Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong domestic sales growth with new order bookings reaching an all-time high of INR1,770 crore, nearly INR500 crore higher than the previous year.
- Pre-tax profit increased by 24% to INR170 crore, driven by a favorable product mix and greater in-house manufacturing.
- The company enhanced its in-house manufacturing capabilities, reducing costs and offering quicker deliveries.
- CapEx spend of INR61 crore aimed at enhancing capability to deliver over INR500 crore of sales per quarter.
- The company declared a final dividend of INR4 per share, taking the total dividend for the year to INR650, which is 325%.
Negative Points
- Export sales were significantly lower, at INR69 crore, nearly INR100 crore less than the previous year.
- Overall sales growth was muted at INR1,323 crore, only 7% higher than the previous year.
- Intense competition in the air compressor space, with nearly all global players driving for market share.
- Refrigeration package sales were affected by delays in delivery of compressors from Europe and clearance issues from EPC contractors.
- The company does not expect significant improvement in export sales for FY25 due to the current situation in the region.
Q & A Highlights
Q: Our order book backlog has grown by 28% on a YoY basis. Can we expect similar growth in FY25?
A: We anticipate strong double-digit growth. Despite a dip in exports, we expect domestic orders to drive at least 20% growth.
Q: Are the current margins sustainable?
A: Yes, the margins are sustainable. Improvements in product mix and operational efficiencies have contributed to the margin growth, and we expect this trend to continue.
Q: Can you provide more details on the agreement with PDC Machines?
A: We will package PDC's diaphragm compressors for the Indian market. This collaboration allows us to offer comprehensive hydrogen compression solutions, leveraging PDC's technology.
Q: What is the outlook for the biogas segment?
A: The biogas segment is promising, with government plans to set up 5,000 biogas stations in five years. We have already secured orders for about 30 packages and expect significant growth as the technology stabilizes.
Q: What are the expected revenue contributions from new products?
A: New products, defined as those launched within the last three years, currently contribute less than 6% to our revenue. We aim to increase this to 12-15% over the next few years.
Q: How do you see the export market evolving, especially in the Middle East?
A: The Middle East market remains uncertain with slow order finalizations. We continue to focus on domestic growth while gradually building our presence in Southeast Asia.
Q: Can you provide a breakdown of revenue by segment for FY24?
A: The air compressor segment remained flat at around INR257 crore, refrigeration at INR275 crore, and significant growth in the gas segment. Exact quarterly numbers are not disclosed to avoid confusion.
Q: What is the expected impact of the Nashik forging plant on costs?
A: The Nashik plant, with a CapEx of around INR25 crore, will primarily meet our internal requirements, contributing to cost savings and quicker deliveries.
Q: What is the long-term vision for the company?
A: We aim for sustained 20% annual growth, driven by strong domestic demand, new product launches, and strategic focus on high-growth sectors like biogas and hydrogen compression.
Q: How do you plan to address the competitive landscape in the air compressor market?
A: We are focusing on cost-effective solutions and leveraging our in-house manufacturing capabilities to compete effectively against imports, particularly from China.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
