Mahindra EPCQ4 FY21
Mahindra EPC Q4 FY21 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹101.82P/E: 25.7Market Cap: ₹285 CrSector: Industrial Manufacturing
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
N/A
Order
N/A
Capex
Yes
1 of 3 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- Greenhouse business market in India is around Rs. 1000 Crores, with Rs. 600-700 Crores organized; EPC’s JV with Top Israel allows access to advanced technology.
- Greenhouse segment expected to see multiple-level growth in next 2-3 years from a low base.
- In 5 years, greenhouse and non-ISI segments may contribute about 7-10% of total enhanced revenue (~10% turnover).
- Current non-ISI and greenhouse sales in FY2021 were small (~3-4%, approx. Rs. 10 Crores).
- Industry growth expected 15-20% if positive factors like Andhra Pradesh market revival and raw material costs improve.
- Long-term industry potential very high due to water scarcity and government support aiming to expand micro-irrigation significantly, targeting 1.5-2 million hectares growth in the next 2-3 years.
- Mahindra EPC aims for sustainable, balanced growth linked to state government fund availability and working capital management.
See what Mahindra EPC management said on margin guidance — free account, 30 seconds.
Fundraise plans
- There is no specific mention of any current or planned fundraising through debt or equity in the provided transcript.
- Ashok Sharma emphasized that Mahindra EPC is virtually debt-free and has positive cash flow.
- The company is managing growth carefully with attention to working capital and receivables, aiming for sustainable growth without taking on excessive debt.
- There was a mention of considering new investors, including mutual funds, as a suggestion to be explored, but no concrete plans disclosed.
- Capex requirements are stated to be moderate and not expected to significantly impact return on capital employed.
- Overall, growth is planned to be organic and dependent on state government funding flows rather than relying on external fundraising at this time.
See what Mahindra EPC management said on order book — free account, 30 seconds.
Capex plans
Yes- Mahindra EPC has maintained a balanced approach toward capex and backward integration, avoiding heavy investments in fixed assets to manage volatility and return on capital employed.
- The company primarily sources key raw materials like PVC from large suppliers, balancing own manufacturing versus buying based on scale and margin considerations.
- There is an openness to future investment in raw material manufacturing, including setting up facilities for PVC (import substitute), which is under evaluation.
- Operational capex to support growth from Rs. 250 Crores to Rs. 400 Crores revenue is not expected to be exorbitant, suggesting efficient use of existing infrastructure.
- The company is also investing in growth areas like non-ISI segments and greenhouse business as strategic growth drivers.
- No specific large-scale capital investment figure mentioned, but strategic investments will focus on product expansion and growing new businesses.
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Margin guidance
Category 3- The greenhouse and non-ISI segments are expected to be significant growth drivers over the next 3-5 years, growing from a low base with potential multiple-level growth in the short term.
- Greenhouse business is projected to contribute around 7-10% of total enhanced revenue in five years.
- FY2021 sales from greenhouse/non-ISI started small (~3-4% of revenue) but expected to increase substantially.
- Management expects sustainable, balanced growth aligned with state government funding and working capital management.
- Operating efficiencies and cost control have improved margins despite raw material cost volatility.
- Industry growth expected at 7-10% in normal conditions; with positive government support, sector could grow by 15-20%.
- ROE target is around 18%, currently at ~14%, believed achievable through favorable market and raw material dynamics.
- Emphasis on expanding non-subsidized product sales to reduce dependency on subsidies, targeting mid-double-digit contribution by FY2022.
Order book
The transcript provided does not contain specific details regarding the current or expected order book or pending orders for Mahindra EPC Irrigation Limited as of May 2021. However, some contextual insights are available:
- The company is focusing on growth in new businesses such as greenhouse and non-ISI segments which are currently at a low base but expected to grow multiple folds over the next 2-3 years.
- Industry outlook is positive with expected growth driven by government allocations like Rs. 4000 Crores tentative PMKSY fund allocation.
- Andhra Pradesh, a key market, is expected to renew business activity which was disrupted in FY2021.
- The company has a decentralized manufacturing footprint to mitigate supply chain risks.
- Discussions indicate positive signals for order inflows but exact order book amounts or pending order values are not disclosed in the transcript.
For precise order book figures, refer to the latest company filings or investor releases.
How does Mahindra EPC rank vs peers in Industrial Manufacturing?
Pro featureThisMahindra EPC
Rev 3Mar 3
How does Mahindra EPC rank in Industrial Manufacturing?
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