Walchandnagar Industries Ltd

Q1 FY19 Earnings Call Analysis

Industrial Manufacturing

Full Stock Analysis
fundraise: Yescapex: Yesrevenue: Category 2margin: Category 1orderbook: Yes
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revenue

Future growth expectations in sales/revenue/volumes?

- The company targets a turnover of Rs. 1,500 to Rs. 2,000 crores per annum within the next five years. - Focus is on maintaining EBITDA margins between 20% to 22%. - Expect strong growth in the Aerospace business, which grew 18.5% YoY and has high order visibility. - Order book as of March 31, 2019, stood at Rs. 822 crores with around 56% from core manufacturing. - Pipeline includes Rs. 1,500 crores of offers pending finalization, expected to convert in next 6-8 months. - Current manufacturing facility can support Rs. 500 to Rs. 600 crores turnover without additional CAPEX. - Anticipated CAPEX of around Rs. 75 to Rs. 100 crores over the next 5-7 years primarily in Nuclear, Gear Boxes, and Aerospace sectors. - Export opportunities seen in Defence and Nuclear segments to new countries under government policy.
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margin

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

- Walchandnagar Industries aims for a turnover of Rs. 1,500 to Rs. 2,000 crores within the next five years. - Target EBITDA margins are set at 20% to 22%, focusing on high-tech manufacturing rather than top-line growth alone. - The company emphasizes sustaining EBITDA margins above 20%, prioritizing cash generation and profitability. - Growth will be driven by products with inherent technological advantages, especially in Aerospace, Nuclear, Defence, Gear Boxes, and export markets. - Existing manufacturing capacity can support Rs. 500-600 crores turnover without additional CAPEX; increased CAPEX (up to Rs. 100 crores planned over 2-3 years) will fuel higher growth. - Debt reduction and release of retention money will help improve financial health, supporting earnings growth. - Overall, the approach is sustainable profit growth with improved Return on Capital Employed (ROCE) and Earnings Per Share (EPS) over 3-5 years.
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orderbook

Current/ Expected Orderbook/ Pending Orders?

- As of March 31, 2019, Walchandnagar Industries Limited had an order book of Rs. 822 crores. - Approximately 56% of this order book value comprises orders from the core manufacturing business. - The company has submitted offers worth around Rs. 1,500 crores in the pipeline. - These offers are expected to be finalized within the next six to eight months. - Management anticipates that order inflows for the fiscal years 2019-2020 and 2020-2021 will be substantially higher compared to the previous two years.
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fundraise

Any current/future new fundraising through debt or equity?

No information is provided regarding the same in the latest conference call.
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capex

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

No information is provided regarding the same in the latest conference call.