Action Construction Equipment : Transcript Concall 11.08.2023

Action Construction Equipment Limited

Corporate & Registered Office

Dudhola Link Road, Dudhola, Distt. Palwal-121102, Haryana, India

Date: August 16, 2023
To,
The Manager Listing	The Manager Listing
BSE Limited	National Stock Exchange of India Ltd.
5th Floor, P.J. Towers,	Exchange Plaza, Bandra Kurla Complex,
Dalal Street,	Bandra (E),
Mumbai-400001	Mumbai-400051
Scrip Code: 532762	CM Quote: ACE

Subject: Earnings Call Transcript Q1-FY24.

Dear Sir/Madam,

Pursuant to Regulation 30 and 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed herewith, Earnings Call Transcript (Q1-FY24) of the Company.

Kindly take the above in your record.

Thanking You.

Yours faithfully,

For Action Construction Equipment Limited

ANIL KUMAR

Digitally signed by ANIL KUMAR

DN: c=IN, postalCode=121006, st=HARYANA, l=FARIDABAD, o=Personal, serialNumber=c69127d248f7209479cfd1acbf29 1cc10ed601a979bf6bcb944845f16be31b0c, pseudonym=486520211115144043002, 2.5.4.20=0385376578c5db8cf99f6f833ee2c53da bcad74d452286710aa52c511344a9ad, email=[e-mail], cn=ANIL KUMAR, title=4865

Date: 2023.08.16 15:22:37 +05'30'

Anil Kumar

Company Secretary & Compliance Officer

Corporate Office: Phone: [phone] (50 Lines), Fax: [phone],E-mail:[e-mail]

Mktg. H.Q.: 4th Floor, Pinnacle, Surajkund, Faridabad, NCR-121009, Phone: [phone] (100 Lines), Fax: [phone], Email: marketing@ace-

cranes.com Customer Care No.:1800 1800 004 (Toll Free), CIN: L74899HR1995PLC053860, Website: www.ace-cranes.com

"Action Construction Equipment Limited Q1-FY-24

Earnings Conference Call"

August 11, 2023

MANAGEMENT: MR. SORAB AGARWAL - EXECUTIVE DIRECTOR,

ACTION CONSTRUCTION EQUIPMENT LIMITED

MR. RAJAN LUTHRA - CFO,

ACTION CONSTRUCTION EQUIPMENT LIMITED

MR. VYOM AGARWAL - SENIOR VICE PRESIDENT,

ACTION CONSTRUCTION EQUIPMENT LIMITED

MODERATOR: MR. JINESH GANDHI - MOTILAL OSWAL FINANCIAL

SERVICES

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Action Construction Equipment Limited

August 11, 2023

Moderator:Ladies and gentlemen good day and welcome to Q1 FY24 Earnings Conference Call for Action Construction Equipment Limited hosted by Motilal Oswal Financial Services Limited.

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 the conference call, please signal operator by pressing "*‟ then "0‟ on your touchtone phone. Please note that this conference is being recorded.

I now hand the conference over to Mr. Jinesh Gandhi from Motilal Oswal Financial Services. Thank you and over to you, sir.

Jinesh Gandhi:Good evening, everyone. On behalf of Motilal Oswal Financial Services, I would like to welcome you all to discuss 1QFY24 Earnings of Action Construction Equipment. ACE is represented by Mr. Sorab Agarwal -- Executive Director; Mr. Rajan Luthra -- Chief Financial Officer and Mr. Vyom Agarwal -- Senior Vice President.

I'll hand over the call to Mr. Sorab Agarwal for his opening remarks, post, which we will start Q&A. Over to you, Mr. Agarwal.

Sorab Agarwal:Thank you. Yes, good evening and welcome everyone to this earnings conference call for discussing the results for the quarter ended June '23.

Along with me in today's earnings call, we have our CFO, Mr. Rajan Luthra and our Head of Investor Relations, Mr. Vyom Agarwal.

The company's financial statements and earnings presentation summarizing the performance of Q1 FY24 have been circulated and uploaded on the stock exchanges. And I will take you through some of the key highlights of our performance in the quarter gone by.

The company has maintained Its growth momentum in the first quarter of the current fiscal year. This has been yet another quarter of strong and resilient performance by our company. And I'm delighted to share that the financial year has started strongly for us. We were able to record our best ever quarterly performance in terms of revenues and profit. And also, for the first time ever our Q1 results have surpassed the preceding Q4 numbers.

To brief you on the financial performance of the first quarter FY24 on a yearly standalone basis, that is year-on-year basis, the agri revenues grew by more than 30% to Rs.650 crores with an EBITDA margin of 15%. The EBITDA during the quarter increased by more than 113% to Rs.97.5 crores as against Rs.45.72 crores. The PBT grew by 125% to Rs.89.23 crores and PAT grew by 133% to Rs.67.26 crores as compared to last year corresponding quarter. The PBT and PAT margins now stand at 13.72% and 10.34% respectively for the quarter on a standalone basis.

