Krishca Strapping Solutions Ltd Q3 FY26 Earnings Analysis

- The company targets a minimum 25% year-on-year revenue growth over the next 3 years. - Significant growth expected from the new cold rolling mill (CRM) with installed capacity of 60,000 tons/year. - Additional revenue of at least ₹150 crore anticipated from CRM starting FY27, potentially crossing ₹200 crore. - Specialty steel vertical to drive most of the long-term growth, leveraging higher capacity and better margins. - Packaging vertical growth steady with ₹150 crore worth of bid pipeline; 20-30% conversion expected. - Revenue from domestic market to dominate (>90%), with exports expected to grow modestly (15-20% annually). - Progressive ramp-up in utilization of cold rolling mill capacity aiming for at least 50% utilization initially. - New product lines like desiccant manufacturing projected to generate ₹20-25 crore by 3rd/4th year. - Diversification into super alloys and specialty steels to improve revenue and profitability in medium term.

- The company targets a minimum 25% year-on-year revenue growth for the next 3 years. - EBITDA margins are expected to sustain in the range of 13% to 15% in the long term. - EBITDA CAGR guidance is a minimum of 25%, with potential for higher growth post production stabilization. - PAT margins are anticipated around 7%, factoring in depreciation and other expenses. - Additional revenue of at least ₹150 crore from the new cold rolling mill (CRM) is expected from FY27, possibly reaching ₹200 crore. - Working capital cycle is planned to improve, aiming to reduce receivable days from current ~120 to less than 45, helping cash flows. - Growth will increasingly come from the specialty steel vertical alongside packaging, driven by new capacities and higher margin products such as super alloys. - The company expects positive free cash flow from H2 next year despite ongoing CapEx.

- Current Capex: Over ₹100 crore investment to set up a cold rolling mill (CRM) with 60,000 tons per annum capacity, expected to start production by end of May next financial year. - Future Capex: ₹2 crore investment in a desiccant manufacturing plant with 200 tonnes per month capacity, anticipated to generate ₹20-25 crore revenue by year 3-4. - Strategic Investment: ₹7 crore investment in Vajra Alloys, a new subsidiary focused on Super Alloys and high-performance materials, targeting industrial and commercial applications initially. - Additional Plans: Potential application under the Ministry of Steel's third round of PLI scheme for specialty steel, primarily for the cold rolling mill; assessing application for Superalloys due to ₹50 crore minimum investment criteria. - Funding: Capex funded through raised funds, internal accruals, mix of debt and minimal strategic fundraise; promoter committed to avoid dilution.

- Currently, Krishca Strapping Solutions has no plans for significant new equity dilution in the near future. - The company is confident that the revenues from the new cold rolling mill and internal accruals will sufficiently fund upcoming Capex plans. - Any future equity raise, if needed, will be minimal, with no dilution to promoter holdings as the promoters will contribute equally. - For the Super alloy subsidiary (Vajra Alloys), a ~7 Cr. investment is planned at the subsidiary level, funded through a mix of debt and limited strategic fundraise. - Overall, the company aims to avoid large equity dilution and prefers internal funding and controlled debt for expansions.

- Current confirmed order book includes over ₹25 crore from Vedanta and ongoing orders from other major clients, totaling around ₹150 crore in the pipeline for packaging contracts. - Total order pipeline over the next 5 years stands at approximately ₹180 crore, with a significant portion being short-term annual POs rather than long-term contracts. - Out of a previous pipeline of ₹750 crore, over 20% (₹150 crore) orders have already been received. - Packaging contracts are moving towards longer-term agreements (2-5 years) for stability, though many current contracts are annual. - Bid pipeline for packaging segment currently includes orders worth over ₹150 crore with an expected 20-30% conversion rate. - Large orders like ₹107 crore from Vedanta were received recently, with more orders in the pipeline. - Specialty steel segment orders expected to grow as new production capacities come online.