Action Construction Equipment : Transcript Concall ACE 07.02.2023

Action Construction Equipment Limited

Corporate & Registered Office

Dudhola Link Road, Dudhola, Distt. Palwal-121102, Haryana, India

Date: February 10, 2023
To,
The Manager Listing	The Manager Listing
BSE Limited	National Stock Exchange of India Ltd.
5th Floor, P.J. Towers,	Exchange Plaza, Bandra Kurla Complex,
Dalal Street,	Bandra (E),
Mumbai-400001	Mumbai-400051
Scrip Code: 532762	CM Quote: ACE

Subject: Earnings Call Transcript Q3-FY23.

Dear Sir/Madam,

Pursuant to Regulation 30 and 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed herewith, Earnings Call Transcript (Q3-FY23) of the Company.

Kindly take the above in your record.

Thanking You.

Yours faithfully,

For Action Construction Equipment Limited

ANIL KUMAR

Digitally signed by ANIL KUMAR Date: 2023.02.10 10:57:31 +05'30'

Anil Kumar

Company Secretary & Compliance Officer

Corporate Office: Phone: [phone] (50 Lines), Fax: [phone],E-mail:[e-mail]

Mktg. H.Q.: 4th Floor, Pinnacle, Surajkund, Faridabad, NCR-121009, Phone: [phone] (100 Lines), Fax: [phone], Email: marketing@ace-

cranes.com Customer Care No.:1800 1800 004 (Toll Free), CIN: L74899HR1995PLC053860, Website: www.ace-cranes.com

"Action Construction Equipment Limited Q3 FY2023 Earnings Conference Call"

February 07, 2023

ANALYST:MR. ABHINEET ANAND - EMKAY GLOBAL FINANCIAL SERVICES

MANAGEMENT: MR. SORAB AGARWAL - EXECUTIVE DIRECTOR - ACTION CONSTRUCTION EQUIPMENT LIMITED

MR. RAJAN LUTHRA - CHIEF FINANCIAL OFFICER - ACTION CONSTRUCTION EQUIPMENT LIMITED

MR. VYOM AGARWAL - HEAD INVESTOR RELATIONS

• ACTION CONSTRUCTION EQUIPMENT LIMITED
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Action Construction Equipment Limited

February 07, 2023

Moderator:Ladies and gentlemen, good day and welcome to the Action Construction Equipment Limited Q3 FY2023 Earnings Conference Call hosted by Emkay Global Financial Services. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions at the end of today's presentation. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Abhineet Anand from Emkay Global Financial Services. Thank you and over to you Sir!

Abhineet Anand: Thanks Lizann. Good afternoon everyone. I would first like to thank the management of Action Construction Equipment for giving Emkay this opportunity to host this call. We have with us the senior management of Action Construction. We have Mr. Sorab Aggarwal, Executive Director, Mr. Rajan Luthra, CFO and Mr. Vyom Agarwal, Head IR. I will hand it over to Sorab Sir for giving the opening remarks post which will open the floor for Q&A. Over to you Sir.

Sorab Agarwal: Good afternoon everybody. Thank you good afternoon everybody and welcome to this earnings conference call for discussing the results for the quarter and nine months ended December 31, 2022. I take this opportunity to wish all of you a fabulous New Year with good health and happiness. Along with me in today's earnings call, we have our CFO, Mr. Rajan Luthra and our Head of Investor Relations Mr. Vyom Agarwal. I hope that all of you have had an opportunity to look at the company's financial statement and the earnings presentation which had been circulated and uploaded at the stock exchange.

Let me start with some of the recent business highlights. To strengthen our product portfolio and showcasing our technical products, the company has recently unveiled India's first indigenously designed and developed fully electric mobile crane with breakthrough technology and zero emissions. Expanding our presence in the heavy crane segment, we have also launched India's biggest crane with 180 tonne lifting capacity and also showcased 35 tonnes 4x4 pick and carry crane which is our biggest. With our focus on the export market and the defense sector, the company has also launched new range of tele handlers and also India's first series of aerial work platforms also popularly called as an AWP for the domestic markets. This occasion of inauguration of all these new machines was graced by Mr. Nitin Gadkari, Honorable Minister for Road Transport and Highways India amongst the gathering of industry leadership, customers, business partners and company delegates to address the emerging needs and technology requirements with the backdrop of reducing carbon footprint of our end users. With these new launches, ACE marks India's first indigenously developed 100% electric construction business and propels India's growth on the global platform of technological advancement.

Further to brief you on the financial performance of the Q3 of FY2023, the operational revenue grew by 27% on a year-on-year basis to Rs.555 Crores with an EBITDA of Rs.67.67 Crores showcasing a growth of 58%. The EBITDA margins stood at 12.2%. The profit before tax stood at 10.9% that is around Rs.60.27 Crores and PAT margins were at 8.1% around Rs.45 Crores. I

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Action Construction Equipment Limited

February 07, 2023

am delighted to share that these are our best ever quarterly revenue EBITDA, PBT, and PAT numbers ever. For the nine months ended FY2023, the operational revenue grew by 38% as compared to similar period of FY2022 and stood at Rs.1545 Crores with EBITDA of Rs.166 Crores which is a 49% growth on year-on-year basis. Our PBT grew by 57% to Rs.146.33 Crores. The PAT stood at Rs.109 Crores with a 56% growth on year-on-year basis and EBITDA margin of 10.7% and net profit margin of 7.1% are also better as compared to last year's nine month results.

