Krishca Strapping Solutions LtdQ3 FY25Industrial Products

Krishca Strapping Solutions Ltd

Q3 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Capex

Yes

2 of 5 growth signals are positive.

Revenue guidance

Category 2

→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.

Category 3

→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.

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Yes

→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.

Yes

→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.

How does Krishca Strapping Solutions Ltd rank vs peers in Industrial Products?

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1Krishca Strapping Solutions Ltd

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