PRECAM - Precision Camshafts Limited Share Price

In the earnings call for Q3 FY 2025-26, Precision Camshafts Limited (PCL) reported a net profit of INR 9.58 crores, a significant recovery from a deficit of INR 42 crores in the previous quarter and an increase from a profit of INR 5 crores in the same quarter of the previous year. The company's stand-alone revenue reached INR 153 crores, yielding an EBITDA margin of 14% and a PAT margin of 6.2%.

Management highlighted several forward-looking points, including:

1. New Business Awards: PCL secured new contracts, including:

   • 3,80,000 camshafts per year from Maruti Suzuki for a 3-cylinder engine starting in 2027.
   • 2,80,000 camshafts from Hyundai India starting in 2026.
   • 6,00,000 camshafts per year from Mahindra for existing engines starting from FY 26-27, with peak volumes in FY 27-28.
   • 1,20,000 camshafts from Uzbekistan Auto starting in FY 26-27.
   • 2,80,000 camshafts from Tata Motors beginning in FY 26-27.
   • 1,20,000 camshafts from Renault Nissan India also commencing in FY 26-27.

2. Order Book Value: The new contracts represent a cumulative business potential of nearly INR 1,500 crores over their lifetime, enhancing revenue visibility for the company.

3. Investment in Capacity: PCL plans to invest approximately INR 120 crores in capacity enhancement and advanced manufacturing capabilities, including the development of a state-of-the-art facility in Solapur to improve production capacity.

4. Sustainability Focus: The company has expanded its solar power capacity to 29 megawatts, aimed at reducing reliance on non-renewable energy and lowering power costs.

5. Growth Outlook: Management expects demand for their products to increase over the next 2-3 years, with stable operational performance across existing and new customer engagements.

Overall, PCL remains optimistic about future growth, focusing on expanding both its domestic and international presence in the camshaft business.

1. Question from Gautam Rajesh: "Could you provide us an update or status of the EV business, specifically regarding our strategy and future plans in India?"

   Answer: The global EV business has faced a slowdown, with many customers shifting from all-electric to hybrid powertrains, which benefits our core camshaft business. In India, our Tata Ace conversion has faced regulatory and ecosystem challenges. We are now focused on electrifying a heavy commercial vehicle, with delivery expected soon, underpinning a future order book reliant on successful vehicle testing and regulatory compliance.

2. Question from Prithika: "What is the outlook for demand sustainability over the next 2-3 years and are there any signs of slowdown from OEMs?"

   Answer: We anticipate increased business over the next 2-3 years, backed by several new orders in hand. We've invested in plant and machinery enhancements and, from our current customer base, do not foresee any slowdown. We are also exploring opportunities with new clients to diversify our camshaft offerings, reinforcing a positive outlook.

3. Question from Kalpesh Shah: "Is the company considering acquisitions or partnerships to enhance its product portfolio or expand geographically?"

   Answer: Yes, we are actively exploring acquisition opportunities within India, focusing on growth sectors like automotive, agriculture, and defense. We aim to find adjacent capabilities that align with our strengths in casting, machining, and forging. We're currently not targeting international markets due to their unstable growth prospects.

4. Question from Subodh More: "How will expansion into Europe and North America affect domestic versus export revenues, particularly concerning camshaft versus EV composition?"

   Answer: Our expansion efforts are tied to our camshaft and machined components, not the EV segment. Our engagement in North America and Europe focuses on these products as these regions become costly for manufacturing. Currently, our revenue is split fairly evenly between domestic and export markets, but we expect this balance to remain as Indian market growth continues robustly.