Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kirloskar Brothers Ltd (BOM:500241, Financial) reported a 15% year-on-year growth in revenue for Q1 FY25, reaching INR1,031 crore.
- The company's EBITDA for the quarter grew by 10% year-on-year to INR127 crore, with an EBITDA margin of 12.3%.
- The domestic business achieved an 18% year-on-year growth, driven by sustained demand for made-to-order and engineered-to-order products.
- The company has a robust order book, with standalone pending orders valued at INR1,956 crore as of June '24.
- International business reported a 9% growth, with significant contributions from Kirloskar Brothers Thailand Limited and SPP USA.
Negative Points
- SPP PUMPS UK experienced a decline in growth due to delays in order execution caused by supply chain issues.
- Other expenses increased due to investments in technology and system automation, impacting overall profitability.
- Employee expenses saw an uptick due to annual salary increments and associated provisioning for retirals.
- Profit from associates was negative INR51 million, primarily due to delays in order execution at Kirloskar Ebara.
- Supply chain issues, particularly with an American engine supplier, have caused delays in fulfilling large offshore packages.
Q & A Highlights
Highlights from Kirloskar Brothers Ltd (BOM:500241) Q1 FY25 Earnings Call
Q: Can you explain the significant increase in other income by 178% YoY?
A: This increase is mainly due to income from investments, including interest income and returns from mutual funds. (Ravish Mittal, CFO)
Q: What caused the negative profit from associates this quarter?
A: The negative profit is primarily from Kirloskar Ebara due to a delayed INR100 crore order, which will be dispatched in the next few months. (Rama Kirloskar, Joint Managing Director)
Q: Will the increased other expenses continue throughout the year?
A: The increase in other expenses is due to one-time investments in technology and system automation aimed at enhancing operational efficiency. These are not expected to recur continuously. (Ravish Mittal, CFO)
Q: What is the outlook for the overseas business?
A: Despite some delays in order execution, the order book remains strong, and we expect growth to continue. (Alok Kirloskar, Managing Director, Kirloskar Brothers International B.V.)
Q: Can you elaborate on the restructuring plan involving the stake sale in Kolhapur Steel Limited?
A: The restructuring aims to streamline the corporate structure, enhance operational efficiency, and realize cost savings by combining resources of subsidiaries located close to each other. (Sanjay Kirloskar, Chairman and Managing Director)
Q: What are the focus areas for the next year or two?
A: We will focus on enhancing operational efficiency through digitization and automation, improving productivity, and increasing market penetration. (Rama Kirloskar, Joint Managing Director)
Q: Are there any plans to enter the solar pumps market?
A: We already supply solar pumps through system integrators to ensure timely payments and avoid financial risks. (Rama Kirloskar, Joint Managing Director)
Q: What is the opportunity in the nuclear power sector for Kirloskar Brothers?
A: We are well-positioned to supply pumps for various types of nuclear reactors and expect significant opportunities as the government pushes for more nuclear power generation. (Sanjay Kirloskar, Chairman and Managing Director)
Q: Can you quantify the one-time investments in technology?
A: While specific amounts are not disclosed, these investments are aimed at digitization and technological upgrades to enhance future operational efficiency. (Ravish Mittal, CFO)
Q: What is the outlook for Kolhapur Steel Limited?
A: We are optimistic about Kolhapur Steel's future, especially with the increasing demand in the power sector, including thermal and nuclear power plants. (Sanjay Kirloskar, Chairman and Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
