Key takeways of the call

Overall consolidated order book as end of Sep 30, 2018 was up by 11%yoy to Rs 777.6 crore (domestic Rs 422.9 crore; Exports Rs 353.1 crore). The order intake in H1FY19 was up by 11% to Rs 456.2 crore (Exports down 7% to Rs 237.1 crore; domestic up 41% to Rs 219 crore).

Aftermarket orders up by 20% to Rs 120.6 crore in H1FY19 and of which about 47% is international orders amounting Rs 57 crore. The product orders were RS 335.6 crore, a growth of 8% in H1FY19.

The overall domestic market for under 30 MW size continued to show positive traction which has reflected in the company's domestic market order booking, which grew by 41%yoy. Further, enquiries from the domestic market showed increase during the half year under review over the corresponding period of last year and these enquiries are spread over all major end user segments including food, chemical, paper, cement and distillery; Steel and Sugar co-generation etc.

In the international market, the quarter under review achieved a good quantum of order intake and considering the lower order inflow in the first quarter, the strong order inflow in Q2FY19 enabled the business to have a healthy order inflow during the half year. On the enquiry front , the company has strong enquiry pipeline from the international market and feel that in the coming quarters, the order booking from the overseas market will improve significantly.

Domestic enquiry base was about 1.2-1.5 GW and international enquiry base was 2.5 GW it has growth now higher percentage of enquiry base is active and reactive.

Paper and Infra industry (such as steel and cement) is picking up in domestic market. Distillery and agro processing is also picking up. Currently steel and cement account for about 20% of enquiry base compared to nil in corresponding previous period and this is good improvement. Lot of orders is still in active stages of finalization so H2FY19 order booking has to be good.

The company is confident of maintaining growth in year-on-year order booking both from domestic and international markets.

In international market while waste to energy and biomass sustain strong growth the combined cycles and O&Gas was subdued but enquiry from these two is good.

With a strong order booking during H1 FY 19, the turnover and profitability is expected to improve in FY19.

Expect FY20 order booking to be good considering active enquiry base. New geographies looked at by the company will be in Asia, Latin America.

Both order intake and revenue of GETL in H1FY19 was below the expectations of the company. On the revenue front, on account of customer delay, GETL could not dispatch one large turbine which has resulted in much lower turnover for the half year under review. Similarly, on the order finalization, there has been postponement in finalization of orders during the half year under review and hence GETL could not book any product order. However, the orders in hand and enquiry pipeline is encouraging from international market which will facilitate GETL have better order booking in coming quarters.

The company does not have any capital expenditure plant free cash flow is available for buyback along with current investment of Rs 75 crore the company currently has will be used to fund buyback. The company thinks Buyback is the best way of rewarding customers.

The company believes that the current year should be a strong year given its increasing focus on exports and aftermarket businesses and a strong carry forward order book and robust enquiry pipeline. The increased focus and market penetration in new geographies have started showing signs of positive results that should strengthen the company's growth in the export market going forward. This also helps the company in evenly spreading its order booking from various markets duly facilitated by its offices overseas, which in turn will support it in mitigating the risks in market volatility to a very great extent. In the domestic market, with the market showing signs of improvement which is reflected in the company's order book and good pipeline of enquiries spread across process co-generation, sugar co-generation, IPPs, and metals, it believe that domestic business should also show growth in the coming quarters. All these factors augers well for an overall growth for its business going forward.