Future growth expectations in sales/revenue/volumes?

Shera Energy targets a volume growth of roughly 40% to 50% from current levels, driven by expanded production capacity. Capacity utilization is currently around 85%-90%, with plans to increase installed capacity by 15%-20% by end of September to meet growing demand. Zambia operations expected to contribute an additional 20%-25% revenue growth in the coming financial year once stabilized. Revenue from export business anticipated to reach around INR100 crores (~8%-10% of total sales) in FY25, up from ~INR25 crores currently. Rajputana Industries’ IPO expected to provide capital boost to support

Any current/future new fundraising through debt or equity?

Shera Energy Limited plans an IPO for its subsidiary, Rajputana Industries Limited, which is expected to bring in funds through equity to support growth and expansion. The company raised its stake in Rajputana Industries to 73.91% via an arm's length transaction, indicating commitment to growth. There is no mention of major upcoming capital expenditure or fresh debt fundraising; the company relies on using second-hand machinery for capacity expansion. The IPO proceeds from Rajputana Industries are expected to help mitigate working capital shortfalls. No explicit mention of new debt financing p

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

No major capital expenditure planned in the near future. The company specializes in acquiring second-hand and old machines, often through NCLT options, at reasonable prices to enhance production capacity. Recently purchased some old machines, with installations in progress. Plans to increase installed capacity by 15%-20% by the end of September 2024. Investment in solar power is ongoing: 3 MW planned, with 1 MW already installed and 2 MW in the pipeline to offset rising power costs. Increased investment in subsidiary Rajputana Industries Limited, raising stake to 73.91%, with an upcoming IPO a

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

Shera Energy expects significant growth, with EPS projected to increase by 50% to 60% in FY25. EBITDA margins are anticipated to improve to double digits once Zambian operations stabilize. The company plans to increase installed capacity by 15%-20% by the next quarter to meet rising demand. Expansion through subsidiaries like Rajputana Industries (with an IPO planned) will support aggressive growth and improved operational efficiency. Investment in solar energy to mitigate power cost increases will positively impact profitability. Revenues are expected to grow due to strong domestic

Current/ Expected Orderbook/ Pending Orders?

Shera Energy recently secured an initial trial order of one container worth approximately USD 87,000 for Zambia, with delivery expected within 5 to 7 days. The company is confident about receiving repeat orders from Zambia, marking the beginning of their expansion in the African market. Their operations in Zambia will focus on manufacturing winding wires and cables for Zambia and neighboring countries, aiming to boost export business significantly. There was no specific mention of the total current order book size or other pending orders during the call. The management highlighted stro

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Shera Energy LtdQ2 FY24Industrial Products

Shera Energy Ltd Q2 FY24 Earnings Call Analysis

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

Price: ₹160P/E: 14.4Market Cap: ₹424 CrSector: Industrial Products

Management growth scorecard

Revenue

Category 1

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

4 of 5 growth signals are positive — a strong management growth story.

Full analysis

Revenue guidance

Category 1

→Shera Energy targets a volume growth of roughly 40% to 50% from current levels, driven by expanded production capacity.
→Capacity utilization is currently around 85%-90%, with plans to increase installed capacity by 15%-20% by end of September to meet growing demand.
→Zambia operations expected to contribute an additional 20%-25% revenue growth in the coming financial year once stabilized.
→Revenue from export business anticipated to reach around INR100 crores (~8%-10% of total sales) in FY25, up from ~INR25 crores currently.
→Rajputana Industries’ IPO expected to provide capital boost to support expansion and working capital needs.
→Overall, company expects sustained volume and revenue growth supported by government infrastructure focus, solar energy demand, and expanding domestic and international markets.

Margin guidance

Category 3

→Shera Energy expects significant growth, with EPS projected to increase by 50% to 60% in FY25.
→EBITDA margins are anticipated to improve to double digits once Zambian operations stabilize.
→The company plans to increase installed capacity by 15%-20% by the next quarter to meet rising demand.
→Expansion through subsidiaries like Rajputana Industries (with an IPO planned) will support aggressive growth and improved operational efficiency.
→Investment in solar energy to mitigate power cost increases will positively impact profitability.
→Revenues are expected to grow due to strong domestic demand and new African export orders, including a recent order worth USD 87,000 to Zambia.
→Working capital challenges are noted but expected to be addressed through IPO proceeds, supporting sustained growth.
→Overall, Shera Energy is confident of consistent volume-driven profit growth rather than margin expansion, focusing on increasing business scale and EPS value.

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Fundraise plans

Yes

→Shera Energy Limited plans an IPO for its subsidiary, Rajputana Industries Limited, which is expected to bring in funds through equity to support growth and expansion.
→The company raised its stake in Rajputana Industries to 73.91% via an arm's length transaction, indicating commitment to growth.
→There is no mention of major upcoming capital expenditure or fresh debt fundraising; the company relies on using second-hand machinery for capacity expansion.
→The IPO proceeds from Rajputana Industries are expected to help mitigate working capital shortfalls.
→No explicit mention of new debt financing plans was made during the call.

Order book

Yes

→Shera Energy recently secured an initial trial order of one container worth approximately USD 87,000 for Zambia, with delivery expected within 5 to 7 days.
→The company is confident about receiving repeat orders from Zambia, marking the beginning of their expansion in the African market.
→Their operations in Zambia will focus on manufacturing winding wires and cables for Zambia and neighboring countries, aiming to boost export business significantly.
→There was no specific mention of the total current order book size or other pending orders during the call.
→The management highlighted strong demand and continuous growth opportunities in domestic and international markets, supported by ongoing capacity expansions.
→The company is optimistic about volume growth, with capacity utilization currently at around 85%-90%, expected to increase by 15%-20% soon to meet rising demand.

Capex plans

Yes

→No major capital expenditure planned in the near future.
→The company specializes in acquiring second-hand and old machines, often through NCLT options, at reasonable prices to enhance production capacity.
→Recently purchased some old machines, with installations in progress.
→Plans to increase installed capacity by 15%-20% by the end of September 2024.
→Investment in solar power is ongoing: 3 MW planned, with 1 MW already installed and 2 MW in the pipeline to offset rising power costs.
→Increased investment in subsidiary Rajputana Industries Limited, raising stake to 73.91%, with an upcoming IPO as part of growth strategy.
→Focus on strategic expansion domestically and globally, including a growing international footprint via Shera Zambia Limited.

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