Elecon Engineering hosted a conference call on July 22,
2022. In the conference call the company was represented by Prayasvin Patel –
CMD; Kamlesh Shah – Group CFO; and Narasimhan Raghunathan – CFO.
Key takeaways of the call
Orders booked in Q1FY23 was about Rs 282 crore in gears and
Rs 45 crore in MHE.
Gears order book as end of June 30, 2022 was Rs 400 crore and
consolidated order book for gears business stood at Rs 516 crore. MHE
order book stood at Rs 102 crore. Total order book including that in overseas
subsidiaries was Rs 617 crore
On the back of strong order book and order enquiry the company
expects strong growth going forward.
Overseas revenue is flat due to logistics issue but expect
to meet the annual overseas revenue target
MHE legacy project completion status – Three legacy projects
already executed. Of which two projects fully settled and balance one project
expected to be settled by Q2FY23.
Arbitration award worth Rs 63+ crores granted in company's
favour, against which customers have pursued further appeal. Recently, the
Company has received a favourable judgement by the Court for one of the appeal.
Total exports expecting for current fiscal is RS 140 crore plus.
Subsidiary business – two factors are currently affecting
subsidiary business including Ukraine Russia war leading to high inflation and
energy cost in Europe. Orders are with
foreign subsidiary and the company expects growth going forward.
Notes matter: Rs 6.95
crore – settlement is towards for the period of Jan 2022-march 22.
Consolidated STO expected for FY23 is about Rs 1500 crore [Rs 1300 crore from gears and balance Rs 200
crore from mhe]. On standalone basis expecting a STO of Rs 1500 crore in FY24.
No deterioration in order enquiries. Expect order flow
continue to be strong.
Not seeing postponement of order execution. But some pausing
for a while for commodity price to correct in domestic market.
Volume growth and higher exports are to compensate the
impact of moderation of commodity prices in STO and margin.
Recently bagged Rs 130 crore odd order from Indian
navy. This order is not part of the
order book.
First quarter for an engg firm is the weakest and fourth
quarter is the largest so the company is confident of strong growth in revenue.
Going forward not seeing any challenges in execution of
current order book. The capex cycles that started upwards are expected to drive
order inflow growth.
For large complex gear boxes its back to back contracts and
for medium to small gears it is stock to materials.
|