How is the Growth Wired For MSWIL? NDTV Profit

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00:00 Hello and welcome. Thanks for tuning in to NDTV Profit. I am Harsh Saita and you are

00:12 watching the Small and Mid Cap show. Quickly on to our first company in focus today. It's

00:17 Madasan Sumi Wiring. Now the company reported the best ever quarterly and yearly performance

00:22 for revenue and EBITDA and 38% rise in net profit when I am looking at it year on year.

00:27 My colleague Tushar earlier spoke to the company's CFO Mahendra Chhabra and CEO Anura Galot and

00:34 began by asking about their fourth quarter earnings and numbers. Here's a slice of that

00:38 conversation. Listen in.

00:40 I would like to say thankful to our customers showing trust on us and we are working closely

00:46 with them. As far as you also suggested that we are the best ever revenue and EBITDA. PV

00:54 industry has grown in the two digit in Q4 and a single digit growth in the 12 months

00:59 of FY24 versus 23 whereas MSWILL has grown around 20% year on year in Q4 around 17.8%

01:09 comparing to FY24 versus FY23. We have outperformed the market on year on year quarter 4 and the

01:16 whole financial year as well. There is a growth is due to two major factors. One is the volume

01:22 growth at OEM and second is customer of customer are choosing the feature rich models or top

01:27 of the top models and subgrade is happening and thus that is more content of wiring harness

01:32 in the car. So MSWILL always get benefit as cost of the sales are dependent on the models.

01:40 So higher the model the more the sales for MSWILL. As you also know the market is supposed

01:45 to grow because all the customer has already invested heavily to create a capacity and

01:51 our biggest customer for example Maruti Suzuki already announced that they will grow and

01:55 this will be building capacity from 2.3 million to 4 million volume in next 6 to 7 years time.

02:02 This data is already available in the public and you can see for the other OEMs as well.

02:07 So they are going into the EVs hybrid and export. So market is going to be very very

02:13 interesting and we showcases that this is going to be a very very good growth in the

02:18 future. So I think that this is not the best ever revenue indicator. It's a long way and

02:27 I think in the coming time you will see that we are going to beat our past performance

02:32 also. So will you better your FI24 performance than FI25? So straight forward answer yes

02:38 or no sir? Yes subject to the customer plans. If their plans goes as they have suggested

02:47 and advised to the market surely we will be also going in the same direction. Alright

02:54 Mr. Chhabra coming to you now. Lot of talking points from that chat with Mr. Gailaut right

02:59 now. But let's talk about the contribution or how the business is looking like from the

03:04 EV perspective as well as from the ICE perspective. What is the split or the mix looking like

03:10 at this point of time? I ask from the point of view of premiumization which Mr. Gailaut

03:14 also pointed out and also the fact that there is some kind of apprehension or slowdown if

03:20 I may say in the EV space. So are you seeing those murmurs? How is the business looking

03:25 like from the both EV as well as ICE perspective? Yeah so as far as business is concerned we

03:31 see growth both in ICE as well as EV and our contribution from EV during the year was about

03:37 4% of our overall revenue which was much better than what we did in the previous year FI23.

03:44 So as of now we don't see really any slowdown now in terms of EV. But yes we will get to

03:48 know over a period of time what are the OEM plans as far as EVs are concerned. So in that

03:55 sense you are okay we are looking at your EBITDA is at 27% and your EBITDA margin is

04:00 at 140 basis points up at 13%. What is your targeted EBITDA margin? Do you want to grow

04:07 it even further going ahead? Yeah so we have good EBITDA for the quarter as well as for

04:13 the year. However as an organization we focus, we target growth, so return on capital employed.

04:19 For the year we achieved a growth of 48% and last year it was 44%. So we are doing much

04:25 better in terms of growth also and that is where we focus upon because that represents

04:30 the overall financial health of the organization. And as far as EBITDA is concerned yes we have

04:34 good amount of efforts in terms of efficiencies, cost optimization etc. which will continue

04:40 as we move forward as well. Okay so we see a 140 basis points, you are on a jump. So

04:48 next quarter or where do you want to end FI25 at in terms of EBITDA margins? Well we would

04:55 like to focus on those and we will do better on those. I would not really like to comment

04:59 on EBITDA margins. Alright, coming back to you Mr. Gyalot, we have a lot of policies

05:05 that came up during the quarter. India revised EV policy, the subsidy on electric two wheelers,

05:12 the fame two subsidy is going away. These policy changes, we are in a flux kind of situation

05:17 if I may say so. How does that impact you at MSWILL? Okay I would like to make one comment

05:25 here that MSWILL is an Indian agnostic company. So irrespective of any powertrain, you talk

05:33 about petrol, you talk about diesel, you talk about EV, hybrid or ICE, we are ready. So

05:41 it all depends on what customer is looking for the solution from us. So if customer is

05:48 asking for any new powertrain also, we are ready with that. We have strong parentage,

05:55 one side from SWS and from SAMIL, one side. We are on the technological advancement through

06:03 SWS. So we are having access of the technology which is happening across the globe on one

06:10 side and with the help of backward integration and the localization from the help of SAMIL,

06:19 I think we are in a very good position to serve any of the powertrain business which

06:25 is going to happen. So whether it's EV or any other, I think we are good to go. So my

06:34 question was actually from the point of the localization itself as part of the EV policy.

