Precision Camshafts Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Precision Camshafts Ltd (PRECAM) Q4 FY22 Earnings Concall

Management Update:

• PRECAM is focused on bringing high quality reliable products to the Indian market, while ensuring cost competitiveness with high localization.

• PRECAM is also in the process of setting up its first EV plant setup on Sholapur and have also signed some agreements with large customers.

Q&A Highlights:

• Vipul Shah from Sumangal Investments asked about more clarity on the LCV project. Karan Shah ED replied that due to confidentiality details cannot be given until the vehicle is launched. PRECAM added that it will be 3 tonne GVW type of vehicle with a payload of 1-1.5 tonne and fully electric. The use case is of 100-200 km run per day.

• Vipul Shah from Sumangal Investments also asked about funding source and launch timeline. Karan Shah ED said the capex required will be funded by internal generation and cash on hand. The time frame cannot be disclosed currently.

• Vipul Shah from Sumangal Investments enquired about volume-wise machine camshaft settling down 2-3 years going forward. Karan Shah ED answered that PRECAM expects to cross the 50% hurdle for machine camshaft volume-wise and it has the capacity. Also based on the orderbook, PRECAM expects to reach the full capacity utilization in 1-2 years.

• Vijay Kundan Jadhav asked about company’s plans for capital expenditure, production improvement or extinction.  Karan Shah ED said PRECAM already has some plans and most of it is in induction hardering of camshafts. Besides that there are no other plans, except electric LCV.  On operation improvement, PRECAM always strives towards it.

• Vishal Agarwal of Leo Capital asked about future standalone margins and if INR150 crore revenue run rate is sustainable. Karan Shah ED replied that a 20-25% margin should be seen as in past. Also the quarter lag with the material adjustment with customers, current fluctuation in margin should be correcting in future. On standalone business, the run rate is strong for future and should keep improving.

• Vipul Shah from Sumangal Investments, asked about the orderbook for PRECAM at standalone level and EMOSS. Karan Shah ED answered that orderbook size numbers cannot be given. But PRECAM is looking for growth in all of the companies that are part of the PCL group.

• Vipul Shah from Sumangal Investments also asked if PRECAM expects any sharp reduction in turnover at EMOSS and MFT level due to non-availability of spare parts. Karan Shah ED replied it has not seen any sharp decline in sales at MFT or EMOSS due to unavailability.

• Panjul Agrawal from Green Portfolio asked about RM inflation and how many days it takes to pass on the price increase to customers. Karan Shah ED answered that it takes somewhere between 30-90 days lag between increase of commodity prices to when it is passed on by the customer to PRECAM.