Tvs Electronics Ltd (NSE: TVSELECT) Q3 2025 Earnings Call dated Feb. 17, 2025
Corporate Participants:
Srilalitha Gopal — Managing Director
A Kulandai Vadivelu — Chief Financial Officer
Analysts:
Nupur Jainkunia — Analyst
Ashok V. Jain — Analyst
Zaki Nasser — Individual Investor
Manan Patel — Individual Investor
Abhijit Periwal — Analyst
Presentation:
Operator
Good day ladies and gentlemen. Welcome to the TVS Electronics Limited’s Q3 and nine month FY ’25 earnings conference call.
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 this conference, please signal an operator by pressing Star and then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms. Nupur Jainkunia from Valorem Advisors. Thank you. And over to you, ma’am.
Nupur Jainkunia — Analyst
Thank you. Good evening everyone and a warm welcome to you all. My name is Nupur Jainkunia from Valorem Advisors. We represent the investor relations of TVS Electronics Limited on behalf of the company and Valorem Advisors, I would like to thank you all for participating in the company’s earnings call for the third quarter and nine months of financial year 2025.
Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by the information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter review.
Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mrs. Srilalitha Gopal, Managing Director and Mr. A. K. Vadivelu, CFO of the company.
Without any further delay. I request Mrs. Srilalitha Gopal to start with her opening remarks. Thank you. And over to you, ma’am.
Srilalitha Gopal — Managing Director
Thank you, Nupur. I would like to know if there are any new attendees on the call as compared to the last earnings call. Is it something that you can tell me, Nupur? I will assume that there could be. They may not be. Let me continue.
For those who are joining us for the first time, I will take you through a background of who we are. TVS Electronics or TVSE as it is popularly known was incorporated in 1986 under the leadership of Mr. Gopal Srinivasan, a member of the industry of TVS family member.
We are headquartered in Chennai and have a state of the art manufacturing plant located in Tumkuru, Karnataka. Our vision is to be an integrated electronic solutions provider for B2B customers. The overall performance of the company is reviewed under two business units, Products and Solutions Group and Customer Support Services. In the Products and Solutions group we aspire to be a single point solutions provider.
The two offerings that we have are point of transaction Products and Integrated solutions. Our point of transaction products mainly consist of input devices, computing devices, validation devices and output devices. Under Integrated Solutions we offer our own software solution, PVSE, pay for retail customers and also have a set of solutions through our partner ecosystem. These include hardware ecosystem based in Taiwan, Korea and China. Software ecosystem mainly consists of Royal Pause, Snapdiz and Vyapar and the third is an analytics ecosystem that we are building.
While we cannot share any forward looking numbers, we’d like to share the addressable market size as we currently assess is around 2000 crores for which our market share is about 18 to 20%. This segment of our business contributes almost 70% of our revenue. The Customer Support Services Business unit We aspire to be the first choice after Sales Service partner.
Our focus is on field support services, infra managed services, O&M services and electronic manufacturing services. The field support services cater to IT and IT peripherals and predominantly cover 15,000 poster codes in 2400 field agents. For large customers like Dell, HP and others, we provide break fix and maintenance services. Under field support, we also cater to the banking sector.
Some large banks and financial service companies have break fix arrangements with us for the EDC terminals Under Customer Support Services, we also have identified the following growth areas for TVSE. The first is infrastructure managed services for IT and IT peripherals.
Second is operations and maintenance for Solar followed by electronic manufacturing services the broad serviceable market for field support services is about 500 crores, intra managed services about 4500 crores and operations and maintenance services is 350 crores.
We’re looking at an addressable market about 5350 crores for the entity in total. In EMS we mainly aim to address box build opportunities exploring make in India opportunities at tech partners. We also exploring opportunity for tech partners. We are confident that the newly identified growth areas will place EVSE in a good position for the coming decade.
I’d like to ask CFO of TVS Electronics Mr. A.K. Velu to now provide some key financial and operational highlights for the quarter under review. Velu, your turn.