Now let me give you a sequential perspective. For the Q3 FY2023 the operational revenues grew by 13% on quarter-on-quarter basis with 150 basis points improvement in EBITDA margins. The PAT during the quarter increased by 25.4% on a quarter-on-quarter basis and PBT and EBITDA numbers registered a growth of approximately 30% respectively. The company sustained its growth momentum across all operating segments during the quarter driven by focus on customer centricity, execution and agility in operations. In the crane segment during the quarter gone by, we reiterated our dominant market leadership position and registered revenue of Rs.385 Crores with margins of 13.5%.

The construction equipment segment clocked revenue of Rs.62.5 Crores with EBITDA at 10.27%. The metal handling segment recorded revenue of Rs.44.5 Crores in margins at 15.65% and agri division registered revenue Rs.64 Crores while maintaining margins at around 3.74%. While the construction equipment cranes has led the growth, agri has shown some signs of improvement with December quarter numbers sequentially better than September. With lower inflation, strong winter crop sowing and signs of pickup in farm income, it is likely that the rural slowdown is bottoming out. Our consistent strong all around performance is a testimony to our strategic directly centered of our brand, our capabilities, our execution skills along with agility in running the business and most importantly the determination and passion of our talented purpose driven team members.

On the operational side, the economic activity in India continued to gather momentum with sequential moderation and commodity inflation even as core inflation remained elevated all the major commodities still remained at an elevated level when compared to long term averages. This is evident when you look at the inflation from medium term perspective. Commodities such as mild steel, alloy steel, pig iron, aluminum, copper, rubber, etc., are seeing close to 50% inflation when compared to pre COVID levels. To summarize commodity inflation seems to have peaked and is moderating from its unprecedented level and that all augurs well for our industry. We remain focused to deliver on our growth agenda growth that is consistent, competitive and profitable. We will try and continue to manage the delicate balance of ensuring competitiveness of our products and keeping our margin profile in a healthy range. Looking ahead, we would like to reiterate our previous guidance and expect a growth of 25% to 30% in the crane segment for the current year and a 30% to 35% growth in the construction equipment segment.

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Action Construction Equipment Limited

February 07, 2023

Material handling and agri segments are expected to grow at around 10% and 15% respectively during this year. On the whole, we are looking at least a 28% to 30% increase in our top line for the current year with the expansion in EBITDA margins as compared to last year. Further our Honorable Finance Minister has presented the Union Budget which lays down seven priority areas that is inclusive development, Sabka Saath Sabka Vikas, reaching out to the last mile, infrastructure and investments, unleashing the potential, green growth, youth power and finally very importantly boost to the financial sector. The budget sets out realistic and inclusive vision for the nation and is in line with the vision of our Prime Minister to make India Athamnirbar while giving a boost to Make in India concept. Capital expenditure outlay will be stepped up by 33% for the third year in a row to Rs.10 lakh Crores in FY2023-FY2024. Also the effective capital expenditure of the Central Government is estimated at Rs.13.7 lakh Crores which is equivalent to 4.5% of our GDP. Allocation towards capital expenditure and infrastructure layout including the setting up of new infrastructure finance secretariat will enhance opportunities for private investments in sectors like railways, roads, urban, infra and power.

Global manufacturers are looking beyond China. With our Prime Minister Narendra Modi stepping up to seize the moment, we believe that India will be a big beneficiary as companies move forward towards China plus one strategy. This along with the PLI initiatives has been helping to revive the industrial capex cycle thereby increasing private capex. This makes us believe that the demand scenario should be further strengthened and will continue to provide strong growth momentum to our company in the medium to long term. With this, I would like to open the call for question and answer session. Thank you.

Moderator:Thank you. Ladies and gentlemen, we will now begin the question and answer session. The first question is from the line of Parag Thakkar from Anvil Wealth Management Private Limited. Please go ahead.

Parag Thakkar: Congratulation on great set of numbers and guidance. I wanted to just understand what is the breakup of our crane business, so how much comes from real estate, how much comes from industrial capex, how much comes from railways or refineries I do not know so I just wanted a segmental breakup in the cranes business?

Sorab Agarwal: Yes thank you. I do think we have a segmental analysis available offhand with respect to the end user segment, but broadly we can tell you that within the cranes about 10% to 12% comes from the real estate side and let us say the balance about 45% and 45% approximately would come from infra and manufacturing. The cranes are used not only for infrastructure and construction at large but also for manufacturing, for lifting, and shifting goods within the factories or logistic so about 10% would be approximately real estate. About 25% plus or minus with respect to infrastructure and 45% to 50% plus or minus with respect to manufacturing.

Parag Thakkar: Manufacturing includes refineries and it includes various things right?

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