Action Construction Equipment : Transcript Concall 31.05.2023

Action Construction Equipment Limited

Corporate & Registered Office

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

Date: June 06, 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 Q4-FY23/FY23.

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 (Q4-FY23/FY23) 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 Date: 2023.06.06 10:42:41 +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

May 31, 2023

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"Action Construction Equipment Limited

Q4 FY'23 Earnings Conference Call"

May 31, 2023

MANAGEMENT: MR. SORAB AGARWAL - EXECUTIVE DIRECTOR - ACTION CONSTRUCTION EQUIPMENT LIMITED MR. RAJAN LUTHRA - CHIEF FINANCIAL OFFICER - ACTION CONSTRUCTION EQUIPMENT LIMITED MR. VYOM AGARWAL - SENIOR VICE PRESIDENT - ACTION CONSTRUCTION EQUIPMENT LIMITED

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Action Construction Equipment Limited

May 31, 2023

MODERATOR: MS. VEDIKA SINGH - MONARCH NETWORTH CAPITAL LIMITED

Moderator:Ladies and gentlemen, good day, and welcome to the Action Construction Equipment Limited Q4 FY '23 Earnings Conference Call hosted by Monarch Networth Capital 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 an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.

I now hand over the call to Ms. Vedika from Monarch Networth Capital Limited. Thank you, and over to you, ma'am.

Vedika Singh:Thanks, Calvin. Good evening, everyone. I would first like to thank the management of Action Construction Equipment for giving Monarch Networth Capital the opportunity to host this call. We have with us the senior management of Action Construction. We have Mr. Sorab Agarwal, Executive Director; Mr. Rajan Luthra, CFO; and Mr. Vyom Agarwal, Senior Vice President. I will now hand it over to Sorab Sir for giving the opening remarks, post which we will open the floor for Q&A. Over to you, sir.

Sorab Agarwal:Yes. Thank you. Good afternoon, and welcome, everybody, to this Earnings Conference Call for the Fourth Quarter and Year Ended March '23. Along with me in today's earnings con call we have our CFO, Mr. Rajan Luthra, and our Head of Investor Relations, Mr. Vyom Agarwal. I hope all of you have had the opportunity to look at the company's financial statements and the earnings presentation which has been circulated and uploaded at the stock exchanges.

This has been yet another year of strong and resilient performance by our company, and the results are a testimony to our clear and compelling strategy backed by the strength of our biggest assets, our people and our brand. We not only navigated the short-term challenges with agility, but also made progress on our long-term strategic priorities. Let me take you through some of the highlights of this fiscal to begin with. It gives me immense pleasure to report that we have crossed INR2,150 crores operational revenue mark in this fiscal and also recorded our highest-ever sales and profits in the quarter gone by.

Our growth of 33% is significantly ahead of the market in our sector. Our EBITDA margins for the year expanded to 11.4% from 10% last year. And our EBITDA grew by 51.5% to INR247 crores on a standalone basis as against INR163 crores in the preceding year. We were able to increase our PBT by 58.4% from INR138 crores in FY '22 to INR220 crores in the last year. Similarly, our PAT also increased from INR106 crores to INR161 crores, thereby registering a growth of 52.2% in the last year.

To brief you on the financial performance of the fourth quarter of last year, the operational revenue stood at INR613 crores for the quarter, which is up by 10.4% sequentially and grew by 20% as compared to the same quarter last year. Our company was able to expand the EBITDA margin to 13.2%, PBT margin to 12% and PAT margin to 8.5% in the last quarter.

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Action Construction Equipment Limited

May 31, 2023

This was led by better product mix, improved price realizations, efficient cost control measures and softening of the commodity prices.

The EBITDA and PBT for the quarter stood at about INR81 crores and INR73 crores, respectively. We continue to be a debt-free company with sufficient availability of liquidity for growth. The Board of Directors has recommended final dividend of 50%, that is INR1 per share for the year ended March '23. The Board has also proved to grant ESOPs to the employees. The ESOP program has been designed in a manner that employees are incentivized and their interests are aligned with those of the company's performance.

Now moving on to segmental business performance. We have strengthened our role as a market leader in Indian crane industry. And with our consistent efforts, we have scaled the business to over INR1,525 crores in this fiscal. Last year, our cranes business has registered a strong growth of 38.4%. The growth was both in value and volume terms. Our number of cranes have increased from 5,328 in FY '22 to 6,584 in FY '23. In cranes segment, we have been able to grow our profits by 53% to INR195 crores, with a margin expansion to 12.77% versus 11.58% for the year before that.