06:39 We know that WinFast has set up a plant in Tamil Nadu. Leap Motors also already announced

06:45 plans to enter India later this year. So foreign electric car makers are coming to India. So

06:51 how much of that poses an opportunity for you sir?

06:55 See, there are two types of customers. One is the established customer in Indian market

07:01 with whom we are working. I think with all the major OEMs or the OEMs we are working

07:05 with and the new customer which are coming to India, we are definitely working with them

07:12 and we are having a good, I can say, opportunity over there. Obviously, as I said, we are an

07:19 Indian agnostic company. So anything which customer is looking at solution from us, we

07:25 are there. We are very focused and very centric to the customer requirements. So if customer

07:31 is going to ask us that they need some solution towards their issues, we are already there.

07:38 And few of these next generation customer or the new customer, we are already in touch

07:43 and I think you will see in the near future that we will be serving them as well.

07:48 Interesting. So Mr. Chhabra, coming to you now, what are your, so we are looking at at

07:56 least growth in FI25, so to speak. You are going to build on the premization that you

08:00 are already seeing. So what are your CAPEX plans for FI25 if you would like to discuss

08:05 with us at this point of time?

08:07 Sure. So we are looking at spending about 200 crores, so investing 200 crores in terms

08:12 of CAPEX for the financial year 2024-25, which would include in terms of, which would include

08:17 expansion, maintenance and the investment on the production efficiency.

08:25 And this will be from internal accruals as well? Are you trying, will not be any outside

08:31 funders or something on those lines?

08:32 Of course, we will be generating these funds internally and we are not targeting or we

08:36 are not planning any borrowings for these CAPEX.

08:39 All right. Finally, Mr. Ghelot, coming to you, outlook for FI25 finally once more, if

08:47 you want to tell us, because see, passenger vehicle makers are saying that the growth

08:52 that we have seen in post pandemic will not be a repeat. Most companies indicated low

08:58 to single digit growth in sales. Does that impact you immediately in FI25 or is it a

09:05 minor blip in the growth that's going to come in the long term?

09:09 Okay. There are a couple of factors which I want to talk about here. As I already submitted

09:15 to you that market is supposed to grow because all the major OEMs in the country has already

09:20 announced and heavily to create a capacity. As I told about the Maruti Suzuki itself,

09:27 they have said 2.3 million to 4 million in the next six to seven years time. We know

09:32 about the Tata Motors also, they have taken the Gujarat facility of Ford there. Also,

09:37 they have taken the land also in Tamil Nadu, near Vellore. So, and new companies, as you

09:42 suggested are also coming to India. Second thing is India's penetration of car is relatively

09:47 low at this point in time. It is only around 30, whereas the world average is around 340

09:54 and most of the European developed economies are having 500 plus per thousand people car

10:01 penetration. So, there is a good opportunity over there also. And India is the third largest

10:07 automotive market as well as the second largest road network at this time and new expressway

10:12 and the road infrastructure is coming with astonishing speed. So, that also gives a chance

10:16 of opportunity that we can sell the, and OEMs can sell the more car over there.

10:22 Another factor which is very important is the growing Indian middle class because increasing

10:26 disposable income is created over there, a large pool of potential car buyers are happening

10:31 there and these potential car buyers are also feeding demand for feature rich models, not

10:36 at the entry level. So, I think that is prompting new launches and things like that. So, I think

10:42 market is going to be very interesting and which showcase that there is to be a very,

10:46 very good growth in the future.

10:48 All right. So, that was Tushar in conversation with Madhusan Sumi Wiring. Good conversation.

10:56 We will of course, time to slip into a very short break. On the other side, we will have

11:02 the management of NCC. We will have the head of strategy Neeraj Sharma to talk about the

11:07 Q4 numbers, extremely strong numbers coming in from NCC. But what is the outlook like

11:12 for FY25, both on in terms of top line margins as well as order book. Stay tuned.

11:18 Thank you.

11:23 Thank you.

11:24 Thank you.

11:25 Thank you.

11:26 (upbeat music)

11:28 you

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