, I would say 50% of it would be in the passenger car space, 40% of it would be the 2 and 3-wheeler and about 10% would be in the commercial vehicle space. And in terms of the business verticals, I would say there is no one, which is a significant major. I think all of them are contributing in their own growth trajectory towards the INR 450 crores of new business.

Emission, plastics, electronics, mechatronics, these 4 business verticals, strategically, as I mentioned earlier, are our growth drivers. So all of them are faring well in the coming years.

[Abhishek Jain, analyst]

So now your contribution from the passenger car is 24%. So what is your target for the next 2 years? You want to achieve 30%, 35% because you have also new orders in the other hand.

[Sanjay Mehta, executive]

Correct. So I think clearly, strategically, if you look at the 12 months of FY '22 versus Q1 of the current fiscal, you will see that the passenger vehicle share has increased to 24% right fully, right? And the 2-wheeler has reduced to 38% from 43%.

I think our endeavor is that consistently going forward, the passenger car segment would definitely grow much more for us, much faster, not to say that the 2-wheeler space will not grow an absolute amount. But as a percentage of the 5, pass car ideally, I would like to see somewhere around 1/3 of the pie would be in pass cars, similar by in the 2- and 3-wheelers and give or take, 20% in the aftermarket business and the rest could be in other than commercial vehicles. That would be a overall ballpark, which is our strategic road map.

[Abhishek Jain, analyst]

And in 4-wheeler passengers because mainly revenue comes from this automatic gear shifter, and from the exhaust system. So -- and you are also inching into the plastic integrated parts business. So just wanted to know what is the outlook for the plastic integrated part business and the exhaust system business going ahead? What can be the contribution?

[Sanjay Mehta, executive]

So I'll answer this in 2 ways. I think apart from the businesses you mentioned, there is a strong growth, which we envisaged on the mechatronics and electronics, be it the shift towers, be it also the other -- the joint venture of Lumax Alps Alpine, which the company has recently gotten into.

So when I'm looking at this INR 450 crores new order book, it envisages all of them. Of course, the current products of emission and plastics are growing, but there is a significant growth coming from the new products as well.

Giving you a flavor of in terms of pass cars, you mentioned the plastics business. I think for the current year, I would say that about close to no significant change from the previous one. I think almost 1/4 of the business comes from plastic vertical. And I think we will still hold that for the current year. But clearly, plastics continues to be a strategic growth driver for the company in the years to come.

[Abhishek Jain, analyst]

So plastic integrated part, from where you are getting the business, from the Maruti, Hyundai or the -- from the other players?

[Sanjay Mehta, executive]

So right now, yes, we are already in business with Hyundai as well as Maruti. But we are also in deep discussions with other OEMs to get future orders of the plastic integrated business for the interiors.

[Abhishek Jain, analyst]

Okay. And sir, in this quarter, if I see the numbers, revenue grew sequentially from the 2-wheeler side, but Bajaj Auto and HMSI number has not improved on a quarter-on-quarter basis. This means you have increased share of business with the other 2-wheeler players, I think that especially from the EV side, so can you throw some more light there from where you got the business in the 2-wheelers?

[Sanjay Mehta, executive]

So are you talking referring to quarter-on-quarter on a year-on-year basis or a sequential basis?

[Abhishek Jain, analyst]

Sequential basis, sir. Bajaj and HMSI number has not improved, but your 2-wheeler number has improved. So from where you got this business?

[Sanjay Mehta, executive]

I will have to check that. I think Bajaj and HMSI are primarily the only major 2-wheeler customers we are serving currently. So I think both on a sequential basis haven't changed much, but I don't think the overall 2-wheeler buy has gone up for the company. I think, as I mentioned earlier, the 2-wheeler buy has slightly gone down and the passenger vehicle has gone up.

[Abhishek Jain, analyst]

Okay. So apart from Bajaj and HMSI...

[Sanjay Mehta, executive]

Growth in passenger vehicle has been far more than the growth in the 2-wheeler space for the company.

[Abhishek Jain, analyst]

So apart from Bajaj and HMSI, you also started to supply to some e-2-wheeler players also. So revenue has increased because of that only?

