TALBROAUTO - Talbros Automotive Components Ltd. Share Price

The management of Talbros Automotive Components Limited provided a cautious but positive outlook for FY '26, anticipating a growth rate of 8-9% domestically, supported by new orders from clients such as Mahindra, Kia Motors, and Ashok Leyland. On the export front, the company expects double-digit growth. For FY '25, the total revenue reached INR 845 crores, reflecting a 7% increase year-on-year. The Fourth quarter demonstrated modest revenue growth of 2%, totalling INR 211 crores.

Key forward-looking points include:

1. New Business Orders: Talbros has secured new orders totalling INR 1,475 crores in FY '25, with substantial demand in their Gasket division, which accounts for approximately 53% of revenue.

2. Heat Shield Segment Growth: The Heat Shield segment has orders worth INR 245 crores and generated revenue of INR 51.6 crores, showcasing a robust margin profile.

3. Investment in EV Components: Management emphasized a strategic push toward electric vehicle components, with notable contracts secured in FY '25, anticipating participation in the significant growth of the EV market.

4. Market Positioning: With a healthy order book and ongoing projects, Talbros sees itself well-positioned to sustain growth, especially in the sectors of Gaskets and Heat Shields.

5. Challenges in Forging Division: The Forging division showed flat growth due to exports primarily to Europe. However, the management noted that commercial billing for delayed projects is expected to begin soon, which could positively impact future revenues.

6. Expectations for Margin Improvement: The management targets an EBITDA margin of around 16.75% to 17% in the coming fiscal year, indicating a projected continued focus on operational efficiency and cost management.

Overall, the management expresses confidence in navigating challenges while capitalizing on growth opportunities, particularly within well-performing segments and emerging markets like EVs.

Here are the major questions and respective answers from the Q&A section of the earnings transcript:

Question: What is our expectation on how recent mandatory AC changes will grow our segment, considering we supply components like gaskets and heat shields?

Answer: We have just begun supplying heat shields to Tata Motors for their truck cabins. However, we're still in the process of finalizing the potential sales and order book. While we've received RFQs and expect validation soon, specific figures aren't available yet.

Question: Are you seeing any revival in the European and North American export markets?

Answer: European orders were delayed due to design changes but will see billing commence in Q3 2025. We've seen improved inventory levels, leading to an expected growth of 10-15% next year for UK-based businesses and 30-35% for JCB projects, pushing our overall export share to about 29-30%.

Question: What is our growth expectation for FY '26?

Answer: We anticipate a growth rate of 8-9% domestically, driven by new orders from Mahindra, Kia Motors, and Ashok Leyland. Our export market should also show double-digit growth given the current order inflow.

Question: What about the Marelli order book and its execution timeline?

Answer: Our Marelli orders will begin impact in Q3 2025, focusing on supplying to Maruti's EV vehicle. We expect a 35-40% growth in this business as the project picks up steam from July onwards.

Question: Can you comment on any potential acquisition of Marelli by Motherson?

Answer: We can't comment on external acquisition news but would like to assure stakeholders that it will not impact our operations moving forward.

Question: What is the capacity utilization for each segment?

Answer: Current capacities are approximately 82% for gaskets, 80% for forging, and 75% for Marelli. Future enhancements could increase peak revenue up to INR 580 crores for gaskets and INR 325 crores for forging.

Question: What is our capex and growth plan moving forward?

Answer: We've executed a capex of INR 45 crores last year and plan to invest a similar amount in the next fiscal year. The overall capex plan of INR 110 crores should be fully completed by FY '26.

Question: How have industry and market changes impacted our top line growth?

Answer: We're aware of delays due to economic conditions and order launches. With expected new launches from Stellantis and Jaguar, we anticipate achieving INR 2,000 crores despite potential setbacks pushing timelines by 6-9 months.

These responses summarize the key highlights and guidance provided during the Q&A segment of the earnings call, aimed at addressing investor concerns comprehensively.