KDDL Limited — Investor Meet, 25-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** KDDL Limited reported a Q2 revenue of INR 410 crores and a half-year revenue of INR 780 crores. The EBITDA for Q2 was INR 76.8 crores, yielding an EBITDA margin of 19.4%, while the half-year EBITDA reached INR 141.9 crores with an 18.8% margin. Profit After Tax (PAT) for Q2 stood at INR 35.6 crores and INR 63.6 crores for the half-year. Comparatively, the first half shows substantial challenges, primarily due to declining demand in the luxury watch sector, most notably in China and Hong Kong, which decreased significantly.

**Future Outlook and Growth Drivers:** Management expresses cautious optimism regarding demand recovery in high-end products starting next fiscal year, while the lower-end segments may lag. They highlighted strategic growth in precision engineering through a new production facility, expanding capacity, and focusing on higher-margin segments.

**Order Book and Operational Updates:** The company has noted a reduced order inflow due to earlier fulfillment trends. However, domestic market operations remain strong. Improvements are sustained with the new bracelet division, expected to enhance performance in the watch component segment.

**Analyst Q&A Insights:** Analysts raised concerns around revenue projections amidst a softening watch market. Management remains confident in precision engineering growth but is cautious about recovery times for the watch component business due to the broader economic slowdown. Capital expenditure plans include investments for capacity expansion in the bracelet segment to meet rising demand.

**Market or Regulatory Updates:** The context of persistent inflation, geopolitical tensions, and a slowing global economy continues to weigh heavily on consumer spending, impacting demand across KDDL's key markets.

**Strategic Focus Areas:** Management emphasizes innovation, agility in operations, and strategic shifts towards premium products to drive resilience. The shift in product mix may impact profits, yet they are optimistic regarding long-term growth potential.

**Investor Insight:** KDDL’s balance between managing current challenges and investment in high-growth segments like precision engineering and the bracelet business suggests a positive outlook. Given the ongoing strategic expansions and recovery potential in high-end markets, this sets a favorable stage for a 'buy' position, while also considering market headwinds.