NDR Auto Components Limited (NDRAUTO.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the NDR Auto Components Limited Q1 FY '16 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, sir.

Good day, everyone, and a warm welcome to all of you participating in the Q1 FY '26 Earnings Conference Call of NDR Auto Components Limited. We have with us today on this call Mr. Pranav Relan, Whole-Time Director; Mr. Vikram Krishan Rathi, CFO and Vice President; Mr. Rakesh Rustagi, GM Finance and Accounts; and Mr. Rajat Bhandari, Executive Director and Company Secretary, along with other members of the senior management team. Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature and are subject to risks and uncertainties. A statement in this regard is available in the Q1 FY '26 earnings presentation shared with you earlier. We will start this call with opening remarks from the management, following which we will have an interactive question-and-answer session. I now request Mr. Pranav Relan to share some perspectives with you with regard to the operations and outlook for the business. Over to you, sir.

Good day, everyone, and a warm welcome to our Q1 FY '26 Conference Call. Let me start by quickly going through our financial performance for the quarter under review. Q1 FY '26 total income stood at INR 185.81 crores, a growth of 7.97%. EBITDA at INR 20.46 crores growth of 16.98% EBITDA margin at 11.01% and PAT for Q1 '26 at INR 13.6 crore, which is higher by 17.87% as compared to the corresponding quarter last year. Our continued progressive performance is driven by consistent increase and component of value addition and disruption in our portfolio, strong execution and enhanced operational efficiencies. We are encouraged by our performance, which was achieved despite unanticipated environmental challenges. Maruti Suzuki as you're aware, has deferred the production of e-Vitara, this resulted in delay of our production dispatch schedules too. Lower offtake by KIA too added to some delays. In addition, our Sunshade orders, which we anticipated to commence in full swing this quarter are ramping up. We see all these aberration, though and believe this situation will hopefully normalize by the second half of the current fiscal year. The Board of Directors has approved the setting up of a Metal Frames and Seat Cover facility at Anantpur to cater to new business from KIA. The proposed facility will manufacture metal frames, including seat trims as well as seat covers, mainly PU, PVC fabric and leather stitched and prefitted. We will invest between INR 27.29 crores over the next 2 financial years, production is expected to commence Q2 2026. This initiative helps us to further deepen our very strong relations with KIA. Our outlook remain strong with f Sunshades and Ambient Lighting to contribute meaningfully going forward. We're particularly excited about the product rollout in our Hayashi Telampu plant, it's something we believe will open up several new opportunities for us. So we're happy with the progress we made in the first quarter of the financial year. Our focus remains clear. We're pushing hard and building innovative differentiated products that increase the value we add to every vehicle. At the same time, we're looking to deepen and expand engagement with OEMs, so that we stay ahead and keep building stronger partnerships. We will now be happy to discuss any thoughts or questions you may have.

[Operator Instructions] First question is from the line of Jatin Chawla from RTL Investments.

My First question is on your results. So when I look at this quarter, your gross margins have improved almost like 200 basis points on a quarter-on-quarter basis and almost 400 basis points on a Y-o-Y basis. So what is really driving this strong margin expansion?

So we've done some cost cutting activities, and that's been driving it. In addition to that, our model mix, in terms of our gross margin has been favorable. So artificial leather hasn't been sold as much as fabric, that is driving this margin expansion.

And on the other expenses side, we have seen a significant increase there again from the previous quarter from INR 20.5 crores to INR 23 crores. So what's driving that?

So we've had -- KIA has started production, our stages have started production, and our e-Vitara has started production but the ramp-up hasn't happened fully. So that is driving this increase and other expenses.

So would it be fair assume that as these models kind of ramp up to their anticipated volumes at an EBITDA margin level, we should see some improvement?

We should be at a similar level.

Got it. On the second question on the KIA plant, the Anantpur plant, so you mentioned in the annexure that this order -- you're setting up frame 50,000 sets for 5-seater car and seat cover 78,000 sets for a 7-seater car. So do you have 2 separate orders and 1 order is only for frames and 1 order is only for seat covers. That is how we should think about it?

So it's for 1 vehicle. We've received the first 2 rows for the frame, it's a 3-row vehicle, and we haven't received an order for the third row, and that's why we received 5-seater.

So it's 1 single model is that you have the trim order for all the 3 rows and frame order for just the first 2 rows.

Exactly.

And with the INR 27 crore -- or INR 27.3 crores investment, what's the sort of revenue potential that this plant will have?

So the peak revenue should be about INR 80 crores to INR 100 crores, it's subject to how the vehicle ramps up.

So this INR 80 crores, INR 100 crores revenue potential you are saying, for this 1 model where you have order already in hand.

Yes.

Any update on the total order book now? I think you've been sharing this number on the past call, with this new order that has come in, how do you see your order book?

So we can remove the KIA existing business, the shades and the e-Vitara because the ramp-up has started. In addition to that we got a new KIA order. So over and above that should -- so our order book should be about of INR 300 crores to INR 350 crores.

And this quarter, on the revenue side for the company, there has been a very sharp fall in Maruti's production volumes that I see from the March quarter to the June quarter. However, for you, the revenue decline is very small. So what is really driving this sharp outperformance compared to Maruti?

