Alicon Castalloy Limited — Q4 FY25 earnings call

Call held 14 May 2025

Management summary

Alicon Castalloy reported a strong Q4 FY25, with sequential revenue growth of 8% and significant EBITDA margin expansion, driven by an improved product mix. While FY25 revenue grew 10% YoY to Rs. 1,724 crore, it fell short of initial guidance due to global headwinds and softness in CV and EV segments. The company has recalibrated its FY26 revenue guidance downwards, acknowledging ongoing macroeconomic uncertainties and US tariff impacts, but maintains a positive long-term outlook with a robust Rs. 9,000 crore order book and strategic investments.

Highlights

  • Strong Q4 FY25 revenue rebound, up 8% sequentially to Rs. 426 crore, returning to over Rs. 400 crore run rate.

  • FY25 revenue grew 10% YoY to Rs. 1,724 crore despite volatile macroeconomic environment.

  • Q4 FY25 EBITDA margin significantly improved to 11.2% (230 bps expansion QoQ) due to better product mix and utilization of new production lines.

  • Order book of Rs. 9,000 crore provides robust visibility, with 82% from higher-value 4-wheeler segments (PV 50%, CV 32%).

  • EV share in revenue increased from 12% in FY24 to 19% in FY25, including hybrid vehicles.

Concerns

  • FY25 revenue of Rs. 1,724 crore missed initial guidance of Rs. 1,800 crore due to slowdown in export markets and CV/EV segments.

  • FY26 revenue guidance revised downwards from Rs. 2,200 crore to Rs. 1,900-1,950 crore (12-14% growth) due to macroeconomic volatility and US tariffs.

  • FY25 Gross Margin declined to 47.8% from 51.5% in FY24, attributed to product mix where the company does not supply fully finished parts.

  • One-time provision of Rs. 4 crore was made for receivables written off due to insolvency of a European customer.

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹426 Cr
    QoQ +8.1%
  • Gross Margin
    47.5%
    QoQ +3.7%
  • EBITDA
    ₹48 Cr
    QoQ +37.1%
  • EBITDA Margin
    11.2%
    QoQ +25.8%
  • PAT
    ₹9 Cr
    QoQ +800%

FY25

  • Total Revenue
    ₹1,724 Cr
    YoY +10.3%
  • Gross Margin
    47.8%
    YoY -7.2%
  • EBITDA
    ₹198 Cr
    YoY -1%
  • PAT
    ₹46 Cr
    YoY -24.6%

What they filed

Q1 FY27: revenue up 38.3%, net profit up 22.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue464 392 425 418 428 −8%430 +10%495 +16%578 +38%
EBITDA56 34 47 49 55 −2%44 +29%46 −2%54 +10%
Net profit17 1 9 9 14 −18%3 +200%8 −11%11 +22%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentTwo-wheelerPassenger VehicleCommercial VehicleICE
FY25 Revenue Mix (Auto)35%39%21%69%
FY24 Revenue Mix (Auto)40%33%19%73%

Order book

high confidence

Total value

₹9,000 Cr

as of 2025-03-31 quantified

Execution

up to 2028-29

Composition

Mix 2 segments
  • Passenger Vehicle 50%
  • Commercial Vehicle 32%

Share of order book by segment· partial disclosure (82% of the book)

Cancellations & deferrals

  • reduced: EV orders reduced based on new guidelines from customers.
Order book is strong, with a major increase from passenger and commercial vehicle segments, and a focus on high-margin products.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹170 Cr Maximum from internal accruals, with a small increase in debt expected, partly offset by working capital improvement.
    • Machinery upgrades and new product development for ICE and EV platforms ₹165 Cr
    • Customer-specific investments for bigger and bolder parts (e.g., JLR eAxle)
    • Maintenance CAPEX and automation for improvement ₹20 Cr
    Capital expenditure for Financial Year '25 stood at approximately Rs. 165 crore to Rs. 170 crore primarily directed towards machinery upgrades and new product development in alignment with our long-term growth strategy. ... We anticipate a capital expenditure of around Rs. 170 crore in the upcoming financial year... So, maximum will be from the internal accruals, but I think there will be a small increase in the debt, but not a major increase from this CAPEX because some money we will realize from this improvement in the working capital cycle.
  • Debt Debt disclosed
    So, maximum will be from the internal accruals, but I think there will be a small increase in the debt, but not a major increase from this CAPEX because some money we will realize from this improvement in the working capital cycle.
  • Dividend ₹1.5/share (interim)
    In recognition of this performance, the Board of Directors has recommended an interim dividend of 50% amounting to Rs. 1.5 per share.

Guidance & targets

Revenue

  • Total Revenue Revenue · FY26 · Medium confidence Rs. 1,900 crore to Rs. 1,950 crore

    Previously Rs. 2,200 crore → Rs. 1,900 crore to Rs. 1,950 crore

    However, in light of recent disruptions, our earlier guidance of Rs. 2,200 crore for FY '26 now appears ambitious. We are recalibrating our outlook and currently expect to achieve revenue in the range of Rs. 1,900 crore to Rs. 1,950 crore in FY '26 translating to a top-line growth of 12% to 14% for the year.