Our margins for quarter 4 stood at nearly 14%. Our cranes business is at its strongest in terms of size, scale, profitability capabilities and its impact on the nation's development. Further, we are very pleased with the growth momentum in the CE segment, wherein we have surpassed our projected growth. The segment has clocked a yearly growth of 42% with a revenue of approximately INR250 crores and increased margins at around 9.5% on a whole year basis versus a 5.3%. And our margins for quarter 4 FY '23 stood at 13.9%, owing to the operating results. The metal handling segment recorded revenue growth of 11.2% and stood at INR170 crores, with margins at 12.33% as compared to 12% the year before.

The agri division also registered growth in revenue of around 7%, but the margins came under pressure owing to inflationary impact during the year. We have also expanded our global footprint and increased our export sales by 90% year-on-year. The contribution of export sales have increased to 6.7% as compared to 4.7% the year before. Further, we expect that going forward, the export segment will contribute about 9% to 10% of the overall volumes -- overall revenues within this year, which is in line with our medium-term target of 15% to 20% contribution from exports.

After 2 years of pandemic-led disruptions, FY '23 marked a return to normalcy in operations. However, geopolitical tensions and continued supply chain disruptions resulted in unprecedented inflation and volatility in commodity and energy prices. Central banks across the world responded swiftly with sharp increase in interest rates within a relatively short time frame. The Indian economy remained a bright spot in FY '23 amidst the global slowdown.

Real GDP growth for the year is estimated at 7% against the backdrop of a challenging environment, operating environment, as I first stated, the company's customer centricity, agility in seizing market opportunities, focus on execution and proactive strategic intervention enabled it to post strong numbers, strong performance across all operating segments.

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Action Construction Equipment Limited

May 31, 2023

	Our model is crafted in a manner that enables us on each business -- enables us to focus on
	each business while harnessing the diversity of portfolio to create unique sources of
	competitive advantage. Our strategic positioning in the core sectors of infrastructure,
	manufacturing, logistics and agri will provide necessary impetus to our growth trajectory.
	Looking ahead, India is one of the fastest-growing economies and its prospects remain very
	strong for the period ahead. The infrastructure growth story continues to play a significant role
	in the economic growth and will have its multiplier effect on the economy. We believe that
	going forward, the strong demand scenario should sustain itself, supported by government's
	unweaving focused on urban infra and rural development. The increased capital expenditure
	announced in the Union Budget 2023 will further aid this growth in FY '24.
	Going forward, in the current year, we expect a growth of at least 15% to 20% in our cranes,
	metal handling and agri portfolios. For the construction equipment segment, we are looking at
	accelerated growth rates of 30% to 35% on an increased pace. In terms of capacities, our
	cranes and metal handling segments are reaching their peak utilization levels. And in order to
	fuel further growth, we are currently incurring a capital expenditure of INR80 crores to INR90
	crores to enhance our capacity. The expansion will take shape from Q2 onwards and will
	enhance our installed capacity and will have a potential to propel us to reach a turnover level
	of INR3,800 crores to INR4,000 crores in the near future.
	On the whole, as a company, we are looking at a 15% to 20% growth in our top line for the
	current year, with further margin expansion of 100, 250 basis points. We hope we are in a
	position to revise these projections by end of second quarter, which will predominantly depend
	on the onset and intensity of the monsoons. Further, we remain optimistic about the medium-
	to long-term prospects of the company and remain focused to deliver on our growth agenda.
	We will continue to drive cost savings harder and take calibrated pricing actions while
	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 the margin profile of the company. With this, I would
	like to open the call for question-and-answer session. Thank you.
Moderator:	The first question is from the line of Mr. Himanshu Upadhyay from O3 PMS.
Himanshu Upadhyay:	I'll just go ahead with my questions. The agriculture equipment has been on the downhill in
	terms of units for the last 3 years and market was strong. Can you elaborate on what happened
	and the way forward here?
Sorab Agarwal:	We are talking about -- I just missed the beginning, which segment?
Himanshu Upadhyay:	Agriculture equipment.
Sorab Agarwal:	Yes, we have been in a little doldrums here, as I had mentioned in the last call last quarter.
	And Vyom, I think you'll be able to clarify better here with respect to what really happened in
	the last quarter.

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