ICE Make Refrigeration LtdQ3 FY23Industrial Manufacturing

ICE Make Refrigeration Ltd

Q3 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→Company aims to surpass a turnover target of ₹500 crores by FY 2024-25.
→Long-term revenue goal is ₹1,000 crores by FY 2027-28.
→Current order book stands strong at ₹152 crores, positioning for 30%+ annual growth.
→Continuous panel plant expected to generate ₹200 crores topline on a single shift.
→Expansion plans include setting up new manufacturing units and warehouses in Chennai, Kolkata, and North India to support volume growth and reduce logistics costs.
→Company plans to invest ₹200 crores in CAPEX over three years to significantly enhance production capacity.
→Market opportunities driven by Indian cold chain industry's growth and increasing demand in refrigeration sector.
→Export business targeted at around ₹14 crores this year, though focused on OEM-based exports.
→Revenue mix expects continuous panel and commercial products to contribute significantly as expansions proceed.

Category 3

→Ice Make Refrigeration aims to surpass a turnover target of ₹500 crores by FY 2024-25 and reach ₹1,000 crores by 2027-28.
→The company plans over ₹200 crores in CAPEX over the next three years to significantly enhance production capacity.
→They expect revenue growth driven by continuous panel plants and subsidiary expansion, with a potential topline of ₹200 crores from a single shift of the continuous panel plant.
→H1 FY24 showed 18% YoY revenue growth to ₹156 crores and a 27% increase in net profit to ₹9.81 crores, indicating improving profitability.
→EBITDA margin improved by 52 bps to 10.27% in H1 FY24.
→Future margin improvement is expected via internal production from the continuous panel plant.
→While some margin pressure may arise due to increased depreciation and interest from CAPEX, management is confident margins will remain stable or slightly improve as scale increases.

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Yes

→Ice Make Refrigeration plans to deploy over ₹200 crores CAPEX over the next three years.
→The initial phase of this CAPEX will be funded through debt.
→Management indicated potential equity infusion in the future as part of the growth CAPEX plan, but the timing and amount are not yet certain.
→They are open to the possibility of raising capital through the equity market depending on the growth trajectory and working capital needs.
→Working capital requirements are expected to be around ₹10-15 crores, with contingencies capped at 10-12%.
→No immediate plans for a defined equity fundraising round, but it remains under consideration for later stages of expansion.

Yes

→Current order book and leads stand strong at Rs. 152 crores, positioning for an annual growth rate of 30% or higher (Page 3).
→Sizable orders are in the pipeline, approximately Rs. 3 to 4 crores yet to be received (Page 6).
→Engagement in technical service support for commercial production line setup at BRC Congo indicates active business development (Page 3).
→Half-year financial performance shows strong order inflow supporting revenue growth (Page 6).

Yes

→**Ongoing and Planned CAPEX:** Total planned CAPEX of around ₹200 crores over the next three years, including:
→ - ₹60-65 crores investment for the first and second phases of continuous panel production lines.
→ - ₹9-10 crores for shifting and setting up a new Chennai subsidiary facility (land, building, machinery).
→ - ₹2 crores initial investment in Kolkata subsidiary Ice Make, with further ₹10 crores planned for expansion.
→ - ₹25 crores planned for automation and commercial product vertical expansion.
→ - Additional working capital requirement of ₹15 crores.
→**Geographical Expansion:** Setting up stock points and warehouses in East (Kolkata) and North India to reduce logistics costs and improve market reach.
→**Future Plans:** Potential equity infusion considered to fund CAPEX and growth alongside debt financing.
→**Continuous Panel Plant:** Expected to be completed by next quarter FY24, with commercial operations starting shortly thereafter; estimated to generate ₹200 crores topline on a single shift.

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