    — Vimal Gupta

  • Top-line Growth Revenue · FY26 · Medium confidence 12% to 14%
    currently expect to achieve revenue in the range of Rs. 1,900 crore to Rs. 1,950 crore in FY '26 translating to a top-line growth of 12% to 14% for the year.

    — Vimal Gupta

Profitability

  • EBITDA Margin Profitability · FY26 · Medium confidence around 13%
    for the full year, we are expecting near about around 13% in the margins, Raghunandhan.

    — Vimal Gupta

Capex

  • Capital Expenditure Capex · FY26 · High confidence around Rs. 170 crore
    Looking ahead, we anticipate a capital expenditure of around Rs. 170 crore in the upcoming financial year, as we continue to build capabilities and support our expanding business pipeline.

    — Vimal Gupta

Capacity

  • Capacity Utilization Capacity · Next year and year after · High confidence around 80%
    Yes, Mr. Desai, we are seeing in the next year and year after, we will be having the capacity utilization of around 80%.

    — Shyam Agarwal

What to watch in Q1 FY26

Clarity on US Tariffs

Next quarter
Current Tariff issues still not very clear, causing customer uncertainty.
Target Settlement or clearer understanding of US tariff situation.

Why it matters

Resolution of tariff uncertainty is expected to unfreeze customer decisions and positively impact export volumes.

Still, all the OEMs, they are also not very certain about the volumes in this year because the tariffs issues are still not very clear. So, we will have to wait for one or two months until this tariff situation will settle down.

Risks & concerns

  • Global Macroeconomic Volatility and Geopolitical Uncertainties

    medium

    Cited as reasons for revised FY26 guidance and cautious outlook, impacting customer decisions and market growth.

    Management acknowledged

  • US Tariffs and Trade Uncertainty

    medium

    Heightened uncertainty around US tariffs is causing customers to pause decisions and commitments, impacting export volumes.

    Management acknowledged

  • Probable US Recession

    medium

    US economy reported negative GDP growth in Q1 2025, though a rebound is projected for Q2.

    Management acknowledged

  • Softness in Commercial Vehicle (CV) and EV Segments

    medium

    CV volumes declined over 21% YoY in FY25, and EV segment growth was lower than anticipated, contributing to revenue shortfall.

    Management acknowledged

  • Global Automotive Production Decline

    medium

    Global automotive production declined 1% in FY25, with Europe contracting 6% and North America 3%.

    Management acknowledged

  • Receivables Write-off due to European Customer Insolvency

    low

    A one-time provision of Rs. 4 crore was made, impacting reported EBITDA.

    Management acknowledged

Q&A highlights

7 direct
FY25 Revenue Mix and Order Book Composition Direct
For the two-wheelers, the sales contribution is 35%. Passenger vehicle is 39% and commercial vehicle is 21%. ... currently our order book is around Rs. 9,000 crore. ... passenger vehicle contributes 50% and commercial vehicle 32%.

Clarifies the company's current revenue breakdown and the strategic shift towards higher-value 4-wheeler segments (82% of order book) for future growth.

Asked by Raghunandhan

EV Share in Revenue and US Tariffs Impact Direct
So, EV sales if we see in FY '24, it was 12% and for FY '25, it is 19%. ... Currently, Raghu, on our part, we are in aluminum die casting. So, current duty on our part before the Trump tariff was 2.8%. And now they have put a 10% tariff on our parts. But whatever agreement we are having, so duties are not paid by Alicon.

Provides specific data on the growing EV contribution to revenue and clarifies that the direct financial burden of US tariffs on exports is borne by OEMs, not Alicon.

Asked by Raghunandhan

FY26 Margin Outlook Direct
for the full year, we are expecting near about around 13% in the margins, Raghunandhan.

Offers specific forward guidance on profitability, indicating management's confidence in margin expansion for the upcoming fiscal year.

Asked by Raghunandhan

Higher FY25 Capex and its Purpose Direct
Yes, we are always explaining, Yash, for the new projects what we are coming up, because these are the very critical and big parts. So, we need good quality and bigger machines. So, for that, we are putting up the capacities.

Explains the rationale behind the higher-than-guided FY25 CAPEX, highlighting strategic investments in advanced capabilities for critical and larger components, which are crucial for future growth drivers.

Asked by Yash Dalal

Gross Margin Decline Despite PV Segment Growth Partial
So, mainly, the gross margins, one is that the sales mix is there. But like when we are talking about the PV, PV has increased. But when we are supplying, because it depends on what kind of product we are supplying to them. Suppose for the PV, we are not supplying the fully finished parts.

Provides a nuanced explanation for the FY25 gross margin decline, attributing it to the product mix and the nature of PV component supply (not fully finished parts), which affects gross margin differently than EBITDA.

