Detailed Narrative
Divergent Geographic Performance
CIE India's portfolio is increasingly tilting toward the domestic market, which now accounts for 68% of sales compared to just 32% from Europe. In CY24, India sales grew 5% to ₹58.1 billion, while European sales plummeted 14% to ₹28.2 billion. Management noted that this geographic mix is a complete reversal from the company's inception in 2015, highlighting a successful long-term pivot to the high-growth Indian market.
European Truck Segment Crisis
The European business faced a severe downturn in the Truck and Off-highway segments, with Q4 sales dropping 21% YoY. Management revealed a cascading decline throughout the year, starting with a 10% drop in Q1 and ending with a massive 35% decline in Q4. This segment, previously considered a 'legacy' business of shafts and spindles, has become a significant drag on consolidated performance, though EBITDA margins were defended at 15% through cost adjustments.
India EV and 2W Momentum
India's growth was spearheaded by the 2-wheeler segment, which grew 'excellently' at 16% during the year. The EV order book in India remains robust, making up approximately 25% of the ₹10,000 billion (as per transcript) in new orders. Management is particularly optimistic about anchor customers like Mahindra and Bajaj, who have launched successful new models, offsetting the slowdown in the tractor and truck segments.
Operational Efficiency and Margin Defense
Despite a 2% decline in consolidated sales, CIE maintained a healthy EBITDA margin of 17.3%. This was achieved through rigorous cost control in Europe, where the workforce was reduced to approximately 900 people, and automation initiatives in India. The company also benefited from stable to trending-down commodity prices, ensuring that material price fluctuations had less than a 1% impact on sales.
Strong Cash Position and Dividend Hike
The company has transitioned to a net-cash position of ₹12 billion, a significant improvement from ₹8.2 billion in the previous year. This strong balance sheet allowed the board to recommend an enhanced dividend of ₹7 per share. Management emphasized that they are generating operating cash flows equivalent to 66% of consolidated EBITDA, providing ample room for future Capex and potential M&A.