Rishabh Instruments Limited — Investor Meet, 12-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

Financial Performance: Rishabh Instruments reported consolidated revenue of INR 1,812 Cr for Q3 FY25, up 13.7% year-on-year, and INR 5,329 Cr for the first nine months, a modest increase of 4.1%. The company's consolidated adjusted EBITDA reached INR 172 Cr in Q3, a significant increase of 70.9% YoY, with an EBITDA margin of 9.5%. Notably, the incremental improvement in EBITDA margins from distressed levels of -14% in Q2 to -3.7% in Q3 reflects effective cost control and contract renegotiation efforts.

Future Outlook and Growth Drivers: Management emphasized their commitment to transforming the Lumel Alucast business and expects to achieve breakeven at the EBITDA level within one to two quarters. The electronics segment is seeing robust growth, fueled by the shift towards industrial automation and clean energy, with Lumel S.A. reporting over 19% revenue growth year-on-year.

Order Book and Operational Updates: The Q3 period saw improved operational metrics, particularly in the electronics business, with Rishabh India achieving 29.3% revenue growth YoY. However, Lumel Alucast continues to face challenges due to the automotive sector's instability, leading to a decline in revenues.

Analyst Q&A Insights (Detailed): Analysts inquired about revenue performance, with management expressing confidence in sustainable growth of 17-20% in the electronics segment, despite fluctuations in export orders. Concerns were raised about the auto industry, revealing a conscious shift towards non-auto contracts to mitigate risk. Additionally, analysts questioned capex plans, with management highlighting investments in expanding electronics manufacturing capabilities through new SMT lines.

Market or Regulatory Updates: Emerging trends in the automotive industry suggest increasing competition due to a shift towards electric vehicles, a factor Rishabh is managing through strategic pricing and contract renegotiations.

Strategic Focus Areas: The focus remains on enhancing capabilities within electronics and diversifying customer contracts to stabilize revenue streams beyond automotive.

Investor Insight: Given the improved financial performance and growth potential in electronics, Rishabh Instruments presents a favorable profile for investors leaning towards a 'buy' stance, particularly considering the company's proactive steps to manage operational challenges and market dynamics.