[Sanjay Mehta, executive]

The company has not yet started any business with any e-2-wheeler manufacturers. As I mentioned, we are in discussions and dialogues with a lot of the EV companies for future orders. But as of now we do not have any running revenue coming out of any e-2-wheeler OEMs.

[Abhishek Jain, analyst]

Okay. And sir, your aftermarket quarterly run rate is around INR 80 crores, INR 85 crores. So what steps are you taking today INR 100 crores and for the quarter -- on quarterly basis?

[Sanjay Mehta, executive]

I think we're going on in line with our long-term strategy, which was to double the aftermarket revenues in about 3 to 4 years. If you look at the previous year, technically, Q1 is a much lower for aftermarket. But I think in this quarter per se, we've been able to maintain the similar rate of revenue as the Q4 sequential quarter.

So I think very clearly, new product launches and expansion of the channel partners across the length and breadth of the country, these are the 2 ways we will grow our aftermarket business. And I think we've also launched some significantly new products in the last fiscal year. And in the current year, we will continue to invest into new product development.

[Abhishek Jain, analyst]

Okay, sir. And my last question is...

[Operator]

Mr. Jain, I'm sorry to interrupt, sir, but I request you to kindly join the queue for further questions.

The next question is from the line of Resham Jain from DSP Investment Managers.

[Resham Jain, analyst]

Yes. So I have a few questions. So first is, if I look at, let's say, last 3 years growth on a CAGR basis, you have grown at around 14%, which is slightly higher than the overall industry. But is it possible for you to break down this into new business growth over the last 3 years? How much growth has come from new products, new business? Any thoughts around that also would also be helpful.

[Sanjay Mehta, executive]

I wouldn't be able to give you exact numbers right now, but majority of this has been coming from the joint ventures, which are pretty much new products and aftermarket obviously has been consistently growing at a much faster rate. But I can tell you that going forward, as I mentioned, the INR 600 crore order book, as I mentioned, 75% of it is in the new products, not replacement. And out of that, also a majority of that, I would say, almost close to 3/4 of it would be in the new joint venture and the stand-alone would be maybe contributing about 25% or so of that side of new business.

[Resham Jain, analyst]

Okay. And I had this confusion, the INR 600 crore order book, how should one read this in the sense your overall yearly revenue is, let's say, around INR 1,500 crores or to INR 1,800-odd crores, how should one read this INR 600 crore order book?

[Sanjay Mehta, executive]

So this is the annual revenue which we will generate from the order book at peak capacity or peak volumes for that particular model. Obviously, I do not have the breakup right now, but some of this would come in -- start coming in FY '23 itself, and then it will go on to '24, '25 and maybe some spillover in '26. But majority of this would come into '24 and '25.

[Resham Jain, analyst]

Okay. And in terms of visibility from the OEs, how are you seeing the situation panning out, let's say, for the rest of the year? Just your thoughts around this.

[Sanjay Mehta, executive]

So majority of the OEMs continue to be very optimistic and bullish. And the primary reason would be that number one, the semiconductor shortage does seem to have eased out for the most part. Of course, no one can foresee what the recent China-Taiwan political conflict would entail for the supply chain. But more or less, things seem to be stable for now.

I think there is definitely some pressure on the 2-wheeler segment, but I think the 2 fundamental customers, which the company enjoys a very deep relationship with Bajaj Auto, I think they are still somewhat insulated because of their strong export portfolio. Apart from that, I think if I look at the passenger cars, I think Maruti, which is probably the largest passenger car OEM for the company continues to be very bullish for the remaining of the year.

But I think overall, as I mentioned, the industry is looking buoyant and I would probably even safely say that we should be looking at achieving a similar number as an industry as was the case in FY '19, which was one of the highest volume years for the auto industry.

[Operator]

[Operator Instructions] The next question is from the line of Harshil Shah from Anvil Research.

[Harshil Shah, analyst]

Congratulations to the entire team for the great numbers. Sir, my first question is on the QIB, sir, the INR 400 crores that you all are planning to raise. Then my second question is on the Lumax FEA JV. So when will the billing start like -- what is the outlook there, sir? My third question is on the Kawasaki order that we have received. So any progress on that, sir?