A Kulandai Vadivelu — Chief Financial Officer
Thank you ma’am. Good afternoon everyone and welcome to the Earnings Con call. Let me first brief you on the financial performance for the period under review. For the third quarter of the financial year 2025, the consolidated revenue from operations stood at around 100 crores which increased by 15% year on year.
EBITDA for the quarter was around 3 crores representing a significant increase year on year and net loss was reported at approximately 70 lakhs which has also reduced on both year on year and quarter on quarter basis. For the nine months ended financial year 2025, the consolidated revenue from operations stood at around 316 crores which increased by approximately 17% year on year.
EBITDA for the nine months was around 9 crores representing growth of 27% year on year and the net loss was reported at approximately 3 crores. For the third quarter under review, the products and solutions vertical generated a revenue of 69 crore representing a growth of 10% year on year while the segment registered year on year growth of 16% for nine months period.
The increase in revenue in the products and solutions relatively is attributed to the increase in businesses with the government and BFSC customers. Further, the retail segment where we are expanding our reach as a single point solution provider also contribute to increase in revenue. The customer support service vertical generated a revenue of 31 crore in Q3FY ’25 representing increase of 28% year on year growth.
The segment registered year on year growth of 21% for the nine month period. The increase in revenue in the customer support vertical is attributable to increase in the volume from existing customers and addition of few niche customers, few new businesses.
With this we can now open the floor for the questions and answer session. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session.
Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to withdraw yourself from the question queue, you may Press Star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles.
We have the first question from the line of Ashok V. Jain from Ayush Capital. Please go ahead.
Ashok V. Jain
Yeah, good evening. I just had one question. You had indicated in your earlier presentations that the phase one of the newly inducted surface mount lines the SMT, the phase one is going to be used for captive consumption. So I was wondering when we use our own PCB assemblies and box filled solutions for captive consumption, how much EBITDA do we presume to increase in our products and solutions category? Thank you.
A Kulandai Vadivelu
See, I would just like to clarify one of the purposes to use is SMT line for internal captive purposes. The main purpose is to generate business from external third party customers from the. Currently we are. How Currently we are using the line mainly for our internal captive consumption.
Ashok V. Jain
Oh, it’s already. It’s already in use for captive.
A Kulandai Vadivelu
Yeah, yeah. It is already in use for captive.
Ashok V. Jain
Okay, okay. All right.
A Kulandai Vadivelu
And from EBITDA perspective, we expect in the short run it may not have much impact as it is all the newly started and then the under recovery of cost. But over a period of time we expect at least 1 percentage 2 percentage improvement in our EBITDA through these initiatives. Internal consumption, captive consumption.
Ashok V. Jain
Okay, okay. And have we found any external customers to begin with?
A Kulandai Vadivelu
As we already mentioned we are working on it. As and then the onboarding happens we will announced to the common forum.
Ashok V. Jain
Okay, thank you.
A Kulandai Vadivelu
Welcome.
Operator
Thank you. Participants, if you wish to ask questions, you may please press star and one. We have the next question from the line of Zaki Nasser [Phonetic], an individual investor. Please go ahead.
Zaki Nasser
Good afternoon ma’am, and sir. So sir, although we see increased use of all the products TVS makes, what is your view on the cheap imports available and the government action on promoting Make in India? Do you see it happen on the ground?
Srilalitha Gopal
Good evening Mr. Nasser. What exactly. Can you just please re-clarify your question? What do you mean?
Zaki Nasser
See, the point of sale products, whatever segment we are into, I mean the use is increasing but so is the availability of cheap imports. I mean do you see import restrictions or promoting the Make in India initiative?
Srilalitha Gopal
I think the government has done a lot for Make in India initiatives and a lot more needs to be done. The scenarios are slowly evolving and we do certainly, like you rightly pointed out, see a lot of imports, finished goods from overseas which are disrupting the market. So I think the industry as a whole and the government needs to work together to see how to further ensure that the PLI or the make in India initiatives succeed at this point of time. It’s evolving is what I would say. Mr. Nassar.
Zaki Nasser
Okay. Thank you ma’am and best wishes.
