Release Date: January 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nelcast Ltd (BOM:532864, Financial) celebrated its 40th anniversary, marking a significant milestone in its history.
- The domestic market, particularly the tractor segment, showed signs of recovery with a 10% year-on-year growth in volumes.
- The company is optimistic about significant growth in FY26, supported by promising prospects of new export order wins.
- Nelcast Ltd (BOM:532864) is actively working on securing new orders, potentially adding $25 million to $60 million in new product wins.
- The company is strategically positioned with a clear order visibility and an exciting range of new products in the pipeline, aiming for enduring value delivery to stakeholders.
Negative Points
- Exports witnessed a decline due to macroeconomic headwinds in key markets, particularly the US.
- Total income for the quarter decreased to 297.1 crores from 323 crores in Q3 of FY24, indicating a revenue drop.
- EBITDA for the quarter was lower at 22.9 crores compared to 28.2 crores in the same quarter last year.
- The profit after tax during the quarter was only 6 crores, reflecting a challenging financial performance.
- The company faces uncertainties related to interest rates and US elections, impacting export volumes and production numbers.
Q & A Highlights
Q: Can you provide more details on the export numbers for this quarter and the reasons for the decline?
A: Our export numbers for this quarter were approximately 91 crores, down from about 130 crores in the previous quarter. The decline was due to uncertainty in the US market related to elections and potential rate cuts, as well as inventory corrections by our customers. We expect a return to normal levels in the fourth quarter. - Mr. P Deepak, Managing Director and CEO
Q: What is the outlook for the MNS CV segment, and are we seeing any recovery?
A: We are seeing some recovery in the tipper and hoist products, likely due to infrastructure spending. We expect a normal seasonal pattern in the current quarter, with moderate growth in our sales to the MNS CV segment, despite an overall industry decline. - Mr. P Deepak, Managing Director and CEO
Q: Are you still on track to achieve the target of 110,000 metric tons of volumes in FY26?
A: We are aiming for 105,000 to 108,000 metric tons, depending on industry growth and new product development timelines. If the industry grows by 5-10% and new product launches are on time, we are on track to meet this target. - Mr. P Deepak, Managing Director and CEO
Q: Can you provide an update on the European market and potential growth there?
A: We have completed an audit with a European customer and are addressing their feedback. We expect to start with a small order, with a potential for a larger order book once the initial order is successful. Meaningful deliveries are expected in FY27. - Mr. P Deepak, Managing Director and CEO
Q: What are the key macroeconomic factors anticipated to drive growth in the coming years?
A: Key factors include infrastructure investment, which will impact the MNS CV segment, and rural growth, which will affect tractor sales. These are critical areas we are closely monitoring. - Mr. P Deepak, Managing Director and CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