[Sanjay Mehta, executive]

Yes. So thanks, Harshil. So first, I'll just say that I think we've been advised to have some financial flexibility. So this is just an enabling resolution to raise INR 400-odd crores. We will see at the time what the need arises and what would be the best way to raise that. But it is purely just an enabling resolution just to have the financial flexibility for the company, nothing beyond that.

In terms of the #2 and #3 question, which you mentioned about Lumax buy outlook as well as the Kawasaki, I will let the CEO Mr. Vikas Marwah answer that, please.

[Vikas Marwah, executive]

So thank you, Harshil, for your question. I'll first take the Lumax FAE question. So you may be aware that there is a recent gazette notification, which is out from the honorable minister and that adversely impacts the immediate implementation of FAE sensors on the OEMs that we were planning to go live with on SOP starting this year itself.

We have a healthy order book of INR 135 crores as we speak. We were expecting to get into the SOPs as early as Q3. But the new notification says that the OBD2 [ catcon ] implementation, which is the catalytic converter is now postponed to 1st April 2025 rather than 1st April '23. This is a result of the lobbying efforts of the OEMs, who pleaded that they were not ready for this implementation, so it has adversely affected our readiness to supply to this particular segment because each 2-wheeler was going to have 2 oxygen sensors effective 1st April '23.

So currently, the scenario continues pretty much the same. And we are hoping that probably it can be still preponed but the gazette notification has given a little setback.

Having said that, we are again back to scouting new markets now and new customers who would be still willing to take heated oxygen sensors because currently, unheated oxygen sensors are being fitted on the 2-wheelers currently. And the idea was that with the new catcon implementation, it would have contributed to a positive environmental impact. But that is a government and a policy decision, so we'll just leave it there for the time being.

And second question relating to Kawasaki, yes, it's a strategic air filter launch on a super bike, and it is going as per plan, but then Kawasaki have -- they do not have significant volumes currently in India. We are now engaged with 2 more 2-wheeler manufacturers, and we will be getting into product validation in the coming quarters for the air intake systems on 2 wheelers. And we already have a very strong traction on the existing 4-wheeler manufacturers for Lumax Cornaglia.

[Harshil Shah, analyst]

And sir, just a comment on the [indiscernible] too big and it's too huge compared to a market cap like INR 400 crores is like 25% of our market cap. So I think -- I mean, what is the kind -- can you throw some more light on the acquisition, like what size of acquisition you're looking at?

[Sanjay Mehta, executive]

I never mentioned there is an acquisition. I think I would like to just say that inorganic growth has always been a part of the strategic growth road map. The company is always evaluating constantly certain opportunities which may come inorganically. So there is no specific acquisitions for which we are looking at a specific INR 400 crores being raised.

As I said, for greater financial flexibility, we are just enabling that. Part of this very well could go through certain inorganic needs, and part of it would be funded for certain other growth drivers, which the company may undertake in the coming quarters or the coming year. But we don't foresee I think even after this INR 400 crores, I think if I look at the balance sheet and if I look at the debt equity, it is pretty robust.

[Harshil Shah, analyst]

I just want to understand the thought process behind how it came to this number, INR 400 crores. That's it.

[Sanjay Mehta, executive]

Oh, I think it's just a derivative of, let's say, the kind of EBITDA which we are trying to do. And what kind of borrowing limits et cetera the bank allows to have a comfortable ratio, that's how the INR 400 crores came to. If you look at my FY '22 EBITDA and talk to any decent bank with the kind of borrowings they would offer on that EBITDA, you will probably come to a similar number.

[Harshil Shah, analyst]

There's the kind of borrowing the banks on the banks, right? This is equity we are talking about, sir. If I see FY '23, FY '24 numbers, my calculation shows we'll do anywhere more than INR 250 crores of EBITDA. So I don't think we need enough -- I mean we need money for the growth. I mean we can do it for the internal approval itself.

[Unknown Executive]

So let me -- can I interject? [indiscernible]. So thank you for raising this question. Absolutely right. As [indiscernible] we are just basically open to all avenues of basically acquisitions as well as for growth drivers. And this is just basically one of the financial instruments, which you're absolutely right, we maybe not even wanted to use this. This was an enabling resolution, which comes in.

