Release Date: May 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stand-alone revenue for FY24 increased by 5% to INR4,906 crore compared to FY23.
- Stand-alone profit before tax for FY24 rose by 30% to INR304 crore.
- Consolidated profit before tax for FY24 increased by 22% to INR354 crore.
- Net borrowing significantly reduced, with a net surplus of INR45 crore on a stand-alone basis and a 43% reduction in consolidated net borrowing.
- Order book is well diversified across various sectors and customers, with a comfortable consolidated order book of INR7,905 crore.
Negative Points
- Consolidated revenue for FY24 decreased by 2.6% to INR6,249 crore compared to FY23.
- Order book growth has been stagnant over the last two years.
- Margins in the project division have declined, with current project margins at 3.9%.
- Working capital remains high compared to historical levels.
- Challenges in the sugar division due to government restrictions on sugar sales and exports, impacting consolidated revenue.
Q & A Highlights
Highlights from ISGEC Heavy Engineering Ltd (BOM:533033, Financial) Q4 and FY24 Earnings Call
Q: What are the strategic business priorities for FY25, given the flat revenue and declining margins in the project division?
A: Aditya Puri, Managing Director: We are focusing on shorter duration, high-technology projects to mitigate uncertainties and improve working capital cycles. This strategy should lead to improved margins and a more comfortable order book.
Q: Can you provide an outlook on the order book for the upcoming year?
A: Kishore Chatnani, CFO: The order book is robust with significant inquiries, especially from exports. We expect order bookings to be higher than last year, although specific numbers are not disclosed.
Q: What is the expected contribution from the Philippines plant in the upcoming year?
A: Kishore Chatnani, CFO: The plant started operations in April and will run at full capacity from October-November. Significant contributions will be seen in the next season.
Q: What is the outlook for revenue growth and margins in the next few years?
A: Aditya Puri, Managing Director: We expect double-digit revenue growth, closer to 15%, and aim for 7-8% EBITDA margins in the projects business. The shift to shorter duration projects should improve margins over time.
Q: How is the company addressing the impact of rising commodity prices on margins?
A: Aditya Puri, Managing Director: The shorter duration of projects and faster ordering cycles help mitigate risks associated with commodity price fluctuations. We remain confident in managing these risks effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
