Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Steelcast Ltd (BOM:513517, Financial) maintained a strong EBITDA margin of 26% despite a revenue slowdown, exceeding their guided margin of 21%-22%.
- The company reported a PAT of INR13 crores with a PAT margin of 16.3%.
- Steelcast Ltd (BOM:513517) has repaid all short-term and long-term debt, focusing on using internal accruals for future CapEx.
- The company is expanding its export markets from 15 to 18 countries over the next two years.
- Steelcast Ltd (BOM:513517) is diversifying its business, including a significant focus on the railroad sector, aiming to grow from 3% to 20% in the next few years.
Negative Points
- The company experienced a revenue degrowth on a year-on-year basis due to inventory liquidation in North America and Europe.
- There was a slight slowdown in the mining, construction, and equipment sectors, affecting overall performance.
- Steel prices have seen a correction, impacting realizations and pricing pressures.
- The company is facing challenges due to global geopolitical tensions and inflation, which could impact future performance.
- Steelcast Ltd (BOM:513517) has a current order book of INR65 crores, which may not be sufficient to drive significant growth in the short term.
Q & A Highlights
Steelcast Ltd (BOM:513517) Q1 FY25 Earnings Call Highlights
Q: Can you give me the volume number for this quarter?
A: In the first quarter, April-June FY25, we sold 2,635 tonnes. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: What was the contribution from American railroads in this quarter?
A: In terms of percentage of the total sales, it was about 2% to 2.5%. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: Are you expecting more pricing correction given the recent steel price trends?
A: We believe the input prices are near the bottom and are unlikely to go down further. If anything, they might be on an increasing trend from the third quarter onwards. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: Can you specify the part developed for defense and its potential?
A: The potential for the parts developed for defense might be in the region of INR60 crores to INR65 crores. We are waiting for new tenders from the Ministry of Defense. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: What is the status of expanding to new countries and industries?
A: We have trial orders for new parts development in three additional countries, primarily in the construction industry. We aim to cater to about 25 countries in the next few years. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: What is the current order book for FY25?
A: The current order book stands at about INR65 crores, with roughly 50% to 53% from exports. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: How do you plan to improve productivity further?
A: We have largely completed automation and are focusing on better layouts, lean manufacturing, and continuous improvement. We aim for a 7% to 8% increase in productivity levels year-on-year. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: What is the potential impact of geopolitical tensions on your business?
A: While geopolitical tensions have increased voyage times and shipment delays, we expect these issues to subside by the end of the calendar year, leading to a more stable environment. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: What is your strategy for the replacement market?
A: We are focusing on securing long-term contracts and may set up a dedicated facility for replacement parts to be globally competitive. Currently, we cater to the replacement market through our existing OEM customers. (Chetankumar Tamboli, Executive Chairman and Managing Director)
Q: What is your outlook for the mining industry and its impact on Steelcast?
A: We expect the mining and earthmoving industries to pick up from the third quarter onwards, driven by new mine allotments and the end of inventory liquidation. This should positively impact our performance. (Chetankumar Tamboli, Executive Chairman and Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
