Gabriel India : Q1FY23 Earnings Call

"Gabriel India Limited

Q1 FY2023 Earnings Conference Call"

August 08, 2022

(Disclaimer: E&EO- This transcript is edited for factual errors. In case of discrepancy, the audio recordings uploaded on the stock exchange on 8th August 2022 will prevail.)

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Gabriel India Limited

August 08, 2022

MANAGEMENT: MR. MANOJ KOLHATKAR - MANAGING DIRECTOR -

GABRIEL INDIA LIMITED

MR. RISHI LUHARUKA - CHIEF FINANCIAL OFFICER -

GABRIEL INDIA LIMITED

MR. NILESH JAIN - COMPANY SECRETARY -

GABRIEL INDIA LIMITED

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Gabriel India Limited

August 08, 2022

Moderator:Ladies and gentlemen, good day and welcome to Gabriel India Limited Q1 FY2023 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" and then "0" on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Kolhatkar - Managing Director of Gabriel India. Thank you and over to you, Sir!

Manoj Kolhatkar: Thank you. Good Morning all. This is Manoj Kolhatkar. A warm welcome to everybody who are joining on the call today. Joining me is, Rishi Luharuka who is our CFO, Nilesh Jain, our Company Secretary and our Investor Relations Advisors, SGA.

We have uploaded our results and investor presentation for the quarter ended June 30, 2022 on the stock exchange and the website. Hope all of you had a chance to go through the same. I will come to the presentation side by side but before that I will just set the context.

Briefly I will just tell you about the operations of the company for the Q1 FY23 so just to share that it has at least started on a good note after two years of COVID. This first quarter has been very strong and thankfully for all of us we have not seen COVID pandemic wave hitting us. Yes, of course we all know that it is entirely behind us but I think the vaccinations overall has helped the country at large so we have seen a robust industry volumes and that is reflecting in our results as well.

Also, we are seeing lot of new models being launched and many more yet to be launched just before the festive season, so our utilization levels have also been fairly good. Before we get into the numbers, I will provide a quick update on the current environment so Q1 FY.23 was of course much better than the quarter of last year because we all know in last year we had the COVID second wave hitting us so we had subdued sale in the month of May and also in June to some extent so this clearly reflects in the result as well. However, automobile industry continued to witness increases in prices of steel, aluminium, and other metals.

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Gabriel India Limited

August 08, 2022

Semiconductor shortage also is not entirely behind us but as you all have seen the order book is very strong and particularly the passenger vehicle players have been able to introduce lot of new models in this rather euphoric environment. Passenger vehicles saw improved performance in the first quarter driven by several of these new launches, EV in supply chains some of the OEMs were able to manage the semiconductors issues a little better. We also saw in the first quarter after a long operating almost each quarter of continuous price increases in commodity. We saw a little softening in commodity prices and a shift in consumer preference moving towards SUVs rather than hatchbacks and Sedans. With the upcoming festive season this demand is expected to sustain.

The two-wheeler segment was impacted due to significant increase in input cost, multiple price increases by the OEMs and of course, yes the running cost driven by the higher fuel prices. I think we have been dampners in the two-wheeler which is kind of bottom of the pyramid particularly in the commuter segment. The CV sales, commercial vehicle sales have improved year on year basis and we are seeing higher infrastructure spending by the government, opening of the economy and also increased freight movement so CV segment have also been quite robust.

While I say two-wheeler sales are still little subdued but it is showing signs of improvement ahead of the festive season, retail demand still seems far from the buoyant levels of the whole year as inventory at dealership have remained little over the ideal level. According to many experts, the festive season sales are 20% to 30% higher than any normal month. Many dealers do not expect to reach the pre COVID level of this festive season sales yet especially in the commuter segment but according to dealerships both the enquiries and footfalls have reduced at the dealership.

Coming to semiconductor scenario which I said is getting little better, so we have seen better shipments from all OEMs. Waiting periods in the SUV segment have remained still lengthy. Strong bookings for newly launched vehicles indicate a strong pipeline of demand. EV which is electric vehicle segment has witnessed massive surge as was predicted. EV sales across two-wheeler segments cars have increased significantly even in terms of buses due to the very aggressive push by all state governments, we are seeing good increase in commercial vehicle buses as well; however, that number is very small but coming two wheelers that has been quite robust and the fuel price which is going up is adding to make this equation of cost of ownership even better for two-wheeler dealers particularly.

EV industry can be expected to be consistent. Demand for two wheelers, three wheelers is expected to be accelerated by massive demand from the B2B sector which would also be aided by the gradual shift of two wheelers minus the electric mobility. Their present EVs still account on the overall level less than 1% of the total market in India. The demand is

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Gabriel India Limited

August 08, 2022

growing very strongly. Out of the total almost three million EVs sold in FY2022 only about 21,000 were EV which accounts to hardly 0.7% but it is up from 0.2% in FY2021 and in fact as we speak in the first six months itself, we have crossed this figure of 20,000 electric vehicle passenger cars so we can see the growth rate is phenomenal in passenger cars as well.

In two wheelers it is far more rapid. I will share the figures also going forward but just to mention the two-wheeler EV is clocking almost 50,000 numbers every month. We had 50,000 in the first few months of this calendar year Jan, Feb, March and then we saw battery fires etc., which slowed down the growth, but it is coming back again to almost 50,000 levels so in the month of July the registration was about 44,000 in EV two wheelers.

Coming to the numbers now I will switch the presentation, since I am at a different location I would request my CFO, Rishi to handle the presentation part which I am surely able to see.

This is slide #3. I will tell the slide number so that you all can refer to that. This is our response to COVID. Why we still put it up because we are still seeing some cases of COVID. Thankfully the intensity is very low and it is normally a mild flu but we should never think that it is not behind us so we are taking all the necessary precautions. We have done the second dose. We have done even the booster dose to all employees, so we continue taking all precautions because safety is of paramount importance to all of us.

These are the supportive initiatives which are so useful for us when the second wave which was particularly devastating which held us see us through that wave, so we continue those initiatives. Coning to the result update, I am on slide 7 which is the financial highlights for the Q1 FY23. As you can see revenue, we had the highest ever quarterly sales crossing Rs. 720 Crores in one quarter so that is excellent work done by the entire team and of course thanks to our customers for having very robust pipeline of orders.

The same figure you can see in the month of Q1 FY23 comparable quarter last year was just 450 but as I said it was COVID impacted month so we really should not be comparing; however, it is 60% higher than that quarter. In terms of EBITDA again we clocked back to 7 plus percent. We are at 7.1% so about 51 Crores of EBITDA compared to the quarter Q1 FY2022 of Rs. 23 Crores and even if you see the last quarter, the preceding quarter is Rs.37.7 Crores.

In terms of PBT we again crossed the 6% which you are doing earlier. The 6.2% which is significantly higher than 3.5% achieved in the comparable quarter for the last year. We have looked up the same numbers, but you see the percentage growth over the last comparable

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