AUTOAXLES - Automotive Axles Ltd. Share Price

Question 1: "Considering all these factors and also the cyclical nature of the industry, what is your assessment of the replacement demand? And when do you expect this to play out?"

Answer: "You are correct in your observations. We believe the cyclicality of the market has changed. Instead of the usual variations of 15%-20%, we now recognize that it's between 10%. Current average volumes suggest peaks around 480,000-500,000 by 2029-2030 due to rising domestic consumption. Replacement demand is expected to increase significantly due to new regulations. However, next year's volumes may be 3%-4% down, possibly stabilizing early in the year."

Question 2: "Was the drop in our revenue only due to the impact of tariffs in exports?"

Answer: "The revenue drop stemmed from product mix issues, particularly a slowdown in tipper sales due to monsoons. Our customer base's varying sales also contributed. While exports were stable, North America's M&HCV market experienced setbacks, affecting our performance. Despite these challenges, we anticipate better results in the upcoming quarters, buoyed by strong domestic demand and GST adjustments."

Question 3: "How much is the export as a percentage of revenue, an approximate number?"

Answer: "Exports are slightly lower than the double-digit percentage we've maintained historically, currently remaining around the same levels as before. We aren't seeing significant shifts in this percentage and continue to strategize to enhance our export performance moving forward."

Question 4: "When do we start seeing the benefit of margin expansion from the structural changes?"

Answer: "We expect to see EBITDA margins improve in the next two quarters as volumes increase, providing leverage on fixed costs. While we've seen consistent improvement in operating margins, a significant portion of our EBITDA margin is still affected by volume and product mix, which should stabilize as we absorb fixed costs better."

Question 5: "Has the recent GST reduction impacted the sentiment among fleet operators?"

Answer: "The GST reduction has had a positive sentiment, but it's still early to see measurable impacts in demand. It should take one or two more quarters for these impacts to be fully realized, but we are optimistic about ending the year better than initially forecasted, anticipating growth of around 5%."

Question 6: "How much impact will the Dedicated Freight Corridor (DFC) have on overall MHCV volume?"

Answer: "In the long run, the DFC, along with improved efficiency and fuel economy, may contribute to an expected 7%-8% impact on volumes from 2029 onward. Currently, we do not see significant short-term effects as domestic demand remains stable."

Question 7: "Can you quantify the volume number for Q2 FY '26?"

Answer: "We estimate the volume for Q2 FY '26 to be around 370,000-380,000 based on current projections. This figure can change as we see how the next two quarters unfold, and the market begins to stabilize."

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