Fiem Industries Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from Fiem Industries Ltd (FIEMIND) Q3 FY23 Earnings Concall

Management Update:

• [00:04:10] FIEMIND said it achieved highest ever sales and profits for the first nine months of FY23. LED shares as a percentage of total automotive lighting touched 50%, and EVs grew more than 3 times over last year.

• [00:05:32] FIEMIND said the outlook for the economy remains bullish and investment for infrastructure and rural economy are increasing.

Q&A Highlights:

• [00:12:04] Viraj Kacharia from Securities Investment asked about the penetration of LED in terms of two-wheeler industry in India. J.K. Jain MD replied that the penetration is very strong as every day most of conventional lamps are changed into LED.

• [00:12:47] Viraj Kacharia from Securities Investment enquired if FIEMIND is suppliers for the new portfolio of products by Yamaha and Hero Motors. J.K. Jain MD said the company is the sole supplier of LED headlight and taillight antennas for Yamaha, with both domestic and export models available.

• [00:15:47] Viraj Kacharia from Securities Investment queried about contribution margins going ahead. J.K. Jain MD replied that the company is closely monitoring escalations and that is reflected in the increased margins.

• [00:17:05] Jatin asked about Yamaha revenue trajectory going forward. Arvind Chauhan CS clarified that some models were fixed for the export market, mainly Europe, and these volumes have been reached. There may be more models coming in the next few quarters due to this fixed volume.

• [00:19:59] Jatin also asked about the drivers of margins performance. O. P. Gupta CFO replied that FIEMIND’s EBITDA margin has increased from 12% to 13.5% because customers are paying their escalations on time and the raw material consumption has decreased by 1%.

• [00:24:40] Komal Ladh from YellowJersey asked what kind of demand FIEMIND expects from two-wheeler industry in the coming 2 years. O. P. Gupta CFO said that the domestic two-wheeler industry is well positioned for growth, and should get back to its peak in the next few years. Export markets are also looking promising with the China Plus One strategy, providing further potential for growth over the next couple of years.

• [00:26:29] Aashin Modi at Equirus enquired about RM prices currently and if FIEMIND will have to take any price cuts if RM prices are decreasing. Arvind Chauhan CS answered that prices have been softening, but this is always passed on to customers with a lag of one or two quarters.

• [00:27:18] Aashin Modi at Equirus asked what kind of volume growth FIEMIND expects with increasing share of business with existing customers. O. P. Gupta CFO replied that there are many factors driving growth, including more realization through technology and increased business from existing OEM customers and EVs, LEDs and more.

• [00:28:51] Aashin Modi at Equirus also asked about the FAME-II subsidy and EV order book if it has a higher proportion of Hero Electric and Okinaw. J.K. Jain MD answered that these are short term hurdles and are not permanent things. The volumes have already been started and production is on.

• [00:31:03] Nirvana Laha enquired what percentage of FIEMIND sales are related to OEM exports. O. P. Gupta CFO answered that it is not possible to give exact numbers for exports as the company is supplying to multiple geographies in Europe and Japan.

• [00:35:21] Shakti Agrawal asked about the capacity utilization currently and peak that can be achieved. O. P. Gupta CFO answered that the capacity utilization is 75% for the quarter. And at peak it can go beyond 90%.

• [00:36:14] Shakti Agrawal asked about the FIEMIND’s overall kit value per vehicle in the entire two wheelers in terms of light. O. P. Gupta CFO said that it depends and varies from INR800 to INR5,000.

• [00:38:18] Shakti Agrawal asked about the capex outlook for FY24. O. P. Gupta CFO replied that for the current year, FIEMIND should budget between INR45-50 crores and for next year an additional INR40-50 crores.

• [00:43:48] Anika Mittal from Nvest Research queried about the revenue guidance for FY23 and if 4Q23 will be better than 3Q23. O. P. Gupta CFO answered that generally the company has given a guidance of 15% revenue growth and also 4Q is always better than 3Q and it will be maintained.

• [00:44:22] Anika Mittal from Nvest Research also asked about the EV share for 3Q23 and order book currently. O. P. Gupta CFO replied that EV share is close to 6%. Order book currently is around INR850-900 crores.