Srilalitha Gopal
Thank you.
Operator
Thank you. Participants, you may press star and one to ask a question. We have the next question from the line of Manan Patel [Phonetic], an individual investor. Please go ahead.
Manan Patel
Thank you for the opportunity. So my first question is regarding the EMS business. So have we shortlisted the sectors that we want to target and any certifications that we need are in place. So can you give some update on that note where I understand there is no business as of now but can you give some qualitative update on the kind of sectors that we are Targeting?
Srilalitha Gopal
Good evening Mr. Patel. Nice to have you back with us. As regards the EMS business. Yes, as we have mentioned earlier also we would like to work in the automotive and the industrial electronics segment for which we need the IATS certification. Work on that is going on and we should be certified in a couple of quarters max because that needs some kind of preparation.
Manan Patel
Okay. Is it safe to presume that for at least a couple of quarters till the certification in place is in place. We have to only use the SMT line for captive purposes or there are other sectors also that we can do. I understand IITF is for largely automotive. So any other sectors that we are planning to address in the meanwhile?
Srilalitha Gopal
The industrial electronics is very much on the cards. And if our customers or other partners, ODM partners which are based overseas, which are out of India, if they decide to give us business, this SMT land can definitely be used for that purpose.
Manan Patel
Okay. And ma’am, you mentioned that you’re looking for opportunities to tie up with technology partners. So how do we think about that part?
Srilalitha Gopal
The technology partners are all our ODM partners, Mr. Patel. And that effort is already on. Not sure what else did you mean by technology partner? I think. Did you have anything in specific which I can help you with?
Manan Patel
No. As in to bring in any technology that we can use for manufacturing for other customers in that sense, not for the business itself.
Srilalitha Gopal
No. So the technology for that will be provided by the customer whom we sign up with. Right? I mean, we don’t. We cannot have our own technology. If you’re manufacturing for somebody, they will have to help us with the tech transfer. And as and when we have a really big customer or a good tech customer, that will happen.
Manan Patel
On the product side. Ma’am, you mentioned 3,000 crore market share. So can you. Would you have any idea how. How fast that market is growing and how are we increasing the market share or market share stagnant?
Srilalitha Gopal
My understanding is the market is growing at about 8 to 10%. Last year and year before were particularly different, difficult market years. But I think Overall it’s about 8 to 10% is the growth that has been attributed to the segment. Mr. Patel.
Manan Patel
Okay, ma’am, thanks a lot. That’s it. Thank you.
Srilalitha Gopal
Thank you.
Operator
Ladies and gentlemen. If you wish to ask questions, you may please press star and one on your touch tone telephones. We have the next question from the line of Abhijit Periwal from APSEC. Please go ahead.
Abhijit Periwal
Good afternoon, ma’am. And thank you, sir. So this is regarding the EMS once again. There was a recent newspaper report that said that down the line and it quoted, I think the officials of the company also that down the line you would be looking at five to six SMT lines. And that half the turnover should come from this particular sector.
If you could throw some light as to if there is a path for how many years do you expect to get to that level? And also are you ma’am, satisfied with the progress of the EMS division as to how things are going. We started I think a division somewhere in 1st of April. So is the work happening as per your satisfaction and any further qualitative aspects that you can share?
Srilalitha Gopal
Thank you. Thank you for coming back on the call. I think what I would like to say is definitely satisfied with the way the EMS is progressing and as and when the growth happens, the additional lines will come. At this point of time, I think it is purely subject to the growth of the business. And as the business grows, I think we should be in a position to add the lines as required.
Abhijit Periwal
Okay, so but do you say five, six lines in the next three years or two years? Anything which you would see?
Srilalitha Gopal
I think it could be more of an aim rather than a forward looking statement as to what would be your aim over the next two years. The aim remains the same. Whatever we’ve committed. Not sure whether five years, three years or a few quarters. Actually to be honest, it’s very difficult to predict. Line can be set up really quickly, business goes really fast. Those number of lines can come fast. Business doesn’t come in those lines in three years also will not make any. Make any moves.
