Krishna Defence & Allied Industries Ltd Q4 FY22 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 1
Margin
Category 1
Fundraise
N/A
Order
Yes
Capex
Yes
4 of 4 growth signals are positive — a strong management growth story.
Full analysisRevenue guidance
Category 1- The company aims to grow its revenues at a rate of about 40% to 50% year-on-year for the next three years.
- Current order book stands at around Rs. 18 to 19 Crores, predominantly in defence (85%) and dairy segments.
- The Indian Navy plans to expand to around 145 ships over the next 20 years, presenting significant opportunities.
- No new projects came up in the last two years due to COVID-19; expected spillover of projects from 2019-2020 into current and coming years.
- Capacity utilization is currently about 35%; minimal Capex (~ Rs. 1.5 Crores) will allow servicing business over Rs. 100 Crores.
- Company plans to add two new defence products annually, including improved space heating devices and naval ammunition.
- For the dairy segment, automation and robotic milk collection units are being developed for growth.
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Fundraise plans
See what Krishna Defence & Allied Industries Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- For FY2023, Krishna Defence and Allied Industries Limited has completed the necessary infrastructure and Capex to service orders for the next couple of years.
- Planned Capex includes mechanization/automation to reduce workforce dependence, estimated at around Rs. 1 to 1.5 Crores.
- Minimal Capex of approximately Rs. 1.5 Crores is expected to ramp up capacity to service business over Rs. 100 Crores without requiring major expansions.
- The company is focusing resources on defense segment with promising opportunities and currently not planning to enter new business segments.
- Engaged in collaboration talks with foreign companies to take technology and build products domestically, but no formal agreements or strategic investments are finalized yet.
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Margin guidance
Category 1- The company targets revenue growth of approximately 40% to 50% year-on-year for the next three years, driven by defence segment expansion.
- Existing defence products include bulb bars, weld consumables, and ballast bricks; two new products are planned to be added each year.
- Ongoing development includes improved space heating devices and naval gun ammunition, expected to contribute to future sales.
- EBITDA margins for defence segment anticipated at 15% to 20%, with expected improvement due to economies of scale.
- Minimal additional Capex (~₹1.5 Crores) required to support business growth beyond ₹100 Crores, indicating operational leverage potential.
- The company aims to focus fully on defence, deemed highly promising, to utilize its full potential, enhancing profitability.
- PAT showed a 32.26% increase in FY2022; with expected order inflow and operational scaling, earnings and EPS are projected to grow correspondingly.
Order book
Yes- The current order book stands at approximately Rs. 18 to 19 Crores.
- Around 85% of the order book is for the defence segment, with the remaining towards the dairy industry.
- The company primarily supplies to defence clients such as Mazagon Dock, KRAC, CSL, and other shipyards.
- The company anticipates good order inflows in the coming years due to the Indian Navy's expansion plans for about 145 ships in the next 20 years.
- New naval projects that were delayed due to COVID are expected to spill over and generate orders in the near term.
- The lead time for orders ranges between 3 to 5 months typically, depending on order size and complexity.
How does Krishna Defence & Allied Industries Ltd rank vs peers in Aerospace & Defense?
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