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How is the Growth Wired For MSWIL? NDTV Profit
NDTV Profit
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5/17/2024
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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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