Abhijit Periwal
Okay, okay. And like you just shared that along with the fact that the auto part there were certain certifications required earlier. It was mentioned that there was most of it were coming in December. I think that was mentioned in the last call. What I currently understand you said that they could take some more quarters. Is there anything in between which has happened which has led to the revision in the timelines?
Srilalitha Gopal
No, I think it’s just a certification is a process and IATV certification something that we are doing for the first time. So obviously the auditor, the team is very particular that they do get it right the first time around and hence the certification process will take a little longer than what we expected.
Abhijit Periwal
Okay. And the consumer electronics part, sorry, industrial electronics or consumer electronics? You mentioned one.
Srilalitha Gopal
Industrial electronics, yes.
Abhijit Periwal
Industrial electronics.
Srilalitha Gopal
Which is what we already are in our capital consumption. If you notice, all the equipment goes into the industrial electronics category.
Abhijit Periwal
True, true, true. So there you’re looking to tie up with some foreign guys, that’s where from Southeast Asia or something. That’s the expectation that you’re expecting from clients from that side. But that’s more of local.
Srilalitha Gopal
Correct. Correct. Correct. All that is from outside. But the people our ODM have to decide to invest in India. I think that all depends on the previous question which one of our participants also asked on the success of Make in India and the PLI schemes. All sort of related and those have to be attractive for our ODMs to come and invest in India in a big time. And same goes for our partners too.
Abhijit Periwal
Oh that would be good. Then in case you are there thinking of making India so then we get more.
Srilalitha Gopal
True, true, true. I think we are hoping, I think the whole industry is hoping that there’s a lot of the market, manufacturing market in India is really good.
Abhijit Periwal
Great. True, true. And ma’am, for say five, six lines whenever it happens, would you be looking more at internal approvals or you looking loans or fresh? I think similar question I had asked last time also if there’s more idea on that side.
Srilalitha Gopal
The answer is the same. I think we answered your detail last time. It was very well.
Abhijit Periwal
Okay, so as and when it happened [Speech Overlap] and point of sale side, I think there were more a lot of efforts happening on the organized retail direction where I think Trent and all these guys are also our clients. Any light you can put on that side as to whether the unorganized one, the distributor part is growing or this retail specific one is growing fast. And how many new clients are we able to get some sort of more idea?
Srilalitha Gopal
Mr. Periwal, as you must have realized, the retail sector has been very, very. The growth has been very slow and it’s been quite a dampener as regards to that. So we are actually waiting and watching as to how this will pan out.
Abhijit Periwal
But as I also see ma’am, that the quick commerce side has done extremely well and we have AITC products. So with the barcode and all those things. So do we see traction at our end due to that or that’s something.
Srilalitha Gopal
Yeah. AIDC has been a new entrant. We have been a new entrant to AIDC. So as far as we are concerned, that’s a new initiative and it has to sort of as a new entrant. All the entry barriers which we face, we continue to face. So we are working on that and hopefully you will see how the traction transforms.
Abhijit Periwal
Okay. And it’s been mentioned in the product side. Sorry I’m taking a lot of time but I thought I’ll just finish my questions in case and to get back to you, please let me know. So in the government side which you’re saying these are the more of printer sales that are doing very well. It has been mentioned in that note, the presentation. The smaller printers which are doing well.
Srilalitha Gopal
That’s right. The mobile printer.
Abhijit Periwal
Yeah, yeah. The one with fingerprints and all that, that is where the traction is?
Srilalitha Gopal
Yeah, that’s where the traction is. Because if you notice the department of Post was one big customer, a couple of others who are looking at taking the print or the business to the last mile into much more. The heart of India. That’s where the mobile printers are being used and commissioned and that’s where the use case has increased.
Abhijit Periwal
So over and above the Department of Post. Any other place where you think they will be used…
Srilalitha Gopal
All depends on how the government rolls out these initiatives. Mr. Periwal, without commenting on the way the government works, the hope that they will digitize soon and quickly. But every time there is an election, if there is something, these projects keep getting delayed. So we really don’t have a real time understanding of how these things work at this point.
