ISGEC Heavy Engineering hosted a conference call on May 30, 2024. In the conference call the company was represented by Aditya Puri, Managing Director. 

Key takeaways of the call

Order book is well diversified and as end of March 31, 2024 stood at Rs 7905 crore of which 71% projects and 29% mfg.  Order intake in Q4FY24 was Rs 1416 crore (down 43%YoY) and for FY24 it was Rs 5478 crore.

Order book include international orders worth Rs 1047 crore (or 13% of total order book). 

Order book of Hitachi JV stood at Rs 1048 crore as end of Mar 2024.    

Overall demand scenario continues to be encouraging. The enquiry pipeline continues to be robust. Export enquiry has also picked up.  Booked better than normal orders so far in Q1FY25.  In FY25, the company expect to book orders higher than last year.

Took a strategic call of not taking long duration project which has higher timely execution risks but shorter duration high technology projects. Shorter duration projects has inherent advantage of not expose to commodity price fluctuations, site risks (land availability, site development, approvals etc) and better working capital management.

Once long duration legacy projects got over, the margin will start improving. Expect long duration legacy project are expected to get completed in next couple of quarters.  Expect two FGD order worth Rs 400 crore get closed in couple of quarters and another one within next fiscal.

Not taking any orders that is not giving 7-8% of EBITDA margin in project business.

Philippines Ethanol plant:  The plant commenced commercial production from April 2024.    Still some balance work such as internal roads and part of boundary walls are to be completed.  So far the plant has produced 3 million liters of Ethanol.  Initially the plant will operate with sugar case as feed stock and then shift to molasses albeit at reduced capacity utilization.  The company will use sugar cane as feedstock from Nov 2024, the month by which the next sugar season starts in Philippines.

Standalone: Closed March 31, 2024 with a net cash surplus of Rs 45 crore against net borrowings of Rs 308 crore borrowing as end of March 2023.  Consolidated Net borrowings as end of March 2024 stood at Rs 594 crore (lower by 43% from Rs 1032 crore as end of Mar 23). 

Capital goods is cyclical and expect good growth this year at standalone level. Further at consolidated level the revenue got impacted by two issues. Firstly, not allowed to export sugar by GOI that impacted the Sugar business revenue.  Secondly in Hitachi JV, the revenue recognition shifted from FY24 end to April/May 2024 (well within the contractual time) in one order due to shipping problem.  

The company expects a double digit revenue growth at standalone revenue in FY25.