Any current/future capex/capital investment/strategic investment?

Electrosteel Castings plans to ramp up existing capacity from 7 lakh tonnes to 9 lakh tonnes per annum by FY2025. CAPEX of approximately INR 595 crores planned, with INR 235 crores incurred till June 2023 and the balance INR 360 crores to be incurred gradually. Majority of CAPEX is funded by internal accruals. Capital received from the coal mine compensation will be partly used for debt reduction and partly for potential expansion. CAPEX expected to be completed by calendar year 2024, with major benefits and volume growth expected in FY26. The company aims to maintain industry leadership statu

Future growth expectations in sales/revenue/volumes?

FY24 growth is expected to be modest due to ongoing CAPEX with major benefits anticipated in FY25 and FY26. Capacity expansion from 7 lakh to 9 lakh tonnes per annum targeted by FY25, a 30% increase. Full benefit of expanded capacity expected in FY26 with major growth likely then. Q1 saw revenue dip due to planned shutdown; second half of FY24 expected to be robust. Volume recovery is planned to make up for shutdown loss, aiming to match last year's volume (~7,10,000 tonnes). No substantial volume growth expected this year; focus more on margin improvement and profitability. Demand

Future growth expectations in earnings/operating earnings/profits/EPS?

Revenue growth for the current year is expected to be modest due to ongoing CAPEX; major growth anticipated in FY26 with a 30% capacity increase to 9 lakh tonnes. FY25 expected growth around 10%. EBITDA margins projected to improve to around 13%-14% for the year, recovering from Q1 dip caused by planned shutdown. Margin improvement driven by both increased realizations and cost reductions, including coking coal price decline. EBITDA expected to benefit from lower raw material costs over next 9-12 months, though order book primarily fixed-price. PAT margins stood at 4.4% in Q1 with expe

Current/ Expected Orderbook/ Pending Orders?

At the start of the financial year, the order book was around 6.5 to 8 months of sales. As of the current quarter, it has increased to approximately 8.5 to 9 months. The order book on hand is close to around 5 lakh tonnes. During the quarter, more orders were booked than serviced, indicating a growing order pipeline. The net order book has increased by about 1 lakh tonnes during the quarter. The company started the year with an order book of around 4 lakh tonnes; after converting some into sales and adding new orders, the net order book increased to about 5 lakh tonnes.

Any current/future new fundraising through debt or equity?

There is no explicit mention of new fundraising through debt or equity in the current discussion. The company has paid INR 35 crore of long-term debt during the quarter, with balance debt repayments scheduled on due dates. Long-term debt scheduled to be paid over the next 3-4 years; no additional debt raised mentioned. Capital expenditure (CAPEX) plan to ramp up capacity will be primarily funded by internal accruals, not through new debt or equity. Proceeds from the coal mine compensation will mostly be used for debt reduction, with some portion potentially utilized for expansion. No indicatio

Electrosteel Castings LtdQ2 FY24

Electrosteel Castings Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹70.8P/E: 23.4Market Cap: ₹4.5K Cr

Management growth scorecard

Revenue

Category 4

Margin

Category 2

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 4

→FY24 growth is expected to be modest due to ongoing CAPEX with major benefits anticipated in FY25 and FY26.
→Capacity expansion from 7 lakh to 9 lakh tonnes per annum targeted by FY25, a 30% increase.
→Full benefit of expanded capacity expected in FY26 with major growth likely then.
→Q1 saw revenue dip due to planned shutdown; second half of FY24 expected to be robust.
→Volume recovery is planned to make up for shutdown loss, aiming to match last year's volume (~7,10,000 tonnes).
→No substantial volume growth expected this year; focus more on margin improvement and profitability.
→Demand outlook remains strong, particularly from water supply, irrigation sectors, and government schemes like Jal Se Nal and Amrut 2.0 for next 2 years.

Margin guidance

Category 2

→Revenue growth for the current year is expected to be modest due to ongoing CAPEX; major growth anticipated in FY26 with a 30% capacity increase to 9 lakh tonnes. FY25 expected growth around 10%.
→EBITDA margins projected to improve to around 13%-14% for the year, recovering from Q1 dip caused by planned shutdown.
→Margin improvement driven by both increased realizations and cost reductions, including coking coal price decline.
→EBITDA expected to benefit from lower raw material costs over next 9-12 months, though order book primarily fixed-price.
→PAT margins stood at 4.4% in Q1 with expectations for steady improvement.
→Long-term financial strength indicated by credit rating upgrade (CRISIL AA-).
→Overall, profitable growth linked to capacity ramp-up, stable raw material costs, and government infrastructure spending, especially under Jal Jeevan Mission and other water supply projects.

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Fundraise plans

→There is no explicit mention of new fundraising through debt or equity in the current discussion.
→The company has paid INR 35 crore of long-term debt during the quarter, with balance debt repayments scheduled on due dates.
→Long-term debt scheduled to be paid over the next 3-4 years; no additional debt raised mentioned.
→Capital expenditure (CAPEX) plan to ramp up capacity will be primarily funded by internal accruals, not through new debt or equity.
→Proceeds from the coal mine compensation will mostly be used for debt reduction, with some portion potentially utilized for expansion.
→No indication of planned equity issuance or new debt fundraising in the near term.

Order book

Yes

→At the start of the financial year, the order book was around 6.5 to 8 months of sales.
→As of the current quarter, it has increased to approximately 8.5 to 9 months.
→The order book on hand is close to around 5 lakh tonnes.
→During the quarter, more orders were booked than serviced, indicating a growing order pipeline.
→The net order book has increased by about 1 lakh tonnes during the quarter.
→The company started the year with an order book of around 4 lakh tonnes; after converting some into sales and adding new orders, the net order book increased to about 5 lakh tonnes.

Capex plans

Yes

→Electrosteel Castings plans to ramp up existing capacity from 7 lakh tonnes to 9 lakh tonnes per annum by FY2025.
→CAPEX of approximately INR 595 crores planned, with INR 235 crores incurred till June 2023 and the balance INR 360 crores to be incurred gradually.
→Majority of CAPEX is funded by internal accruals.
→Capital received from the coal mine compensation will be partly used for debt reduction and partly for potential expansion.
→CAPEX expected to be completed by calendar year 2024, with major benefits and volume growth expected in FY26.
→The company aims to maintain industry leadership status through this capacity expansion.
→Expansion driven by robust market demand and opportunity to capitalize on growing water infrastructure spending domestically and in export markets.

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