Walchandnagar Industries Ltd
Q1 FY19 Earnings Call Analysis
Industrial Manufacturing
fundraise: Yescapex: Yesrevenue: Category 2margin: Category 1orderbook: Yes
📊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.
📈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.
📋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.
💰fundraise
Any current/future new fundraising through debt or equity?
No information is provided regarding the same in the latest conference call.
🏗️capex
Any current/future capex/capital investment/strategic investment?
No information is provided regarding the same in the latest conference call.