But I think there are certain strategic discussions, which are underway. And with that, I think we just wanted to keep all our this thing, and we would like to first basically use debt, which right now the balance sheet can lever up if any basically inorganic or other opportunities coming. And that's what we have been doing in the last minute because last year, we're doing for internal growth. And that's what the company has been doing to fund the growth till now.

But I think if you wanted to go to the next thing, we'll probably be using these kind of instruments. So this, as I said, is more of enabling, just to keep options open and also I mean, a lever of strategy also would be open terms of leading that.

[Operator]

[Operator Instructions] The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services.

[Jinesh Gandhi, analyst]

Just a clarification, INR 100 crores is entirely equity or it also include some enabling resolution for big fund raised?

[Unknown Executive]

I think we have taken that classical resolution includes both debt and equity. QIP is there, then the debenture [indiscernible] is there, debenture is there, foreign convertible bond is there.

[Jinesh Gandhi, analyst]

Okay. And no limits for -- no sublet limit for equity versus debt?

[Sanjay Mehta, executive]

I think you're reading too much into this INR 400 crore number. I think it's just an enabling resolution in nature, and maybe we don't even use all of this at all. But yes, I hope we gave some clarity on the structure and how we arrived at this INR 400 crore number.

[Jinesh Gandhi, analyst]

So I also believe that it was getting blown out of proportion. I thought it was a mixture of instrument and not just equity. So I wanted to clarify that.

[Sanjay Mehta, executive]

Sure.

[Operator]

The next question is from the line of [ Nisha Desai from NM Securities ].

[Unknown Analyst]

I have a couple of questions. So my first question is can you give us an outlook on the segment-wise revenue opportunity going forward?

[Sanjay Mehta, executive]

The revenue -- I didn't get you. Sorry, Nisha.

[Unknown Analyst]

Can you give an outlook on the segment-wise revenue?

[Sanjay Mehta, executive]

So the segment-wise revenue, as I said, for the quarter 1 is, again, in 2 and 3-wheelers stands at 38%, passenger car is 24%, 19% is aftermarket. Commercial vehicles is about 8%, and then there are others at about 11%. And if I look at the overall for the -- I don't see any significant change for the entire year. It would remain ballpark similar.

[Unknown Analyst]

And going forward, based on your interactions with OEMs, have you seen any improved traction in any particular segment?

[Sanjay Mehta, executive]

So I think the order book, which I mentioned, clearly states that we are seeing a very strong traction across OEMs. I also mentioned that the passenger vehicle segment for us will grow at a much faster rate than the 2 and 3-wheeler. And hence, I said that in the next few years, our endeavor would be to have passenger car at about 1/3 -- 2 and 3-wheelers at about 1/3 of the total revenue pie.

And of the INR 600 crores order book, I did mention that about INR 450 crores is a new order, which are across various OEMs, right from Marutis and Tatas and Mahindras to the other 2-wheeler makers as well.

[Unknown Analyst]

Okay. And my second question is regarding EV. So how do you see the evolution of EV industry in the near future?

[Sanjay Mehta, executive]

Absolutely. Well, the EV industry continues to evolve. We are a firm believer that the 2-wheeler EV story will have a faster adoption much more than the passenger car EV space. The good part is that the company's majority products are EV-agnostic, which means that we will -- and we are already engaged with most of the EV makers for certain developments in their forthcoming models. And also, as I mentioned, the company is underway a strategic plan into entering EV critical components, which are only and only for EV vehicles. I will be able to throw some more light of that in the forthcoming quarters.

[Operator]

The next question is from the line of Pritesh Chheda from Lucky Investment Managers.

[Pritesh Chheda, analyst]

So just a clarification, you mentioned that incrementally you see pass car at 56% of the revenues in the near future. That's what you mentioned, or [indiscernible]?

[Sanjay Mehta, executive]

I'm sorry, could you repeat? There is a lot of echo in your voice.

[Pritesh Chheda, analyst]

Is it clear now?

[Sanjay Mehta, executive]

Better. Yes.

