Exports and market share gain increase the revenues, margins impacted by commodity costs| Tube Investment Q2 FY22 Result Analysis￼3 min read
Tube Investments of India has announced its Q2FY22 results. The stock has increased on 2nd Nov 2021 by more than 10%.
- Revenue for Q2FY22 stood at Rs. 1,676 crores. Revenue grew by 53.1% YoY and 32.2% QoQ.
- Revenue from Operations increased by 53.3% YoY and stood at Rs. 1,667 crores. Revenue also grew by 32.6% QoQ.
- Operating Profit Margins have been impacted as they have also decreased on YoY and QoQ basis.
- Due to operating margins impact, the PAT have increased relatively lesser than revenue. PAT stood at Rs. 121 crores, a growth of 26.6% YoY and 25.2% QoQ.
- The consolidated revenue increase has been good as it has increased by almost 173% YoY to Rs. 3,288 crores. A growth of 33.5% can also be seen.
- Operating profit margins
- Operating margin have been impacted on the consolidated numbers too. OPM has decreased by 12.2% in Q2FY22.
- PAT has increased by 70% YoY and stands at Rs. 168.5 crores. PAT has also seen a growth of 40.4% QoQ.
- Majority of the revenue came from Industrial Systems in Q2FY22. In last quarter previous year, the majority of revenue was contributed from Engineering division.
- Mobility division has shown the highest growth. Whereas Gears & Gear products have shown a subdued growth.
- Revenue from Engineering stood at Rs. 1026.64 crores, YoY growth of 26%. The Profit for the segment stood at Rs. 102 crores, a YoY growth of 23%.
- Metal formed products had a revenue of Rs. 328.28 crores as and profit of Rs. 38.13 crores. A YoY growth of 34% and 49% respectively.
- Mobility business revenues stood at Rs. 266 crores, a YoY growth of 52%. Mobility Profits stood at Rs. 16.76 crores, a YoY growth of 123%.
- Gear and Gear products form a small part of total revenue contributed, only about 2% in Q2FY22. The revenue increased by only 7% on YoY basis and stood at Rs. 71.77 crores. The profits has a small decline and stood at Rs. 11.34 crores.
- Power systems revenue stood at Rs. 390.49 crores, a YoY growth of 38% and profits declined to Rs. 31.57 crores, a YoY decline of (-1%).
- Industrial systems had a revenue of Rs. 1059.37 crores in Q2FY22, having the largest contribution of 32% in the revenue mix. It grew by 39% on YoY basis. The profit also stood at Rs. 109.34 crores with YoY growth of 178%.
- Other businesses revenue stood at Rs. 190.2 crores, YoY growth of 23% and profit growth of 29% in Rs.13.57 crores.
- Industrial Segment contributed 34%, most among the segment to the profit mix in Q2FY22.
- Engineering Segment contribution was the highest in Q2FY21 but currently stands second.
Earnings call Highlights
- Strong exports and gain in market share has led to improvement in revenues.
- Chip shortages affecting OEM demands.
- Rs. 200-250 crores of CAPEX can be expected.
- Significant rise in raw material prices leading to an impact on gross margins.
- Recovery through price increase will happen in coming quarters.
- Delay in electric 3 wheelers launch due to COVID. The management has not taken decision about the geography of the launch.
- Dividend policy will continue its current form.
- Aims to move away from auto component supplier business.
- Revival in mobility will take some quarters.
- Exports in cycles have shown growth but is not that significant.
- Gained 1% market share in domestic business. Total market share in bicycles is around 25%.
- Softer market as compared to last year.
- Domestic contribution in mobility is 97%.
Metal Formed Products
- Growth mainly driven by automotive chains and industrial chains.
- Autos and railways form most of the business in metal formed products.
- Other businesses have increased share when railways were down.
- Improvement in railways can be seen in Q3FY22 and Q4FY22 as railways have increased their operations.
- Export content is relatively less as compared with other segments.
- Contribution margins are relatively higher, hence effect of raw material business price increase has not been much.
Comprises mainly chains and some new businesses which are currently ramping up.