Any current/future capex/capital investment/strategic investment?

Expansion at Unit 3: New galvanizing plant with a capacity of ~100,000 metric tons, one of the largest globally. Land adjacent to existing plant acquired; construction and foundation work underway. Machinery orders placed; overseas shipments expected by October-November 2022. Plant commissioning targeted in the last quarter of FY23 (December 2022 to March 2023). Chhattisgarh heavy steel sector division plant (25,000 metric tons capacity) under construction; land acquired and development started. Chhattisgarh plant expected to be commissioned within the last quarter of FY23. Planned CAPEX: Rs.

Future growth expectations in sales/revenue/volumes?

For FY23, Salasar Techno Engineering expects revenue growth of approximately 20% to 25%, targeting Rs. 900 to Rs. 1,000 crores. For FY24, they anticipate continued growth of 15% to 20% year-on-year. Volume growth is supported by utilization increase from current 60% towards 70%-75% in FY23. New plants (Galvanizing and Heavy Steel Sector division) are expected to be commissioned by Q4 FY23, which will aid capacity expansion. Growth drivers include good order books in heavy steel structures (bridges), telecom towers, and power transmission monopoles. Export orders, particularly telecom towers fo

Future growth expectations in earnings/operating earnings/profits/EPS?

The company expects revenue growth of 20-25% in FY23, targeting Rs. 900-1,000 crores, up from Rs. 720 crores in FY22. For FY24, Salasar anticipates continued growth of 15-20% year-on-year. EBITDA margins have been around 10-11% historically; despite a recent decline due to commodity price volatility, margins are expected to improve and stabilize. Operating profitability is expected to recover with softer raw material prices and reduced inventory finance costs. Capacity utilization is planned to rise from current ~60% to around 75-80%, supporting growth and margin stability. New plant

Current/ Expected Orderbook/ Pending Orders?

Overall order book as of June 30, 2022: Rs. 1,182 crores. Composition: - Unexecuted EPC orders: Rs. 808 crores. - L1 EPC orders (awaiting agreement signing): Rs. 89 crores. - Prefabricated heavy steel structure division orders: Rs. 233 crores (up from Rs. 200 crores on March 31, 2022). - Export orders of telecom towers: Rs. 62 crores. - Routine monthly telecom tower orders: approx. Rs. 25 crores. Railways order book: about Rs. 380 crores. Remaining from power transmission lines and substations. Heavy steel sector division plant orders: Rs. 232 crores. Export orders in hand worth Rs.

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Salasar Techno Engineering LtdQ2 FY22Industrial Manufacturing

Salasar Techno Engineering Ltd Q2 FY22 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹6.17P/E: 64.6Market Cap: ₹1.3K CrSector: Industrial Manufacturing

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Order

Yes

Capex

Yes

2 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→For FY23, Salasar Techno Engineering expects revenue growth of approximately 20% to 25%, targeting Rs. 900 to Rs. 1,000 crores.
→For FY24, they anticipate continued growth of 15% to 20% year-on-year.
→Volume growth is supported by utilization increase from current 60% towards 70%-75% in FY23.
→New plants (Galvanizing and Heavy Steel Sector division) are expected to be commissioned by Q4 FY23, which will aid capacity expansion.
→Growth drivers include good order books in heavy steel structures (bridges), telecom towers, and power transmission monopoles.
→Export orders, particularly telecom towers for African countries and the Philippines, are projected to contribute increasing revenues, expected around Rs. 120 crores.
→5G network rollout is expected to increase demand for telecom towers, though tower weight and margin pressure are factors to watch.

Margin guidance

Category 3

→The company expects revenue growth of 20-25% in FY23, targeting Rs. 900-1,000 crores, up from Rs. 720 crores in FY22.
→For FY24, Salasar anticipates continued growth of 15-20% year-on-year.
→EBITDA margins have been around 10-11% historically; despite a recent decline due to commodity price volatility, margins are expected to improve and stabilize.
→Operating profitability is expected to recover with softer raw material prices and reduced inventory finance costs.
→Capacity utilization is planned to rise from current ~60% to around 75-80%, supporting growth and margin stability.
→New plants (galvanizing and heavy steel division) commissioning in FY23 will enhance production capacity and revenues in coming years.
→Telecom, heavy steel structures (bridges), and power transmission monopoles divisions are expected to drive robust margin and profit growth.
→No specific EPS guidance was given, but improved margins and revenue growth indicate positive earnings trajectory.

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Fundraise plans

- As per the management comments during the Q1 FY23 earnings call, there is no mention of any new debt being taken on by Salasar Techno Engineering Limited. - The debt level remained the same as on 31st March 2022, with no further new debt during the quarter. - Cash and cash equivalents were reported at about Rs. 12 crores as of 30th June 2022. - The company is currently investing in CAPEX for expansion projects (galvanizing plant and heavy steel sector plant) funded presumably through internal accruals or existing resources. - There was no indication or announcement regarding any future fundraising plans through debt or equity in the call transcript or related documents. - For clarifications or updates, the management suggested reaching out to the IR team. In summary, no current or future fundraising through debt or equity was disclosed in the provided transcript.

Order book

Yes

→Overall order book as of June 30, 2022: Rs. 1,182 crores.
→Composition:
→ - Unexecuted EPC orders: Rs. 808 crores.
→ - L1 EPC orders (awaiting agreement signing): Rs. 89 crores.
→ - Prefabricated heavy steel structure division orders: Rs. 233 crores (up from Rs. 200 crores on March 31, 2022).
→ - Export orders of telecom towers: Rs. 62 crores.
→ - Routine monthly telecom tower orders: approx. Rs. 25 crores.
→Railways order book: about Rs. 380 crores.
→Remaining from power transmission lines and substations.
→Heavy steel sector division plant orders: Rs. 232 crores.
→Export orders in hand worth Rs. 60 crores.
→Timeline for order execution: ranges from 3 months to 24 months depending on order size.

Capex plans

Yes

→Expansion at Unit 3: New galvanizing plant with a capacity of ~100,000 metric tons, one of the largest globally.
→Land adjacent to existing plant acquired; construction and foundation work underway.
→Machinery orders placed; overseas shipments expected by October-November 2022.
→Plant commissioning targeted in the last quarter of FY23 (December 2022 to March 2023).
→Chhattisgarh heavy steel sector division plant (25,000 metric tons capacity) under construction; land acquired and development started.
→Chhattisgarh plant expected to be commissioned within the last quarter of FY23.
→Planned CAPEX: Rs. 47-50 crores for UP galvanizing plant, Rs. 60 crores for Chhattisgarh plant.
→No additional CAPEX planned specifically for 5G connectivity; existing fungible capacity can handle diverse product manufacturing.

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