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Action Construction Equipment Limited

August 11, 2023

On a sequential basis, quarter-on-quarter, the revenues are up by 6%. This is one of our most robust performances given the anecdotal evidence of our sales trend in the first quarter. The EBITDA, PBT and PAT have increased sequentially by 20%, 22.5% and 29% respectively.

Moving on to the segmental business performance, the company has sustained its growth momentum across all operating segments. In the crane segment during the quarter gone by, we retained our dominant market leadership position and registered revenue of Rs.441 crores which is up by 26% year-on-year. In volume terms, the crane business has grown by 17% year- on-year to Rs.1,856 crores in the last quarter.

We are pleased to update that the growth momentum in the CE segment has sustained, and we have again surpassed our projected growth targets. The segment has registered volume growth of 80% year-on-year. Further, as compared to last year's corresponding quarter, the construction equipment segment clocked revenue growth of 78% and we achieved revenue of Rs.92 crores with margins in excess of 14%. This is a testimony to our clear and compelling strategy, backed by the strength of our brand.

The material handling segment recorded revenue growth of 10% and stood at Rs.41 crores with margins at 10.17%. And our agri division registered revenue of Rs.75 crores while recording margins at 6%, thereby registering a growth of close to 30% year-on-year. Further, we were able to attain good traction in the overseas markets and increase our exports. We are on track to attain around 10% contribution to our revenue in the current year from export sales.

On the operational side, India has remained stable in the continuing global macroeconomic volatility. The domestic activity in Q1 FY24 has remained resilient as reflected by various economic indicators. The healthy balance sheets of corporations, normalization of supply chains and stable commodity prices are favorable for continued growth in the sectors where we operate in.

The manufacturing activity in the country has been on the upswing, aided by positive geopolitical scenarios in favor of our nation, and continued focus of our government to increase the manufacturing progress of our country.

According to data released by S&P Global Market Intelligence, India's manufacturing activity, as measured by Purchasing Managers Index (PMI) was at 57.7 in July as demand scenario improved and new orders increases. The enhancement in the manufacturing capabilities and capacities of our country will further aid in the growth story of our company as manufacturing segment is one of the prime consumers of our cranes and material handling segment equipment. The infrastructure growth story continues to play a significant role in the economic growth, and we'll have a multiplied effect on the economy.

We believe that going forward, the strong demand scenario for our products should sustain itself, supported by government's unwavering focus on urban infra and rural development. And

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Action Construction Equipment Limited

August 11, 2023

the front loading of capital expenditures announced in the Union Budget 2023 will further aid in the current year. We continue to be a debt-free company with sufficient availability of

	liquidity for future growth.
	The envisaged Brownfield CAPEX of 90 to 100 crores for the current year is already under
	implementation and we expect to make the expanded as well as the new facilities operational
	by Q3, Q4 of the current financial year. This CAPEX will expand our capacities and will
	enable us attain revenue in the range of Rs.4,000 crores at full utilization levels.
	Looking ahead, India is one of the fastest growing economies and its prospects remain very
	strong for the period ahead. With continued focus of government on infrastructure
	development and efforts to strengthen the manufacturing sector, we hereby upgrade our earlier
	guidance and expect a growth of at least 20% to 25% on a consolidated basis. In the cranes and
	agri segment for the current year, we foresee a growth of 18% to 20% at least. Further, we
	expect the construction equipment segment to grow by at least 45% to 50% and material
	handling to grow by 15% to 20%. We hope that we are in a position to revise these projections
	by the third quarter, which will predominantly depend on the overall macroeconomic scenario,
	especially the monsoons and the commodity prices. Further, we remain optimistic about the
	medium to long term prospects of our company and remain focused to deliver on our growth
	agenda. We will continue to drive cost savings harder and take calibrated pricing actions whilst
	ensuring we protect and grow our markets. We believe that our building blocks are firmly in
	place and are on path of sustainable growth in all our segments where we operate, leading to
	expansion in top line, bottom line and margin profile of the company.
	With this, I would request the moderator to open the call for a question-and-answer session.
	Thank you.
Moderator:	We will now begin the question-and-answer session. Our first question is from the line of CA
	Garvil Goyal from Invest Analytics. Please go ahead.
CA Garvil Goyal:	My question is basically on the demand outlook on the end industry. So, basically, in your
	opening remarks you mentioned the near-term outlook. So, how do you see at the medium
	term and long-term perspective like you mentioned in Q3 and Q4 you are going to do a
	CAPEX that will give you a revenue potential of I think INR4,000 crores. So, how do you look
	at next three to four years down the line, sir?
Sorab Agarwal:	If I talk of the demand scenario, currently our major end segments are infrastructure and
	manufacturing. And luckily, the situation in our country is poised as of now. The government
	is very much focused on manufacturing, which is very evident and with all the PLI and China
	Plus One, plus XYZ. And apart from that, we are also getting a lot of to be very frank
	outsourcing opportunities in the export markets for manufacturers for some other countries. So,
	a lot of things are happening. The domestic demand and a lot of our cranes and material
	handling everything goes through the manufacturing as well as infrastructure side.

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