[Pritesh Chheda, analyst]

Did you mention that in the future, you see pass car at 56% of your revenue, 2/3, or it's in the order book that is 2/3 of the pass car segment?

[Sanjay Mehta, executive]

No, the 56% I never said is pass car. I said the order book is 50% of the INR 450 crores new business, 50% of that is pass car, 40% is 2-wheeler, 3-wheeler and about 10% is commercial vehicles. And I also mentioned that in the long run, the endeavor strategically is to have 1/3 of the total revenue pie in pass cars and 1/3 in 2 and 3-wheelers.

[Pritesh Chheda, analyst]

Okay. Understood, sir. Second, for FY '23 now based on the new orders which will come into execution, plus the volume growth of your OEM clientele, sum total what kind of revenue would you expect for '23?

[Sanjay Mehta, executive]

So I would say that the company has always delivered better than the industry growth. And obviously we are looking at a strong growth in FY '23. To give you a guidance, I would say anywhere between 20% to 30% should be the growth of -- on revenues. The margins would continue to expand. I think last financial, we've closed at about 10.8% EBITDA. For Q1, we are already sitting at about 11.5%. So I would say that maybe around 12% should be the target and benchmark for the FY '23 on a higher revenue.

[Pritesh Chheda, analyst]

Okay. Okay. And the CapEx to be spent in '23?

[Sanjay Mehta, executive]

So I think as indicated earlier, the CapEx plans remain unchanged. The total CapEx outlay for FY '23 stands at about INR 75 crores, INR 76 crores, out of which almost close to INR 23 crores to INR 25 crores would be towards the PLI scheme for which the company has already been accorded approvals.

[Operator]

The next question is from the line of Apurva Mehta from A M Investments.

[Apurva Mehta;A M Investments;Analyst, analyst]

Congratulations for a decent set of numbers. So I just wanted to ask you that our share from Bajaj Auto is decreasing, we had a peak at INR 150 crores, and now we stand at INR 110 crores. So are you leaving some market for Bajaj Auto? Are we using some products which are not being supplied now? Because your fabrication units have INR 50 crores, INR 65 crores. But other than that, why is that the share of Bajaj is lower?

[Sanjay Mehta, executive]

Apurva, I think it's not like that. I think if I look at the quarter 1 to last year to this year, I think my growth in Bajaj Auto is roughly flat or rather a 2% incremental growth, whereas the customer has de-grown by about 1%. And if I look at the sequential quarters, Q4 of FY '22 to Q1 FY '23, I have de-grown 7%, whereas the customer has also de-grown by about 4% to 5%.

But for the full year, I am still quite optimistic that because of the deeper penetration on our wallet share, specifically for the metallic business, we should be able to have a double-digit growth on Bajaj Auto as a customer account on a full year basis. So I think these are just certain 1 quarter hiccups based on certain other -- we all know what happened with Sri Lanka and Sri Lanka continues to be an important market for Bajaj Auto. And obviously, the domestic 2-wheeler industry is for the last few quarters going under some stress.

So I don't anticipate this to be read that our share of business at Bajaj Auto is reducing. I think it's in line with the customer performance. But for the full year, I think we will be able to still deliver a double-digit growth with respect to Bajaj Auto.

[Apurva Mehta;A M Investments;Analyst, analyst]

Because Q3 last year, we were at 38%, 40% our sales from Bajaj Auto, now it has dropped to 36%. So in Q3...

[Sanjay Mehta, executive]

Correct. But you'll have to see the absolute amount for Bajaj Auto. We will have to see the absolute amount of our sales on a quarter-on-quarter basis. The percentage of the pie is dropping because the other customers, specifically in pass cars, et cetera, are moving much faster than Bajaj Auto. But -- Vikas, do you want to add something?

[Vikas Marwah, executive]

Yes. And to answer your very valid question on Bajaj, the confidence we would like to give you is that starting Q3 itself, we will be coming on a new platform of Bajaj, very strategic platform, EV platform from the coming quarter at Jharkhand facility, the new Jharkhand plant. We are also going up in terms of the value addition and putting up more subassembly processes, which would give us an upside of 10% in revenue terms starting Q3 at Bajaj itself. So Bajaj business mix and the overall product strategy is currently under implementation, and we will definitely be moving up in the coming quarters on the revenue on the existing models and some new models.

