Release Date: August 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated revenue for the quarter stood at INR386.71 crores, showing strong financial performance.
- Standalone revenue grew by 21.92% to INR354.45 crores, indicating robust growth.
- Sales volume increased by 24.63%, reaching the highest ever volumes for the quarter.
- Successful completion of a fund raise of up to INR360 crores via QIP, strengthening the balance sheet.
- Optimistic outlook for the rest of the year with expectations to surpass annual targets of 48,000 tonnes on a standalone basis and 63,000 tonnes on a consolidated basis.
Negative Points
- One-time expenditures related to the BCIPL acquisition amounted to INR2.18 crores, impacting financials.
- Decline in exports revenue on a sequential basis, though it was up year-over-year.
- Blended EBITDA per tonne for BCIPL was lower due to accounting policy changes and inventory valuation adjustments.
- Employee costs and other expenses increased by 100 to 200 basis points in terms of sales.
- Concerns about the competitive landscape with MNCs entering the Indian market, potentially increasing competition.
Q & A Highlights
Highlights of Pitti Engineering Ltd (BOM:513519, Financial) Q1 FY25 Earnings Call
Q: What is the current status and future outlook for the railway business, given the delays in railway orders?
A: Majority of our railway-related business is export-oriented, with 75% of revenue from exports last year. We are seeing an increase in railway orders going forward. The total order book is around INR1,000 crores, with INR200 crores being long-term orders.
Q: Can you provide details on the new pump segment added through the acquisition of Bagadia Chaitra Industries?
A: The pump segment primarily serves the agricultural pump set business, with Texmo as a major customer. This segment is expected to deliver good returns on capital employed (ROCE).
Q: What caused the decline in exports revenue and high value-added assemblies, and will there be any one-time expenses affecting EBITDA per tonne in future quarters?
A: Export revenue is up year-over-year, despite a sequential decline. The decline in high value-added assemblies is due to product mix. One-time expenses related to the BCIPL acquisition affected EBITDA per tonne, but we expect it to improve to around INR18,000 per tonne over the next two to three quarters.
Q: What are the current cash and debt levels, and what is the outlook for debt reduction?
A: As of June 30, net debt was INR525 crores, which has been reduced to INR300 crores post fund raise. We are focusing on reducing debt further with free cash flow and are not looking at additional inorganic opportunities this financial year.
Q: Can you provide an update on the CapEx for the Aurangabad unit and the expected timeline for completion?
A: We have added about 2.5 lakh square feet of build-up area in Aurangabad. The current CapEx for machining is expected to be completed in 12 to 18 months, depending on demand.
Q: What is the expected trajectory for EBITDA per tonne over the medium term?
A: On a standalone basis, EBITDA per tonne is around INR45,500 after adjusting for one-time expenses. With the merger of Pitti Castings, this number should grow to about INR48,000.
Q: Will employee costs and other expenses normalize post consolidation of acquisitions?
A: Employee costs and other expenses are expected to stabilize. The recent increase is due to the increment cycle and one-time expenses related to acquisitions.
Q: Do the recent acquisitions have price variation clauses similar to Pitti Engineering's standalone business?
A: Yes, both Bagadia Chaitra and Dakshin Foundry have quarterly price variation clauses built into their contracts, similar to Pitti Engineering's standalone business.
Q: How is the competitive landscape changing with MNCs entering the Indian lamination industry?
A: The entry of MNCs is expected to make the industry more organized, which is beneficial. We welcome this development and believe it will drive further consolidation in the industry.
Q: What are the current inventory levels and working capital cycle?
A: Inventory is at INR270 crores with 70 days outstanding. DSO is about 60 days, and DPO is about 70 days. The net working capital cycle is around 63 days.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