Abhijit Periwal
Okay. And lastly, ma’am, on the infra managed services and the solar part, if you can throw more light as to how have the, say, the number of megawatts under O&M which have gone up, or any consultancy work, and also in infra manage over and above the earlier clients if some more clients have been added.
Srilalitha Gopal
So the clients remain the same as far as the O&M service is concerned. Tata Power is a big customer for us and as they grow, we will grow to them. Yes, we have added a few more megawatts and I think we hope to end the year with about 800 to 900 megawatts under management and it will consistently grow on that side. On the IMS side, we’re yet to crack any big customer. And when that happens, you will definitely hear from us.
Abhijit Periwal
Ma’am, when you say 800 megawatts is under your O&M, how big is the revenue? Because it looks huge. 800 megawatts…
Srilalitha Gopal
Revenue is very small. 800 megawatts is no connotation with the revenue. The revenue is the service part. Mr. Periwal, we’ve got nothing else to do other than maintenance and management, which will be a small part of that. The megawatts means that the installation sizes, you can have all of that. So, yeah, so each site, each, the installation size is say, 100 megawatts, 50 megawatts, 200 megawatts. Accumulation of that is what it is. But the service revenue from that has no relation to the size of the installation. As in it’s not as large as the number that you seem to be.
Abhijit Periwal
Okay, okay, yeah, true. I thought 140 megawatts to 800 sounded that there was a quantum jump. All right, ma’am, thanks. Thanks for answering all the questions.
Srilalitha Gopal
Thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. The next question is from the line of Ashok V. Jain from Ayush Capital. Please go ahead.
Ashok V. Jain
Yeah. In auto electronics, from the EMS side, what sort of products are we specifically looking at contract manufacturing. And is the EV transition going to help us for entering into the newer categories of products that will come up specifically on the EV side? Thank you.
Srilalitha Gopal
Mr. Jain, in auto electronics, we’re looking at accessories that go into the automotive segment. Obviously, the main and the other electronics are already taken care of by the OEM. This is an exploration. Or we’re also looking at working with people who give us subcontracting smaller components on the accessory side, EV will definitely help this initiative.
Ashok V. Jain
Okay. Okay. What sort of accessories, ma’am, specifically?
Srilalitha Gopal
We are exploring. Mr. Jain, I can’t give you any specific answers at this point in time.
Ashok V. Jain
Okay. Okay. So you’re also looking at supplying to within the TVS group because they seem to be making giant strides on the EV side of things.
Srilalitha Gopal
Again, I’m not at liberty to talk about those things because anything that we work with would be a violation of our agreements with them.
Ashok V. Jain
Okay. All right. No problem. Thank you, ma’am.
Operator
Thank you. Participants, you may press Star and one to ask a question. We have the next question from the line of Manan Patel, an individual investor. Please go ahead.
Manan Patel
Thank you for the opportunity again. So, the question is on the, on the margin. So. So there is slight improvement in the gross margins, but the EBITDA margins are pretty low and it barely covers. It doesn’t even cover the depreciation. So wanted to understand what is the time frame do we look at in terms of breaking even at PBT level? So is it like next one year, two years? How do we think about breaking even at the PBT level?
A Kulandai Vadivelu
A good question. Mr. Patel. I think as you would have seen, the revenue is already growing at 15 to 17 percentage. Okay. And we continue to manage our cost tightly with various initiatives. And already you see The EBITDA is at 3 percentage. And as explained in the earlier calls, we are continuing to invest 2 to 3 percentage of our revenue in growth initiatives like EMS and R&D. Okay. So in the short term, as we continue to invest, we are seeing that at a bottom — PBT level, there is a negative margin. However, we expect, like in the future, this investment of 2% to 3% expected to contribute for growth much bigger than what we are growing 15% and expected to result in a positive margin at the bottom line.
Manan Patel
Okay. And in terms of employee costs, so we are at around 19 crores per quarter right now in December quarter. So do you think this is the base number or this should keep growing in next few quarters or it will stay stable.