[Sanjay Mehta, executive]

And Mr. Mehta, what you were mentioning the INR 150 crores of my revenue in sales Q3 to INR 119 crores in Q4, you're right, it's a 20% dip. But during the same period, the customer also de-grew by 15% in terms of their volume. So it's directly proportionate to the customer volumes, I don't see any wallet share contraction. On the contrary, on some of the products, we have improved our wallet share with Bajaj Auto. And as the volumes pick up, you will see that traction in the forthcoming quarters. But the full year, as Vikas mentioned, we are quite bullish on growing our account with Bajaj as a customer.

[Apurva Mehta;A M Investments;Analyst, analyst]

On the export front, are you seeing some -- apart from what are we doing to increase our exports for aftermarket sales or something like that? Can you throw some light what is our long-term target for like next 1, 2 years, what will be our export contribution?

[Sanjay Mehta, executive]

So I think, first and foremost, our strategy was to derisk the company and have at least the export in line with our import so that there is a natural hedge of the foreign exchange. That was the first and strategic, let's say, move because we largely -- and our philosophy has always been with our all joint venture partners to capture the growth of the Indian auto industry.

So when we are partnering with these world leaders in terms of partnerships, we do it for the Indian industry. Export is not necessarily the growth driver as a strategy. But as I mentioned, overall, we wanted to make sure there is a balance of imports to exports and I think the company has been able to manage that successfully, whereas the import and export is broadly in line, at least for FY '22, if you see the numbers.

I think apart from gear shifters, there is some opportunity. And obviously, exports of aftermarket continues to be a very big opportunity I think this year. But the exports do take a long lead time to fructify. So last year, we did some engagement. This year, I think you'll see a good traction on the aftermarket exports.

But in terms of OEMs also, I think we are engaged with some customers, but most of this would be in direct exports. So we are on export models or our parts are exported to other countries. But for us, it's not a direct export. It goes through the OEM in India. So for us, it continues to be a rupee billing in the OEM space.

[Apurva Mehta;A M Investments;Analyst, analyst]

And what -- can you [indiscernible] JV and when will it start maturing, growing revenues like the new products like contact coils and [indiscernible] sensors and everything. So when we will see materially being a revenue?

[Vikas Marwah, executive]

[indiscernible] take that. So Mr. Mehta, the company is very, very bullish on the new joint venture signed up as Alpine as we have mentioned in the previous investor calls also. You'll be happy to know that out of this INR 600 crore order book, INR 60 crores of order book has been generated for Alps Alpine alone. That gets into the SOP in FY '24. So Alps Alpine has got a very healthy mix of technologically advanced sensors on the 2-wheelers, which are the throttle position sensors and the side position sensors.

And besides that, the portfolio includes the side power window switches. It includes steering angle sensor, which is a PLI approved product. It includes contact coil. As we speak, we are currently in the RFQ negotiations for almost INR 300 crore worth of business for Alps Alpine.

The business decisions for these will get taken over the next couple of months. And therefore, probably in the coming 2 years, Alps Alpine joint venture will be serving the customer needs with as many as 6 products. These will be in addition to the complexity. But of course, we'll be able to give you more updates as the RFQ discussions [indiscernible].

[Apurva Mehta;A M Investments;Analyst, analyst]

Good, good. And on the PLI scheme, when will the revenue start moving in for PLI?

[Vikas Marwah, executive]

So the revenues for PLI scheme starts flowing as early as next year because [ Telematics ] is one of the approved projects here. The advanced gear shifter formed a part of this. So FY '24 will start reflecting with the PLI nodes also as a separate item.

[Apurva Mehta;A M Investments;Analyst, analyst]

And can you quantify if it's possible, what kind of -- what are the targets you will need for this? Any quantification number?

[Vikas Marwah, executive]

So we are currently confirming the threshold revenue and the investment commitment that we have made that part of the approval for PLI. Over a 5-year period, we have to do a consolidated number of INR 250 crores. The company is confident of exceeding this number on the back of the new orders that we start now generating in the components that have been approved under the PLI scheme.

