Key takeaways of the call

Order inflow in Q1FY20 was Rs 93 crore. Order book (Excluding Sri Lankan order)as end of June 30, 2019 was Rs 821 crore compared to Rs 585 crore in the corresponding previous period and Rs 860 crore as end of March 31, 2019. Of the order book exports accounts 20% and balance 80% are domestic orders. Major portion of the order book is from industrial sector.

Pending order book of Sri Lankan (SL) orders as end of June 30, 2019 was Rs 800 crore plus.

The bid pipeline is strong at Rs 6000 crore. Expect significant large orders inflow in few quarters from now. The bid pipeline largely comprise orders from verticals such as Refinery, steel, oil&gas, power and food and beverages.

The company is confident of 50% plus growth in standalone topline for FY20.

Other income may remain same as last year or may dip a bit.

Contribution of SL order in Q1FY20 was Rs 41.14 crore. The company expects invoicing of Rs 500 crore (including the Rs 41.14 crore in Q1FY20)for FY20 from SL order.

Exports stood at Rs 80 crore in Q1FY20.

Excluding the contribution from SL order, the topline of the company registered a growth in excess of 40% in Q1FY20. Similarly the Engineering segment revenue also registered a double digit growth in Q1FY20 excluding SL order contribution.

Increase in sales and profit of Engineering Business was on the back of healthy order backlog at the beginning of the year. Sri Lanka order execution is proceeding satisfactorily. Revenue recognition in the quarter is based on work progress.

Reduction in y-o-y profitability in Q1FY20 was largely due to mix of orders. In the balance quarter of current fiscal the margin is expected to improve on year on year basis. So the company expects the EBIT margin of Engineering for FY20 to stay flat even if not improve.

Membrane is accounted as part of the engineering business. Capacity utilization of membrane was just around 30%.

Do expect increase in order inflow for WTP considering water stress across the country both for residences as well as industrial space. For the last few years there is increased participation from government in both water and waste water treatment.

Sustained demand in certain segments has resulted in improvement in sales and profitability of Chemicals business. Chemical is growing in double digit, the growth trend is expected to continue going forward. Demand in export market of US and EU is growing strongly.

The Company continues with the capacity expansion in Chemical segment to meet the increasing market demand. Chemical segment capex is on track at Rs 50 crore for FY20. Capacity utilization of chemicals division is in excess of 80%.

EBIT margin of chemicals business will vary quarter to quarter due to seasonality as well as product mix.

The new in-house R&D centre focuses on development of largely import substitute products in resins, specialty chemicals, products related to water etc.

Offerings of the company in consumer products segment are huge with large number of products at various price points. Higher volumes have resulted in growth on year on year basis in this quarter. The Company expects improved financial performance in the ensuing quarters with increase in volumes. Expect good growth for FY20 for this division and the profitability is also expected to improve.

The company is not as aggressive as some of the competitors are. The company is selective in bidding and it has not put in bids for the large order recently won by one of the competitors relating to Namami Gange project. However the company will continue to look at the orders from this segment.