A Kulandai Vadivelu
See, the major initiatives we have already made our investments towards employee cost with hiring all the business aids and business team and the operations team required to run a factory and everything. But as the business grows, you will require the operational team to add it up in proportion to the growth in business. And we have to continue to invest on business development. So these two, we will continue to invest as the business grows.
Manan Patel
But — so that will be in line with the top line growth or it will initially, at least for a few quarters, will increase disproportionately and then maybe stabilize down the line?
A Kulandai Vadivelu
Yeah, initially it may increase a little faster, but I think it will stabilize as the revenue grows much little faster than for the revenue growth from all the new initiatives.
Manan Patel
Got it, got it. So last more of a comment than a feedback. So most of the investors are waiting for this company to grow exponentially and in the kind of field that we are, all of our listed peers are growing at a breakneck speed. So we also want this company, TVS Electronics also to grow at that speed. So it would be great over next maybe couple of calls you could sort of indicate directionally what kind of speed we can expect from a company like us. And like we have a very good vintage, very good brand, very good balance sheet, everything looks pretty good but the delivery on growth is sort of missing.
And we have been taking initiatives. But it would be great if we can give some comment in terms of what kind of growth can we expect in a few quarters so that we know what milestones to track. Otherwise we are — at this point we are just sort of in the dark and we don’t know what will happen in the next quarter also or maybe in the next few years.
While we are not short term investors, we might be looking three to five years out, but it would be great to have some milestones to sort of track the company also. So that is just a comment from my side and thank you. Please keep doing this call it’s helpful. Thanks a lot.
Srilalitha Gopal
Thank you and appreciate the suggestion. Definitely we’ll work on this note for the investor call.
Operator
Thank you. Ladies and gentlemen. You may press Star and one if you wish to ask questions. Participants who wish to ask questions may please press Star and one at this time. We have the next question from the line of Abhijit Periwal from APSEC. Please go ahead.
Abhijit Periwal
Thanks once again. Just continuing with what Manan just mentioned Ma’am. Ma’am, as a general feedback from the stock market side, I reiterate that if there is more elaborate, what you say, communication from the company be in terms of aims, be it in terms of one-on-one conversation. You know the investor interest in terms of where the company is going, considering the pedigree, considering the initiative, considering the new guys whom you have taken. Everything will actually as stock market investors we need more feedback from you all. So in case more particulars in terms of numbers.
I understand qualitatively one is saying, but more in terms of numbers and exact things that okay, maybe in this year we might add two customers. We are actively talking to them. Something of that sort of can be done. It will be highly appreciated. Sorry. Thanks. Thanks once again.
Srilalitha Gopal
Thanks. Mr. Periwal and I think you have been very earlier also very interactive and you have given us very constructive feedback. I take it from you, take it from Mr. Patel and all of that and I think we will come back to you at the right time. I don’t think there is any point in jumping up and talking about things before those are ready. I know the investor community is frustrated. I know the investor community thinks we are keeping them in the dark. Maybe not on purpose, but that’s a policy which the company is following.
We will find the right time and engage a little more if that makes sense at the right time. And I think for now I would definitely request patience from the community. I know it’s tough, but it’s the only thing I can mention at this point of time.
Abhijit Periwal
Sure, ma’am. Sure. Sure. Appreciate that. Thanks.
Srilalitha Gopal
Thank you.
Operator
Thank you. Participants, to ask a question, you may press star and 1. Ladies and gentlemen, if you wish to ask questions, you may press star and 1. We have no further questions at this time. I would now like to hand the conference over to the management from TVS Electronics limited for closing remarks. Over to you.
Srilalitha Gopal
Thank you all for participating in this earnings call. It really was very illuminative. I hope we were able to answer some of your questions satisfactorily and give a little more insight into our business. If you have any further questions or would like to know more about us, please do reach out to Valorem Advisors. We will work with them to satisfy your answers. Looking forward to having this call again next quarter. All the very best. Thank you.
A Kulandai Vadivelu
Thank you.
Operator
Thank you on behalf of TVS Electronics limited that concludes this conference. Thank you all for joining us. You may now disconnect your lines.