Icra Limited · NSE:ICRA
Icra — Investor Presentation (July 2024)
17 slides from Icra's investor presentation, July 2024
Slide 1: Indian Automobile Dealership Industry
INDIAN AUTOMOBILE DEALERSHIP INDUSTRY Elevated inventory levels to impact passenger vehicle dealers’ earnings in FY2025 July 2024 1
Slide 2: Highlights
Highlights ▪ The domestic passenger vehicle (PV) sales volumes registered an all-time high level of 4.2 million units in FY2024, representing a growth of 8% on a YoY basis. However, even as underlying demand drivers remain supportive, domestic PV volume growth is expected to moderate to 3-6% in FY20
Slide 3: Stable supply and muted retail sales result in elevated inventory holding
Stable supply and muted retail sales result in elevated inventory holding Exhibit 1: Trend in monthly wholesale and retail PV volumes, and PV inventory Higher than average inventory 4.5 110 3.5 85 Days Lakh units 2.5 60 Low inventory due to Average inventory: 30-35 days supply issues 1.5 35 0.5 10 J
Slide 4: Elevated inventory levels leading to higher discounts and borrowing costs
PORTER’S FIVE FORCES MODEL Elevated inventory levels leading to higher discounts and borrowing costs Higher discounts Increased interest costs Lower margins Elevated inventory levels at PV Debt levels of PV dealerships have also Increased discounts, high stock holding dealerships led to sharp increa
Slide 5: Moderation in margins owing to high discounts and borrowing costs
Moderation in margins owing to high discounts and borrowing costs Exhibit 2: Trend in dealers’ profits and margins 800 6.0% 4.6% 4.7% 4.3% 600 3.8% 4.5% 3.6-3.9% ~3% Rs. crore 400 3.0% 200 1.5% 0 0.0% FY2020 FY2021* FY2022 FY2023 FY2024 E FY2025 P OPBITDA PAT OPM (%) Source: ICRA Research; Based on
Slide 6: Moderation in credit metrics foreseen in FY2025
Moderation in credit metrics foreseen in FY2025 Exhibit 3: Trend in dealers’ coverage and leverage metrics 5.0 4.8 4.5 4.0 4.6 4.0 3.5-3.8 3.5-3.8 3.5 3.0 3.0 3.2 2.9-3.2 3.0-3.3 2.5 2.1 2.8 2.6 2.0 1.5 FY2020 FY2021 FY2022 FY2023 FY2024 E FY2025 P Interest coverage Total debt / OPBITDA Source: ICRA
Slide 7: Growth in domestic PV sales expected to moderate
Growth in domestic PV sales expected to moderate Exhibit 4: Trend in yearly domestic PV volumes 50 27% 30% 40 13% 20% 11% 8% 8% Lakh units 3-6% 10% 3% 3% 30 -2% 0% 20 -18% -10% 10 -20% 0 -30% FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Q1 FY2025 FY2025 E Domestic PV volumes % YoY growth
Slide 8: Revenue growth to be driven by volume growth, better product mix
Revenue growth to be driven by volume growth, better product mix Exhibit 5: Trend in dealers’ revenue growth 25000 35% 40% 24% 30% 20000 11-13% 20% 15000 7-9% Rs. crore -6% 10% -13% 10000 0% 5000 -10% 0 -20% FY2020 FY2021 FY2022 FY2023 FY2024 E FY2025 P Revenue (Rs. Crore) growth (%) Source: ICRA Re
Slide 9: Upgrades outpaced downgrades considerably in the past 18 months
Upgrades outpaced downgrades considerably in the past 18 months Exhibit 6: ICRA’s rating distribution in auto dealership sector Exhibit 7: ICRA’s rating movements in auto dealership sector 45% 16 3.0 14 14 39% 14 13 40% 12 2.5 35% 12 2.0 10 10 10 10 29% 10 9 9 30% 1.5 25% 8 19% 5 1.0 20% 6 4 4 4 4 0
Slide 10: ICRA-rated entities in the automobile dealership sector
ICRA-rated entities in the automobile dealership sector Name of Issuer LT Rating Outlook / Special Symbol ST Rating AVG Motors Private Limited [ICRA]BBB Stable [ICRA]A3+ Bimal Auto Agency India Pvt Ltd [ICRA]BBB+ Stable Chowgule Industries Private Limited [ICRA]A Stable [ICRA]A1 Commercial Automobil
Slide 11: ICRA-rated entities in the automobile dealership sector
ICRA-rated entities in the automobile dealership sector Name of Issuer LT Rating Outlook / Special Symbol ST Rating P.R.Nayak Associates Pvt Ltd [ICRA]BB+ Stable Pillai and Sons Motor Company [ICRA]BBB Stable [ICRA]A3+ Pratham Motors Private Limited [ICRA]BB Stable Padmaja Motors Private Limited [IC
Slide 12: ICRA-rated entities in the automobile dealership sector
ICRA-rated entities in the automobile dealership sector Name of Issuer LT Rating Outlook / Special Symbol ST Rating V.S.T. & Sons Private Limited [ICRA]A- Stable V.S.T. Motors Private Limited [ICRA]A- Stable Varun Motors Private Limited [ICRA]A- Stable [ICRA]A2+ Source: ICRA Research; Note: Does not
Slide 13: Click to Provide Feedback
Click to Provide Feedback 13 13 www.icra.in
Slide 14: Analytical Contact Details
Analytical Contact Details Name Designation Email Contact Number Shamsher Dewan Group Head shamsherd@icraindia.com 0124-4545 328 K. Srikumar Co-Group Head ksrikumar@icraindia.com 044-4596 4318 Nithya Debbadi Sector Head Nithya.Debbadi@icraindia.com 040-6939 6416 Etikala Ravi Teja Analyst Etikala.tej
Slide 15: Business Development/Media Contact Details
Business Development/Media Contact Details Name Designation Email Contact Number L Shivakumar Chief Business Officer shivakumar@icraindia.com 022-61693304 Neha Agarwal Head – Research Sales neha.agarwal@icraindia.com 022-61693338 Rohit Gupta Head Business Development – Infrastructure Sector rohitg@i
Slide 16: Copyright, 2024 ICRA Limited. All Rights Reserved.
© Copyright, 2024 ICRA Limited. All Rights Reserved. All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided 'as is' without
Slide 17: Thank You!
Q) cx Thank You! ey