Any current/future new fundraising through debt or equity?

The company currently has a debt level of around Rs. 235 crores, with a gearing ratio below 1x, indicating a comfortable leverage position. No new equity fundraising is mentioned. Regarding future debt, the company plans to take term loans to finance capacity expansions: - For the new galvanizing plant (GI plant) CAPEX, no disbursement has yet been taken; such disbursement is expected in the current financial year. - For the Bhilai plant expansion, the company will apply for a term loan from the bank to finance the CAPEX. These two term loans relating to capacity enhancement will increase

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

New galvanizing plant at Hapur Unit III, UP: - Cost: Rs. 50 crores - Capacity: 96,000 metric tons - Expected commissioning: December 2022 - Machinery orders placed; some machinery being imported and manufactured locally. - Land acquired; construction ongoing. Heavy steel structure division plant at Bhilai, Chhattisgarh: - Cost: Rs. 60 crores - Capacity: 25,000 metric tons - Expected commissioning: December 2022 - Land acquisition in progress; construction to start in July 2022. Overall galvanizing capacity to reach ~200,000 metric tons after commissioning new plant. Additi

Future growth expectations in sales/revenue/volumes?

The company targets a growth of at least 30% to 35% in topline (sales/revenue) for the financial year 2022-23. Order book as of December was close to Rs. 980 crores, with new L1 orders worth Rs. 80 crores expected soon. Strong order inflows in the heavy steel structure division and steady telecom orders (~Rs. 30-35 crores monthly) indicate sustained demand. Capacity expansions at Hapur (new galvanizing plant) and Bhilai (new steel plant) expected to be commissioned by December 2022, supporting volume growth. Government focus on steel capacity expansion and infrastructure projects (incl

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

Salasar Techno Engineering is poised for a growth of at least 30-35% in topline for the current financial year (FY23) due to a strong order book and growing opportunities. Sustainable EBITDA margin is expected to be in the range of 10-11%, with PAT margin around 5%, reflecting long-term profitability. Capacity expansions, including new galvanizing and steel structure plants (expected operational by December 2022), will support growth and efficiency. The company expects improved operating efficiency and capacity utilization, which can enhance margins rather than price increases. Growth

Current/ Expected Orderbook/ Pending Orders?

As of 31st March 2022, Salasar Techno Engineering Limited had an overall order book of Rs. 1,182 crores. The breakup includes: - Unexecuted EPC orders: Rs. 808 crores. - L1 EPC orders (awaiting LOI): Rs. 130 crores. - Manufacturing orders under heavy steel structure division: Rs. 200 crores. - Export orders of telecom towers: Rs. 44 crores. The heavy steel structure division's unexecuted orders increased from Rs. 163 crores as of 31st December 2021 to Rs. 200 crores as of 31st March 2022. Telecom tower orders are received on a rolling, site-to-site basis, typically Rs. 30 to 35 crores

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Salasar Techno Engineering LtdQ1 FY22Industrial Manufacturing

Salasar Techno Engineering Ltd Q1 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

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→The company targets a growth of at least 30% to 35% in topline (sales/revenue) for the financial year 2022-23.
→Order book as of December was close to Rs. 980 crores, with new L1 orders worth Rs. 80 crores expected soon.
→Strong order inflows in the heavy steel structure division and steady telecom orders (~Rs. 30-35 crores monthly) indicate sustained demand.
→Capacity expansions at Hapur (new galvanizing plant) and Bhilai (new steel plant) expected to be commissioned by December 2022, supporting volume growth.
→Government focus on steel capacity expansion and infrastructure projects (including bullet train bridges) provide substantial business opportunities.
→Growth prospects in telecom (including anticipated 5G rollout), power transmission, and railway electrification sectors.
→The company is selective in bidding tenders to maintain margins and payment terms while capitalizing on growth segments.

Margin guidance

Category 3

→Salasar Techno Engineering is poised for a growth of at least 30-35% in topline for the current financial year (FY23) due to a strong order book and growing opportunities.
→Sustainable EBITDA margin is expected to be in the range of 10-11%, with PAT margin around 5%, reflecting long-term profitability.
→Capacity expansions, including new galvanizing and steel structure plants (expected operational by December 2022), will support growth and efficiency.
→The company expects improved operating efficiency and capacity utilization, which can enhance margins rather than price increases.
→Growth drivers include increased telecom infrastructure (5G rollout), power transmission, railway electrification, and heavy steel structures including bullet train projects.
→The steel industry’s planned capacity expansion in India up to 300 million tonnes by 2030 presents significant business growth opportunities.
→Despite previous volatility due to commodity prices, stabilized steel and zinc prices forecast steadier margins and earnings going forward.

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Fundraise plans

Yes

→The company currently has a debt level of around Rs. 235 crores, with a gearing ratio below 1x, indicating a comfortable leverage position.
→No new equity fundraising is mentioned.
→Regarding future debt, the company plans to take term loans to finance capacity expansions:
→ - For the new galvanizing plant (GI plant) CAPEX, no disbursement has yet been taken; such disbursement is expected in the current financial year.
→ - For the Bhilai plant expansion, the company will apply for a term loan from the bank to finance the CAPEX.
→These two term loans relating to capacity enhancement will increase the debt levels going forward.
→The rationale behind any current financial actions is mainly tied to expansions rather than equity fundraising or major new debt beyond capacity-related loans.

Order book

Yes

→As of 31st March 2022, Salasar Techno Engineering Limited had an overall order book of Rs. 1,182 crores.
→The breakup includes:
→ - Unexecuted EPC orders: Rs. 808 crores.
→ - L1 EPC orders (awaiting LOI): Rs. 130 crores.
→ - Manufacturing orders under heavy steel structure division: Rs. 200 crores.
→ - Export orders of telecom towers: Rs. 44 crores.
→The heavy steel structure division's unexecuted orders increased from Rs. 163 crores as of 31st December 2021 to Rs. 200 crores as of 31st March 2022.
→Telecom tower orders are received on a rolling, site-to-site basis, typically Rs. 30 to 35 crores monthly.
→Order inflows for the recent quarter were around Rs. 200 crores, and the company is L1 in additional projects worth Rs. 80 crores as of April-May 2022.
→The company expects strong order book growth and selective bidding for better margin projects.

Capex plans

Yes

→New galvanizing plant at Hapur Unit III, UP:
→ - Cost: Rs. 50 crores
→ - Capacity: 96,000 metric tons
→ - Expected commissioning: December 2022
→ - Machinery orders placed; some machinery being imported and manufactured locally.
→ - Land acquired; construction ongoing.
→Heavy steel structure division plant at Bhilai, Chhattisgarh:
→ - Cost: Rs. 60 crores
→ - Capacity: 25,000 metric tons
→ - Expected commissioning: December 2022
→ - Land acquisition in progress; construction to start in July 2022.
→Overall galvanizing capacity to reach ~200,000 metric tons after commissioning new plant.
→Additional financial details:
→ - CAPEX at Bhilai increased from Rs. 40 crores to Rs. 60 crores due to redesign.
→ - Debt expected to increase as disbursement for new plant and Bhilai capacity enhancements begin.
→Strategic advantage:
→ - Heavy steel plant approved for bullet train project (Ahmedabad-Mumbai), estimated 10,000 tonnes of structures over next couple of years.

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