ISGEC Heavy Engineering hosted a conference call on Feb 14, 2023. In the conference call the company was represented by Aditya Puri, Managing Director.

Key takeaways of the call

Order book as end of Dec 31, 2022 stood at Rs 7752 crore up from Rs 7322 crore as end of March 31, 2022.  Of the order backlog about 74% is project and 26% is products. Similarly of the order backlog about 44% is PSUs, 56% is private sector and 11% is Exports (all from private sector). 

Order intake (OI) during Q3FY23 was Rs 1388 crore (against Rs 893 crore in Q3FY22) despite being selective in project business.   Margin will surely improve with selective order booking.

OB of Hitachi Zosen as end of Dec 2022 stood at Rs 798 crore.

Market demand and enquiry is good for all product lines of the company.

Construction of Philippines Ethanol plant is going on as per the plan. Construction will be completed by July 2023 and will be operational by Aug 2023. It is profitable to run the plant and the company is getting more enquiring. Debt of Philippines plant is Rs 350 crore. 

EBIT margin decline for manufacturing biz in Q3FY23 – sustainable will be about 8%.  The margin depends on product mix and even within a product group the margin of product will vary due to customization level. Expect revenue of 12-15% growth in FY24, The margin of about 8% will be achieved in two-three quarters and then onwards it will be sustained at 8% level.

In next 6-8 months the retention money in FGD order struck will be released. Two FGD orders are closure to completion and thus retention will be released from these two projects in next 6 months.

Consolidated debt is Rs 1064 crore as of Dec 31, 2022.

Exports contributed about 10% of revenue in FY22, and about 11% of the total order book.  Exports are expected to pick up as travel has opened up after COVID.

Boilers, sugar machinery, air pollution equipments are the focus area in project business.

Barring one or two orders the execution timeline for all other orders in the current order book is less than 24 months.

Eagle Press is going through challenging times and it is under booked. It has booked an order and couple are under pipeline.

Q4FY23 revenue will be better than Q3FY23.

Hitachi Zosen – delayed equipment dispatch has not happened yet as the customer is dallying lifting. But the company has major portion of the money for that equipment.