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The company held its conference call on 27th Nov 2017 which was addressed by Jitendra Mamtora and other key management team
Key Highlights
Overall transformer industry is operating at around 70% of installed capacity. The trend is towards improvement in capacity utilisation.
Higher complexity in the index of transformers produced in H1 FY 18 reduced the sales of the company by around Rs 75 crore. These orders required higher processing and higher time for execution. These large orders were from Power Grid and Getco. These orders have been now executed.
Further there was 3rd party export order in H1 Sep 16 as compared to Nil for H1 ended Sep 17. All these resulted in lower sales on YoY basis for H1 FY 18.
Order book is around Rs 833 crore which translates to around 23500 MVA as on Nov 17.
Composition of order book is favourable. Specialty transformers and export orders to be delivered in H2 FY 18.
Rs 450 crore of net sales to be added in H2 FY 18 with double digit margins.
Expecting absolute Ebidta to be better in FY18 than FY 17 and thus expecting strong recovery in H2 FY 18.
Strong demand from Railways for 220 KV transformers. Overall industrial transformer demand expected to remain very strong in FY 19. Steel and furnace companies also are giving orders. GIS transformers will be big in FY 19
For FY 19, expects 20% growth in net sales and double digit margins. Expects around 20% of sales from exports, 15% sales from utilities, 10% from Solar transformers and rest around 55% sales to come from utilities.
Australia, Latin America, CIS countries and Iran are some of the key markets where the company has a strong presence in international market. Enquiry levels are high from exports.
Expects margins to improve on an annual basis. Continues to target margins of around 12% at operating levels in next couple of years. Higher capacity utilization, more matured competition, large export orders and cost control will lead to higher margins.
The company is the largest supplier to Metros for the transformer requirements.
Borrowing is around Rs 200 crore with average interest of around 11%. Expects borrowings to remain at these levels despite higher sales due to better advances.
Overall, with current capacity, the company can generate net sales of around Rs 1200 crore without any additional capex.
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