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

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earnings Conference Call of NDR Auto Components. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Rishab 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 '25 Earnings Conference Call of NDR Auto Components Limited. We have with us today on the call Mr. Pranav Relan, Whole-Time Director; Mr. Mohit Kumar Jain, Chief Financial Officer; 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 '25 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 regards to the operations and outlook for the business. Over to you, sir.

Good day, everyone, and a warm welcome to our Q1 FY '25 conference call. Let me start by quickly going through our financial performance for the quarter under review. Q1 FY '25, total income stood at INR 172.1 crores, a growth of 33.49%; EBITDA at INR 17.49 crores, growth of 36.76%; EBITDA margin stood at 10.16%; and PAT for Q1 FY '25 at INR 11.53 crores, which is higher by 39.91% as compared to the corresponding quarter last year. We continue to see encouraging traction in demand. To cater to this, we have commenced expanding capacities. We have, as you may be aware, acquired land at Kharkhoda, which is near to the upcoming Maruti Suzuki plant. The size of the land is around 9 to 10 acres. We are also exploring land acquisition possibilities at Anantapur, which is in close proximity to Kia's manufacturing facility. Both these initiatives, on being completed, will enable us efficiently cater to the growth and requirements of our two of our large OEM clients. All our initiatives are in line with our aspiration to expand our OEM partnerships and enhance our portfolio of offerings with innovative and differentiated offerings. Just to recap, in February 2024, NDR Auto Components was empaneled as a T2 supplier to Hyundai Transys to supply seat trims to Kia, supply of which will commence from Jan 2025. Kia is a third OEM partner, adding to our other esteemed long-term relationships with Maruti and Toyota. Also, in February 2024, we entered into a technology assistance agreement with Hayashi Telempu for the supply of sunshades to Maruti and Toyota automobiles. Utilization at our facilities across Haryana, Bangalore and Gujarat stood at 80% to 85%, offering us ample runway to grow in the medium term by when our new facility would also become operational. The auto sector is poised for growth in the coming decade, and we look to leverage on this and grow with our OEM partners. Our strong balance sheet affords us the opportunity to explore both inorganic and organic opportunities. We are excited about the potential of the business and are focused on creating value for all our stakeholders. We will now be happy to discuss any sorts of questions you may have.

[Operator Instructions] The first question is from the line of Saket Kapoor from Kapoor & Company.

Congratulations on a very strong set of numbers and a good start to the year. So just wanted to understand that do we need to factor in any seasonality in your numbers, or we can look these as the normal set of numbers going ahead also? And should we...

These are normal set of numbers for the quarter. Our numbers have actually been driven by strong SUV sales.

Okay, sir. What we are hearing is there is a lot of inventory issues with the CV segment. So how are you looking into the situation? And what are our utilization levels and the deliverables for the coming near future or the 2 quarters, if you could give some color?

Our utilization levels seem to be the same, our production numbers also seem to be the same. So let's see how the quarters play out.

Sir, last point I missed, come again.

Our production volumes also seem to be the same. So let's see how the quarters -- how the market plays out.

But there is an issue with the inventory...

Our production volumes seem to be intact. So there's no downward revision to that at the moment.

Okay, sir. And even the RM part of the story is stable now, sir? I think so RM remains the same Q-on-Q, we can -- and do you see any variations going ahead or any price revision upward or downward?

So no revision as of now. It will depend on model to model mix, but it's stable.

All Right. So going into the year, sir, what should be the volume growth? And where will the growth come from? This is my last question.

So the market actually played out quite well for us. Our model mix has been very favorable. In addition to that, January 2025, we start Kia. February 2025, we start the shade. And after that is the EV vehicle. So let's see how the market plays out.

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

The first question is, when I look at this quarter's numbers for the company, they are very strong compared to the underlying volume growth that I see for the main clients. So what sort of models are really driving this? And is there a kind of share gain within the two key OEM customers also that the company is seeing? Or this is largely just model mix driven?

So it's mostly module mix. The Brezza has done very well. The Grand Vitara has done very well. The Wagon R has also done -- sorry, the Fronx has done very well. The Jimny has done very well. It is largely due to that. There has also been a slight increase in the market share.

So where are we now on our market share with Maruti, share of business with Maruti for example?

So we are in mid-30s, slightly improvement.

And do we see this share of business going higher to, let's say, 40% plus over the next 2, 3 years?

So we're working on that. As soon as we get some new models in next few months.

Got it. Got it. My second question is on the last call, you had said that you will be supplying to Kia from your existing Bangalore plant, and you will be looking at land in Anantapur only if you get further business from Kia. Now given that this quarter, you are announcing that you're looking for land, have you won any further business from Kia, which is kind of making us go for land acquisition in Anantapur?

So we are looking for further land in Anantapur. If and when we acquire new business, then we will acquire land over there. As of now, we haven't -- last quarter, we haven't acquired any new business from Kia.

Got it. Got it. And on the sunshade product, any -- because I think you had said that this is for both Maruti and Toyota, with Maruti, I think you have some sort of business starting from February '25. Any business visibility from Toyota?

So actually, we're expecting some RFQs from maybe this quarter or so. If something converge, we will definitely let you know.

Got it. Got it. And this quarter, we've also seen our EBITDA margins kind of start to move to a slightly -- from last few quarters, we were around the 9% mark. Now we are kind of 9.5%. Do you see this improving to double-digit margin going forward as the business scales up further?

So that's what we're working towards. Let's stick to the 10% mark for now. And yes, let's stick to it.

Got it. Got it. And -- so you have the new products and new OEM business is starting from 4Q. So for the next 2 quarters, we should look at this as the broad run rate with whatever seasonality that festive -- there is some festive seasonality. But by and large, one should look at this as the base revenue run rate or the quarterly run rate?

Yes, I think that should be a fair number to say, subject to how the market drives.

Right. And to the previous participant, you said utilization and production numbers remain the same. So your comment was 1Q versus 4Q? Or was it kind of 2Q versus 1Q?

No. Q-on-Q, quarter-on-quarter.

So current quarter versus the previous quarter, right?

Yes. It seems to be the same. It seems to be good. No, sorry, let me put it in another way. Q2 always seems to be better than Q1. Q1 has been great because of the favorable model mix.

Right, right. And 2Q, given the seasonality, if the same model mix continues, should be slightly better, given the seasonality. Got it. Got it.

[Operator Instructions] The next question is from the line of [ Ritu Kumari ] from LK Investments.

Just had one question. What is your focus in terms of portfolio expansion? I mean, what sort of products would you look at? If you could just help me with that?

Right now, we're doing seats, we're going from NVH parts and the sunshade. We're looking at some more parts. Once something happens, we'll let you know.

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

Thank you for your time and participation. We continue to be optimistic about the opportunities before us and look forward to sharing these with you as we move forward. Should you need any input or clarification, please write in to us or our Investor Relationship partner, CDR India.

Thank you. On behalf of NDR Auto Components Limited, that concludes the conference call. Thank you for joining us. You may now disconnect your lines.