Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jash Engineering Ltd (NSE:JASH, Financial) reported significant revenue growth in Q1 FY25, increasing to INR114 crores from INR65 crores last year.
- The company has a strong consolidated order book position of INR939 crores, indicating robust future business prospects.
- Jash Engineering Ltd (NSE:JASH) has shown improvement in profitability, with a PAT margin moving from -5.1% in Q1 '24 to 0% in Q1 '25.
- The company is expanding its manufacturing capacity with new plants in Chennai and a special export zone, expected to contribute significantly to future revenue.
- The company has received its first order for three turbo blowers worth INR2 crores, indicating successful product diversification.
Negative Points
- Rodney Hunt, one of the company's subsidiaries, is still facing profitability issues due to legacy orders, although improvements are expected in future quarters.
- The company faces challenges in the US market, particularly with the requirement to manufacture locally, which could impact profitability and operational efficiency.
- There is a significant dependency on the export market, with 85% of revenue coming from exports, making the company vulnerable to international market fluctuations.
- The company has faced delays in project execution in Southeast Asia due to political and logistical issues, which could impact future revenue.
- The Invent JV has not performed as expected, with differences in strategic approach between Jash Engineering Ltd (NSE:JASH) and its German partner affecting market capture.
Q & A Highlights
Q: Can you give us some idea about when we are going to introduce screens in the US market and what kind of pre-launch activities we are taking right now?
A: We have concrete plans to introduce screens in the US market and have already manufactured and sold screens from our US plant. However, we need to put a team in place first and then go for approval and marketing. We aim to start this process by the end of the year. (Pratik Patel, Executive Chairman, Managing Director)
Q: Apart from the US, are we not pushing other products?
A: We are pushing valves and other products in every market. While gates have been our predominant product, we have diversified into screens, valves, and other businesses over time. (Pratik Patel, Executive Chairman, Managing Director)
Q: Can you comment on the opportunity in Singapore and the INR6,000 crores figure you mentioned?
A: INR6,000 crores is the equipment we have offered for budgetary purposes in Singapore. These projects will start coming from next year and will continue for the next 15 years. Singapore is investing in infrastructure to be ahead of future requirements. (Pratik Patel, Executive Chairman, Managing Director)
Q: How are the products and acceptance in the Southeast Asian market, particularly Thailand?
A: With the new government in Thailand, infrastructure projects have started moving again. We have received orders worth more than $2 million this year and expect to receive $3 million to $4 million in total from Thailand. (Pratik Patel, Executive Chairman, Managing Director)
Q: Have the legacy orders at Rodney Hunt impacted margins, and will this continue in future quarters?
A: The impact will be lesser in future quarters. The legacy orders are worth $5 million to $6 million out of a $47 million order book. As revenue increases, the impact of legacy orders on profitability will reduce. (Pratik Patel, Executive Chairman, Managing Director)
Q: What is the revenue contribution from Waterfront in Q1, and can you provide more details on legacy orders impacting Rodney Hunt?
A: Waterfront contributed around INR3 crores in Q1. The legacy orders at Rodney Hunt are around $5 million, and their impact on profitability will decrease as revenue increases. (Pratik Patel, Executive Chairman, Managing Director)
Q: Are we planning to enter the EPC business for wastewater treatment and reuse?
A: We are manufacturers and will not enter the EPC business. We are focusing on equipment required for wastewater reuse, such as disk filters, aeration, mixing equipment, and turbo blowers. (Pratik Patel, Executive Chairman, Managing Director)
Q: How is the initial feedback from the Waterfront acquisition in the UK?
A: It is early, but we have learned from Rodney Hunt. We have recruited a person from India to stay in the UK and help grow the company. (Pratik Patel, Executive Chairman, Managing Director)
Q: What is the progress or performance with the Invent joint venture?
A: We have received our first job for aeration mixture and turbo blower. The progress is slow, partly due to differences in strategy with Invent. We are evaluating the situation and may adjust our approach in six months to a year. (Pratik Patel, Executive Chairman, Managing Director)
Q: Any comments on the margins given the revised sales guidance?
A: We expect to improve our margins from last year's 12-12.5% PAT margin to 13-13.5% this year. (Pratik Patel, Executive Chairman, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