So all our new vehicles have started, all -- our KIA has started, our shade has started, our e-Vitara has started, so that has contributed to the increase in revenue. In addition to that -- so our KIA business has started, our shade business has started and e-Vitara has started. So that is contributing to the increase in our revenue. In addition, you can see the Maruti exports have done quite well. So that has led to our increase in revenue.

Next question is from the line of Tanmay Jhaveri from Finterest Capital.

I have this 1 question...

Sorry to interrupt, Mr. Jhaveri, your voice is not clear. Please use your handset.

So my question was the investment which you are making right now of INR 27 crores. So why are we doing that under a subsidiary and not in our main company?

So in order to get some benefits, we are setting up with company.

And can you give revenue guidance for this year and next financial year?

Sorry?

Revenue guidance, like what revenue are we looking forward by this financial year?

So we don't want to give a revenue guidance for the current financial year subject to how the market behaves and how the new order book plays out.

Next question is from the line of Hitesh Goel from Aurigin Capital.

My question is on the order book, so what is the updated order book now? I think last quarter, you had given INR 1,100 crores, INR 1,200 crores is the order book. So with this INR 100 crores, is there addition in the order book? Or because Syros is not doing that well, we have factored that from our own?

So INR 1,100 crores, INR 1,200 crores is the revenue potential expected in the 2 years, so if we remove the KIA Syros to shade and the e-Vitara, the ramp-up has still happening. In addition to that, there should be another INR 300 crores to INR 350 crores.

Sorry, INR 300 crore, INR 350 crores is coming from where? Because you said KIA new order is INR 100 crores, right?

So we got KIA business, we've got the seat and frame project. We've got the new Maruti business that we've worked with before. We got the BIW business. So that is an additional INR 300 crores to INR 350 crores.

So Maruti -- in Maruti, you've got additional business apart from the 2 EVs, which was already part of the order book, right?

So no, including one of the EVs, it's about INR 300 crores to INR 350 crores.

And basically, the BIW project is starting from when?

So we have a BIW project starting from Q3.

And on the e-Vitara side, basically, earlier targets for Maruti was very high, right? But because of this rare earth metal shortage, do you think -- what is the target that Maruti is sharing now?

So Maruti has shared that they are going to make 65,000 this year. This is the target that we gave initially, they will just make it the whole target in the second half of the year.

65,000 vehicles on exports, right?

Yes.

And you set up this facility in Aurangabad is only for KIA, or the plant capacity could be used to for other OEMs in future?

So the Anantpur facility is for the KIA.

So there -- I mean is there a contract with KIA that it can be only used with KIA or you can use it for other OEMs in future?

We can use it for other OEM, but it's very close to the KIA plant.

Next question is from the line of Hemant an individual investor.

Sir, wanted to ask something. We had previously guided for the revenue of FY '26...

Sorry to interrupt, Mr. Hemant, your voice is not clear. It is breaking.

I just wanted to add one thing. We had previously guided in one of our earlier calls that for FY '26, we'll be doing a revenue of INR 250 crores to INR 300 crores extra apart from the -- I mean, FY '25 numbers. So basically, FY '25, we have closed around INR 700 crores. So the idle revenue according to our earlier guidance should be in the vicinity of INR 1,000 crores, okay. So are we kind of sticking to the guidance or we are some sort of lowering given the subdued performance in Q1?

So we don't want to give a guidance for the current revenue. It's subject to how the vehicles perform and how the market performs.

So sir, given the subdued performance in Q1, sir, I just wanted to ask you, are we some sort of -- I mean lowering it? I mean, are we anticipating a further slowdown?

So it will be slightly lower than what we have suggested. Exact number is something we don't like to suggest.

Can I, sir, expect it to be the lower end of the previous range?

So again, we don't want to give a guidance, but subject to how the market behaves and how the model behaves.

And sir, the long-term guidance of INR 311 crores in FY '26 is still intact, or right?

The long-term guidance is intact.

[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor and Co.

Firstly, on the CapEx front, sir, what have we outlined in terms of the CapEx for the current financial year?

INR 50 crores.

Sir, your voice is mumbled. Come again?

It should be approximately INR 40 crores to INR 50 crores.

INR 40 crores to INR 50 crores. And sir, we have worked out our strategy of derisking the client concentration from -- especially from Maruti. So going ahead, what should be the revenue mix, Maruti and X or Maruti for this financial year and the next year with the type of agreements which we have currently done?

So Maruti will always be our biggest customer. The percentage mix, I don't have offline -- off hand, I will share that with you.

Sir, when we look at the P&L part for a Q-on-Q basis, we have seen the other expenses rising from, say, INR 20 crores, INR 50 lakh to INR 23 crores. whereas the commensurate revenue is lower. So what explains this Q-on-Q increase of other expenses by 8% to 10%.

So we've actually had our new projects. We've established them. We've added new capacity for the KIA, for the shade, and the e-Vitara and the ramp-ups are still happening.

So these costs are not absorbed. That is what the reason?

So our production has started. Our capacity utilization isn't what we expected it to be.