Chennai: When an auto-component maker announces a Rs 2,000-crore order win, investors want to know how much will translate into revenue — and when.
The answer is not always evident from the headline number. Component suppliers often win contracts for a vehicle platform’s life, with volumes ramping up, peaking and then tapering. This is why some companies use lifetime value (LTV) rather than annualised order value.
LTV measures the size of the opportunity, not the speed at which it reaches the revenue line. It needs to be read alongside duration, SOP (Start of Production) and revenue ramp-up to assess true revenue visibility.