Asked by Preet

Reasons for Revised FY26 Revenue Guidance Direct
And if you see globally, the automobile market has not done good in the last year. The global automotive market was down by 1%. ... And we have also seen the impact of the election. Because of the election year, lots of tenders were canceled.

Clearly outlines the macroeconomic and industry-specific factors (global market decline, lower EV growth, election impact) that led to the significant downward revision of the FY26 revenue target.

Asked by Jyoti Singh

Working Capital Improvement and Debt Outlook Direct
We are taking a lot of actions for the improvement of the working capital cycle, especially on the inventory side as well as on our receivables. ... So, maximum will be from the internal accruals, but I think there will be a small increase in the debt.

Addresses the company's focus on improving working capital efficiency and clarifies that future CAPEX will be primarily funded by internal accruals, with only a minimal increase in debt.

Asked by Preet

Jaguar Business and Portfolio Diversification Direct
Jaguar and Land Rover is our strategic customer, and we are supplying for the last five to six years. ... we have a fairly balanced portfolio, and we don't rely on any one of the customers more than 15%.

Confirms the strategic importance of the Jaguar business while reassuring that the company maintains a diversified customer base to mitigate concentration risk.

Asked by Manas Jain

3 min read 7 chapters

Detailed narrative

Q4 FY25 Performance and FY25 Overview

Alicon Castalloy reported a strong rebound in Q4 FY25, with revenues growing 8% sequentially to Rs. 426 crore. This performance helped the company achieve a 10% year-on-year revenue growth for FY25, reaching Rs. 1,724 crore. EBITDA for Q4 stood at Rs. 48 crore, up 36% from Q3, with the EBITDA margin improving significantly from 8.9% to 11.2%. Despite a one-time provision of Rs. 4 crore for receivables written off, the company posted a Q4 PAT of Rs. 9 crore, a significant recovery from Rs. 1 crore in Q3.

Strategic Shift in Product Mix and EV Transition

The improvement in Q4 gross margin to 47.5% was primarily driven by a higher share of Passenger Vehicle components in the sales mix. For FY25, the revenue mix saw PV contribute 39% (up from 33% in FY24) and 2W contribute 35% (down from 40% in FY24). The company's EV share in revenue increased from 12% in FY24 to 19% in FY25, including hybrid vehicles, indicating a strategic shift towards higher-value and future-oriented segments. The order book of Rs. 9,000 crore is heavily skewed towards 4-wheelers (82%), with PV accounting for 50% and CV 32%.

Capital Expenditure and Future Growth Drivers

Capital expenditure for FY25 was approximately Rs. 165-170 crore, primarily directed towards machinery upgrades and new product development for both ICE and EV platforms. This represents the largest CAPEX outlay in two decades, focused on critical components. The company plans a similar CAPEX of around Rs. 170 crore for FY26, emphasizing customer-specific investments for growth drivers in FY26-27. These investments are crucial for ramping up volumes from key Japanese and European OEMs, including products for JLR like the eAxle.

Revised FY26 Outlook and Macroeconomic Headwinds

The company revised its FY26 revenue guidance downwards from an earlier target of Rs. 2,200 crore to a new range of Rs. 1,900-1,950 crore, translating to 12-14% top-line growth. This recalibration is due to macroeconomic volatility, geopolitical uncertainties, and customer-specific disruptions. Factors include a 1% decline in the global automotive market in FY25 (Europe down 6%, North America down 3%), lower-than-anticipated EV growth, and election-related tender cancellations in India. Management expects FY26 EBITDA margins to be around 13%.

Export Market Dynamics and US Tariffs

Export markets, particularly Europe and the U.S., faced ongoing challenges. The US economy saw a -0.3% GDP growth in Q1 2025. While US tariffs (10% on parts) are paid by OEMs, the uncertainty surrounding these tariffs is causing customers to pause decisions and commitments. Exports constitute 22% of Alicon's revenue, with 8% from the US and the remainder mainly from Europe and the UK. The export mix is predominantly 4-wheelers (CV 60%, PV 40%), with negligible 2-wheeler contribution.

Working Capital Management and Debt Strategy

Alicon is actively implementing measures to improve its working capital cycle, focusing on inventory and receivables. Management expects these actions to yield further improvements in FY26. Regarding debt, the company aims to fund the majority of its CAPEX through internal accruals, anticipating only a small increase in debt, partly offset by gains from working capital improvements. The company maintains a balanced customer portfolio, with no single customer contributing more than 15% of revenue, to mitigate risk.

Operational Efficiency and Sustainability Efforts

The company's new advanced production lines, featuring robotics and automation, contributed to the Q4 margin improvement. Alicon is focused on scaling these assets to enhance fixed cost absorption. Capacity utilization, which was about 75% in Q4, is expected to reach around 80% in the next year and year after, leveraging existing CAPEX. In sustainability, nearly 30% of the company's electricity consumption is now met through solar power, demonstrating ongoing efforts in environmental responsibility.

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