WPIL hosted a conference call on May 28, 2024.
In the conference call the company was represented by Prakash Agarwal -
Managing Director and KK Ganeriwala - Executive Director.
Key takeaways of the conference call
Order Book as end of March 31, 2024 stood at Rs
3860 crore [ against Rs 4300 crore as
end of Dec 2023] and of which domestic order book is Rs 3402 crore [against Rs
3835 crore as end of Dec 2023] and that of international was Rs 458 crore [
against Rs 421.1 crore as end of Dec 2023]. Of the domestic order book the
product orders were Rs 348 crore (up 11%) and the domestic project order book
stood at Rs 3054 crore.
In FY24, domestic revenues grew
by 7.4% year-on-year to Rs. 1,077 crores with the domestic product business up
19% to Rs 261 crore and domestic project revenue up 4% to Rs 816 crore. Growth in project revenue was driven by
strong order execution in Q4FY24 which saw order execution to the tune of Rs
343 crore.
Strong domestic product order
book gives a strong revenue visibility and a positive outlook for FY25. The
outlook for the product division has also improved considerably with the
successful development of new products for the oil and gas and sewage and
drainage segments.
Domestic Project Business: Project execution has gained strong momentum
and the company is ahead of schedule on a few projects in the state of West
Bengal. Barring one all other 8 projects of Madhya Pradesh Jal Nigam are on
track. One of the Madhya Pradesh Jal Nigam contracts was terminated by the
client due to slow progress. About Rs.
11 crores bank guarantee has been encashed by the client. However
the company has disputed the termination citing that the land for construction
was allotted only in December 2023 causing the delay. The un-executed part of
the terminated contract was about Rs 155
– Rs. 160 crore. It is exploring all contractual remedies to protect the
Company''s interest. The unexecuted
portion of other 8 Madhya Pradesh Jal Nigam contracts which are in various
stages of completion aggregate to about Rs 1100 crore.
Unexecuted portion value of MP
Jal Nigam order that got terminated was taken out of the current orders book of
the company.
The outlook for the core
industrial pumps business of Gruppo Aturia remains strong, driven by robust
demand in the MENA region and strong aftermarket revenues from Finder. The successful divestment of the nuclear
business of Rutschi has allowed the company to focus on its core industrial pump business.
The company is pursuing inorganic opportunities in industrial pump business and
hoping for positive outcomes by mid FY25.
WPIL South Africa is also
performing well with the continuous focus on the water sector and significant
aftermarket contracts from Eskom Power. Both Sterling Pumps and United Pumps
Australia have robust order books and are expected to post strong growth in
FY25.
WPIL Thailand posted record
revenues in FY24 and expect this momentum to continue with opportunities
arising from the new Thai Government’s focus on irrigation and drainage
projects.
Navy order (frame work agreement for
Rs 17-18 crore for supply of new types of pumps for which type test is
completed and ready for shipyards to place orders for subsequent ships) execution is on track and expects to supply
all these in next 6 months. This will
contribute to a strong revenue growth from FY25 onwards.
In domestic business the mix
currently is 76% project and 24% products. But the company looks at a ratio of
2:1 (that is 66% projects 34% products).
So it is working with an active
trust on products. In case of domestic projects business it wants to be margin
focused and not volume focused. The company typically looks an EBITDA margin
of 15-20% in project business.
The product orders are generally
shorter duration tentatively between 4 to 8 months depending on the type of
product. Project order book execution timeline is normally 24 to 30 months.
Enhancing its execution rates in
the domestic project business and in product business the strong demand is
providing traction. Thus the company expects strong growth in domestic business
in FY25.
In FY24, the project business
execution in first half was affected by supply
chain challenges. But with strong focus on execution it has turned in a
quarterly burnout of Rs 343 crore in domestic project in Q4FY24. Based
on this strength and the achievement in Q4FY24 the company expect to see good
revenue growth for domestic project business in FY25.
In India product business earlier
it used to have more thrust on power and irrigation but now both industrial
especially oil & gas and municipal water & sewerage is giving a strong
support in domestic market. See a very strong outlook going ahead in these
two sectors because the order book
remains strong and the inquiry flows are very strong.
The two segment that are growing strongly
now are Navy and sewage/drainage. This
two segment gives a margin of about 15-20%.
Project order enquiry pipeline or
work that is put out is quite significant in the country and thus replenishing
the project order book is not a challenge.
Recently there was a contract worth about RS 5000-8000 crore in
Rajasthan for about 10-12 jobs.
Fiscal 2022-23 was a growth year
for the company when it grew from RS 1100 crore to RS 1800 crore. In FY24 it
have consolidated and strengthened its execution and hope to start growing to
grow again henceforth. And all its order books are strong enough to support
this growth.
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