MCON Rasayan India LtdQ3 FY25Other Construction Materials

MCON Rasayan India Ltd

Q3 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 2

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 2

→Expecting over 50% year-on-year growth in sales revenue.
→Targeting to reach ₹70 crore sales by the end of the current fiscal year (FY26).
→Planning to grow from approximately ₹28 crore to ₹70+ crore within the year.
→Aim to cross ₹100 crore revenue mark by next year (FY27).
→Expansion through new FOCOs (Franchise Owned Company Operated units) to increase capacity by additional 7,000-7,500 metric tons per FOCO.
→Government projects and infrastructure orders expected to contribute significantly and ramp up sales.
→Liquid admixture division targeted to increase contribution from 13% to over 20% in FY26.
→Continued focus on high-margin products and market expansion to sustain growth.
→Expecting rapid market penetration increase from under 1% currently to about 1.5-2% in three years.

Category 2

→Targeting over 50% year-on-year revenue growth in the next two to three years.
→Shift towards higher-margin products (admixtures, paint division) expected to improve EBITDA gradually.
→EBITDA margin improvement expected, aiming to reach 15% by FY27.
→PAT expected to grow steadily with a focus on high-margin products and better working capital management.
→ROE anticipated to reach double digits, likely after crossing the Rs 100 crore turnover mark (expected next year).
→Working capital might remain stretched for 6-8 months due to rapid expansion but will improve thereafter.
→Overall profit improvement driven by operational efficiencies, cost control, and increased sales volumes.
→EPS expected to improve alongside PAT growth as business scales and margin quality improves.

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Yes

→Currently, MCON Rasayan India Limited is **not planning any immediate further borrowing** from banks; any new borrowing is expected **towards the end of the financial year**.
→The **blended cost of borrowing** is around **8.5% to 8.7%**.
→For FY27 and beyond, the company **expects to require funds** to sustain growth.
→The planned approach for future fundraising is a **balanced mix of debt and equity**.
→No specific timelines or amounts for equity raising are detailed yet, but it's part of the company's growth strategy.

→MCON Rasayan India Limited operates primarily through a distributor model; hence, they do not maintain a traditional order book.
→Orders come continuously month-on-month rather than being booked upfront.
→For bigger builders and infrastructure companies, there are Letters of Intent (LOIs) but not confirmed orders.
→Current LOIs (potential order backlog) stand at approximately ₹18–18.5 crore.
→The mix of orders is roughly 70% low margin products and 30% high margin products.
→Recent monsoon delays caused order postponements, but business normalcy and order inflows have resumed in the last 15 days.
→Order dispatch turnaround time is quick, around 3 to 4 days from order receipt.
→The company targets to increase contribution from higher-margin admixtures and liquid products in coming years.

Yes

→Expansion of government project division to increase market reach across Maharashtra, Goa, Gujarat, and Union Territories.
→Potential capital expenditure ("capex") of a few lakhs to increase liquid product manufacturing capacity at Vapi plant by adding machinery.
→Planning new FOCOs (Franchise Owned Company Operated units) with roughly 7,000 to 7,500 metric tons capacity each to expand production; two additional FOCOs planned currently.
→No immediate plans for major new borrowing; incremental borrowing may happen by end of the financial year.
→Possible future capex for establishing new plants in faraway zones (eastern or northeast regions) if large orders are received there.
→Channel financing initiatives and inventory management improvements ongoing but not classified as capex.
→Overall strategic focus on expanding product mix, better inventory management, and high-margin products to improve margins.

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