Already 3 components are going to be in the mass production starting FY '24. And there are 4 more products that we are targeting to get into the revenue stream and get the businesses for that for which we have applied.

[Apurva Mehta;A M Investments;Analyst, analyst]

Okay. And now when your orders for FAE is no longer there so how will you ensure that FAE becomes profitable in around 2 years? Or what are your plans for this company because we have already made some CapEx on -- what are your plans? Are we able to export from here? Is it possible for us to export or to bring some new products -- any light on that?

[Vikas Marwah, executive]

So on the FAE front, as I mentioned, while the environmental impact has pushed the OBD2 implementation to April 2025, but what we do in the next 2.5 years is critical. The OEMs are in discussion with us in terms of the possible application of these sensors of the primary application rather than the catcon application.

But for that, the OEMs will need to take a principal decision that they move from unheated sensor to heated sensor. Having said that, we are also very aggressively looking at some new O2-sensor markets, which are the nonautomotive markets because in North America, the auto sensors are applied in the non-automotive categories also. I'm happy to share with you that we have qualified the technical rounds there for North American customers. Yes, exports will form thrust area now at least for the next year -- for the next 2 years, to keep the revenue ticking in this particular segment, while we wait for the April 2025 date now.

[Operator]

[Operator Instructions] The next question is from the line of Harshil Shah from Anvil Research.

[Harshil Shah, analyst]

Also, sir, just a reminder again, I mentioned this on the last con call also. So can you please think about the dividend and buyback policy, sir? Because what I understand we'll be giving out 30% of our EPS like of our profits that will be around INR 5 to INR 6 sir, and 7x6 is around INR 35 crores of payout, sir. So can you please think about it? Can you just go to the drawing board and see what is the -- I mean, what is more benefit, dividend or buyback, sir?

[Unknown Executive]

Sure. Point noted, we'll internally deliberate on it.

[Operator]

[Operator Instructions] The next question is from the line of Abhishek Jain from Dolat Capital.

[Abhishek Jain, analyst]

Sir, how much benefit do you see in the coming quarter in the gross margin due to fall in the metal prices? And what would be the outlook for the elevated power and logistic costs?

[Sanjay Mehta, executive]

So I think if you look at the gross margins, the raw material consumption, despite the inflationary environment on commodity prices, I think in Q1, we have been able to reduce our raw material consumption by about 0.5%. I think this is not just because of the product mix, but also better efficiencies of sourcing.

We, as I mentioned, do not have a high risk of the OEMs not compensating for the commodity price increases. Most of the OEMs we have a back-to-back arrangement. It's just a time lag of 3 to 4 months by when we get these commodity prices. But I think going forward, and if I look at the last 3- to 4-year trend, I think our raw material consumption or the gross margin, the contribution has been fairly stable or rather improved by a few basis points. So I think I don't anticipate any significant change going forward on the raw material consumption.

[Abhishek Jain, analyst]

So what is your margin guidance for FY '23, it will be 100 bps expansion?

[Sanjay Mehta, executive]

So as I mentioned that looking at all the cost measures, I think on a top line, I gave a guidance of about 20% to 30% revenue growth. And I think on the EBITDA, I have always maintained that our endeavor in the short to midterm is to try and attain close to a 13% or a teen EBITDA, as I call it. I think the company had closed at 10.8% last year. And in the current quarter, it's already sitting at 11.5% on a healthy revenue growth and cost optimization.

I think for the full year, I would say that the guidance I would give is close to 12% EBITDA. That should be our endeavor and target. And further, then we will deliberate on how to sustain that and further expand that.

[Operator]

[Operator Instructions] As there are no further questions, I would now like to hand the floor over to the management for closing comments.

[Anmol Jain, executive]

All right. I take this opportunity to thank everyone for joining into the call. I really do hope that we have been able to address all your queries. If there are any further information required from our side, kindly get in touch with us or Strategic Growth Advisors, our Investor Relations adviser. Thank you once again for joining the call, and stay safe. Thank you.

[Operator]

Thank you. On behalf of Lumax Auto Technologies Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.