GREAVESCOT - Greaves Cotton Ltd. Share Price

Greaves Cotton Limited provided a robust outlook during its quarterly earnings call on April 30, 2025. The management anticipates continued growth driven by strategic initiatives and a diversification of its portfolio, aiming for a topline of Rs. 15,000 crore by 2030 through both organic growth and strategic acquisitions.

Key points discussed include:

1. Financial Performance: For Q4 FY25, the company reported consolidated revenues of Rs. 823 crore, with standalone revenue increasing by 19% to Rs. 573 crore. Full-year consolidated revenues reached Rs. 2,918 crore, with standalone revenues growing by 12% to Rs. 1,988 crore.

2. Profitability: Standalone EBITDA for Q4 stood at Rs. 84 crore, with a margin of 14.7%. The combined Q4 EBITDA for Greaves Cotton and Excel Controlinkage was Rs. 107 crore, showing a margin of 16.4%.

3. Electric Mobility Growth: The Electric Mobility division recorded revenues of Rs. 659 crore for FY25, and management indicated a strong growth trajectory in electric two-wheelers and L5 segments, with volumes rising by 10% and 61% respectively.

4. Future Plans: Management remains committed to driving innovation, with ongoing strategic investments to enhance capacity and the product portfolio. Plans are in place to expand in high-potential categories and pursue further acquisitions while maintaining a tech-driven growth model.

5. Strategic Investments: The organization plans to continue capital expenditure of about Rs. 100 crore for the upcoming year aimed at production efficiency and capacity enhancement.

6. Cash Position: Greaves Cotton maintains a strong financial health with cash reserves of Rs. 379 crore and operates with a near-zero debt balance sheet, positioning itself favorably for future investments.

In conclusion, management expressed optimism about the company's growth potential, supported by industry trends and internal strategies focused on operational excellence and sustainable innovations.

Major Q&A Excerpts from the Earnings Call Transcript

1. Question by Tushar Bohra: "As an outsider coming into the firm, where do you think the firm is in terms of the overall journey and how comfortable are you taking on the target of a 6x increase in revenues over the next 6 years?"

   Answer by Parag Satpute: "I'm excited to join Greaves Cotton, having just started my role two weeks ago. The company's recent track record is strong, which is why I found the opportunity appealing. Interacting with management and diving into business plans has solidified my belief in our potential for growth. While it's early to make specific assessments, I'm genuinely optimistic."

2. Question by Tushar Bohra: "Should we consider the fourth-quarter growth as a sustainable benchmark moving forward for the Engineering side of the business?"

   Answer by Akhila Balachandar: "Q4 often marks our best quarter, and we have successfully implemented several initiatives over the last few quarters, laying a foundation for future growth. While Q4 performance reflects our potential, we aim to maintain this momentum, focusing on sustainable progress as we pursue our long-term vision of growth."

3. Question by Tushar Bohra: "What is the profitability status of the EV business and when do we aim to break even at EBITDA level?"

   Answer by Vijaya Kumar: "Due to the transition from a non-subsidy scenario to receiving approvals for subsidies, our revenue reflects this change. We're building the path to profitability, emphasizing cost control and increasing our market share. While I can't guarantee precise timelines, we're focused on achieving a more favorable burn rate as we expand our product offerings."

4. Question by Saket Kapoor: "What have we factored in regarding the growth trajectory and quarterly burn rate for the Electric Mobility division?"

   Answer by Vijaya Kumar: "The current subsidy stands at Rs. 2,500 per kWh for two-wheelers, and we anticipate a continued government commitment through this fiscal year. We're preparing for a non-subsidy future by enhancing product value. We expect our burn rate to improve as new products gain traction and customer acceptance rises."

5. Question by Krisha Kansara: "Can you elaborate on the drivers of 30% growth in the Greaves Engine segment and the demand from specific sectors?"

   Answer by Akhila Balachandar: "The growth stems mainly from diversifying our portfolio beyond automotive applications, specifically through gensets. Our market share has improved from approximately 2.7% to about 4%. Non-auto applications like gensets will dominate our strategy, reflecting a strong customer-centric approach."

6. Question by Darshan Jhaveri: "Given the recent growth, what kind of seasonality do you expect moving forward?"

   Answer by Akhila Balachandar: "While Q4 typically shows the highest performance, we do not foresee substantial seasonal fluctuations. Our ongoing initiatives focus on optimizing operations and enhancing revenues, which will play a crucial role in our growth strategy going forward."

Each answer focuses on forward guidance, insights into business operations, and expresses optimism about the company's performance prospects, aligning with the organization's strategic goals.