Knowledge Marine & Engineering Works LtdQ1 FY24Engineering Services

Knowledge Marine & Engineering Works Ltd

Q1 FY24 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.

Full analysis

Revenue guidance

Category 2

→FY24 revenue was approximately INR164 crores with a decline due to external site conditions.
→FY25 revenue is targeted between INR270 crores to INR300 crores.
→Order book currently stands at INR733 crores, with expected additions of INR400 crores soon, potentially exceeding INR1,100 crores.
→Expected to execute around INR230 crores to INR300 crores revenue in FY25 based on current and pipeline orders.
→National Waterways contracts execution started April 2024, with full revenue recognition expected mid-2024 onwards.
→The company aims to grow its operations steadily, adding new vessels and expanding into new geographic markets.
→Plans to grow market share sustainably to 10% in the dredging business.
→Intent to enter new countries beyond Myanmar, India, and Bahrain within the next 2 years.
→Continuous focus on enhancing fleet capacity and project execution to support growth.

Margin guidance

Category 3

- Revenue target for FY25 is INR 270-300 crores, up from INR 164 crores in FY24. - EBITDA margins are expected to remain strong at around 30%. - Profit After Tax (PAT) margin is projected between 20% to 23%. - Conservative bottom-line estimate for FY25 is a minimum of INR 60 crores. - Order book stands at INR 733 crores, with plans to add INR 400 crores soon, potentially exceeding INR 1,100 crores. - Execution ramp-up expected with higher run rates following project streamlining. - Company aims for sustained growth, expanding fleet and entering new markets, targeting a 10% sustainable market share in dredging. - Promoters plan to buy back shares, reflecting confidence in valuation and future growth. - KMEW's upcoming listing on BSE and NSE main boards could enhance visibility and attract opportunities. Overall, strong fundamentals, robust order book, and efficient execution indicate positive earnings and profit growth in the near term.

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Fundraise plans

Yes

→There is no explicit mention of any new fundraising through equity in the transcript.
→Promoters have sold 5%-6% of their stake recently to mutual funds to recognize their hard work; however, no future equity selling is planned.
→Promoters intend to buy back some shares at current valuations, indicating no immediate equity dilution.
→Debt usage is aligned with specific fleet contracts, with a strategic approach to maintain 25% cash against debt for growth and acquisitions.
→A capex of INR160 crores is planned this year for new cutter suction dredgers and allied crafts, suggesting capital expenditure financed possibly through existing debt or cash.
→The company maintains a cash balance (~INR48-50 crores) for fast acquisitions and growth.
→No direct announcement of fresh debt fundraising was made, but debt facilities are structured alongside asset acquisitions and contracts.

Order book

Yes

→Current confirmed order book: INR 733 crores.
→Bid pipeline in next 30 to 45 days: INR 1,200 crores.
→Expected additional orders from pipeline: INR 400 crores.
→Total order book expected after adding new orders: INR 1,100+ crores.
→Execution from current order book if no further orders secured: Approx. INR 230 crores in the year.
→Order book split includes:
→ - Inland Waterways Authority of India (IWAI) orders: INR 175 crores over 3 years.
→ - Bahrain sand mining order: INR 450 crores.
→ - Yangon and Sittwe projects: Additional INR 120 crores approx.
→Target revenue from order book next year: INR 275-300 crores.

Capex plans

Yes

→The company plans a total capex of INR 160 crores this year focused on adding cutter suction dredgers and allied crafts to support additional orders.
→Capex is driven by the need to expand fleet and operational capabilities, aligning with growth ambitions in the dredging industry.
→Maintaining cash reserves is strategic for future growth, acquisitions, and faster decision-making in acquiring second-hand assets.
→Promoters expressed intent to buy back shares, indicative of confidence in sustainable growth and capital management.
→Investment in professional talent to broaden capabilities supports expansion into new segments such as IWAI and DCI dredging contracts.

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