Alicon Castalloy Limited — Investor Meet, 14-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** Revenues for Q3 FY25 declined to ₹393 crore from ₹406 crore in Q3 FY24, driven by weak demand in export markets, particularly Europe. Gross margins fell to 45.81%, down 543 basis points year-over-year, primarily due to a shift in sales mix and increased upfront costs associated with new technology investments. EBITDA was ₹35 crore, reflecting a drop in margin from 13% to 9%. Net profit plummeted to ₹0.78 crore from ₹17 crore in the prior year. For the nine-month period, revenue increased to ₹1,298 crore, up 14% year-on-year, but net profit decreased to ₹37 crore from ₹41 crore.

**Future Outlook and Growth Drivers:** Management remains optimistic about long-term growth, highlighting that they expect revenue and margin recovery in FY26, supported by ongoing client engagements and a healthy order book worth ₹9,000 crore, which ensures visibility for growth. The strategy includes diversifying product offerings and expanding into hybrid technologies.

**Order Book and Operational Updates:** The company experienced a setback with a leading OEM due to a production shutdown but expects volumes to recover in Q4. Intensified focus is on leveraging automation and smart manufacturing techniques to enhance operational efficiency.

**Analyst Q&A Insights (Detailed):** Analysts raised concerns regarding revenue projections and profitability, with management acknowledging ongoing challenges in European markets and their impact on the sales mix. There are plans for significant CAPEX related to EV parts, projected to add ₹250–₹300 crore in capacity over the next two years. Analysts also pressed on margins, which management attributes to temporary factors like customer-specific disruptions and new technology costs.

**Market or Regulatory Updates:** Management noted that the global market remains unpredictable, particularly in Europe, while indicating potential for recovery in North America.

**Strategic Focus Areas:** The company is concentrating on operational excellence through high-tech investments and strengthening its market position by enhancing customer collaborations.

**Investor Insight:** Despite a challenging quarter, potential for sequential improvement in revenue and margins in FY26 indicates a favorable scenario, aligning with a 'buy' position for investors, given the strong order book and strategic focus on growth in hybrid technology.