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Exports and market share gain increase the revenues, margins impacted by commodity costs| Tube Investment Q2 FY22 Result Analysis

Exports and market share gain increase the revenues, margins impacted by commodity costs | Tube Investment Q2 FY22 Result Analysis

Published on 03 November 2021 Views 0 Comments 0

Tube Investments of India has announced its Q2FY22 results. The stock has increased on 2nd Nov 2021 by more than 10%.

Standalone Highlights

  • 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.

Consolidated Highlights

  • 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.


Business Highlights

  • 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.

Mobility

  • 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.

 Other segment

  • Comprises mainly chains and some new businesses which are currently ramping up.

Originally Published On: https://blog.investyadnya.in/tube-investment-q2fy22-result-analysis/
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