Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Skipper Ltd (BOM:538562, Financial) achieved its best-ever second-quarter revenue of INR 1,109 crore, reflecting a 44% growth compared to the previous year.
- The company's consolidated EBITA increased by 53% to INR 112 crore, with an improved operating EBITA margin of 10.1%.
- The order book stands at INR 6,590 crore, the highest in the company's history, indicating strong future revenue potential.
- Skipper Ltd (BOM:538562) has a robust export revenue growth of 23% in the first half of FY25, reaching INR 410 crore.
- The company is well-positioned to capitalize on the global shift towards renewable energy, with qualifications to undertake high-voltage projects up to 800 KV.
Negative Points
- The polymer segment experienced a revenue decline of 7%, attributed to channel partner destocking and project slowdowns.
- Despite significant revenue growth, operating margins have remained largely range-bound, with limited visible operating leverage benefits.
- The company's working capital days have increased, raising concerns about cash flow management.
- There is no defined timeline for the planned INR 600 crore fundraise, which could impact future expansion plans.
- The export order conversion cycle is slow, leading to uncertainties in the timing of international order inflows.
Q & A Highlights
Q: What is the capacity utilization of the engineering division this quarter, and what is the status of the 75,000-ton expansion?
A: The capacity utilization for the year is expected to be around 85%, which is optimal for our business. The 75,000-ton capacity expansion is on track and should be commissioned by the end of this financial year. We will consider further expansion plans in Q4.
Q: Can you provide an update on the INR 600 crores fundraise and the Capex plan?
A: There is no defined timeline for the fundraise. The company has an enabling resolution valid for one year, and we will proceed at an opportune time. The INR 800 crores Capex is an estimation, and we will finalize plans annually, starting in Q4.
Q: What is the current status of the order book pipeline, and has there been any change in market share for high voltage transmission lines?
A: The order book pipeline is at a similar level to previous quarters. Our market share in high voltage transmission lines remains in the 10-15% range.
Q: Despite significant revenue growth, why hasn't there been a visible operating leverage benefit in margins?
A: On a PBT basis, the company has benefited from operational leverage, with PBT margins increasing from below 3% to around 4%. We expect further margin improvements in the long run.
Q: What is the outlook for the export market, particularly in the Americas?
A: We remain focused on the export market, especially developed regions like North America and Europe. However, order conversion cycles are slow, so we are more bullish on the domestic market in the near term while continuing to increase export penetration.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
