ISGEC Heavy Engineering hosted a
conference call on Nov 15, 2023. In the conference call the company was
represented by Aditya Puri, Managing Director; Kishore Chatnani, Whole-time
Director and CFO; and Sanjay Gulati, Whole-time Director and Head-Manufacturing
Units.
Key takeaways of the call
Consolidated order intake in
Q2FY24 and H1FY24 was Rs 1545 crore (vs. Rs 1508 crore in Q2FY23) and Rs 2697
crore respectively.
Consolidated Order book on hand as
end of Sep 2023 stood at Rs 8667 crore (as against Rs 8321 crore as end of FY23)
and of which 73% projects and balance 27% is manufacturing. Moreover of the OB about 85% is domestic and
15% is International orders. Of the order book about 38% is PSU/Government
orders and balance 62% is private sector orders.
Interms of industry mix about 27%
is refineries, 18% power, 12% steel/cement/aluminium, 16% sugar, 15% chemicals/fert/petrochemicals,
2% railways and balance 10% others.
Typical execution time period for
manufacturing orders is about 3-15 months with average period being 9 months
and for projects business the typical execution period is 15-18 months.
ISGEC Hitachi order book is about
842 crore.
Enquiries continue to be robust
and further the export order enquiry has also picked-up. The company is
confident of strong order inflow in H2FY24 as well.
Philippines Ethanol plant will commence
commercial operation with all approvals by Dec 2023 end. Thus by next quarter
it will start generating revenue. Expect
to reach full utilization level in 1-3 months. On full year of operation the plant is
expected to turn in a revenue of Rs 530 crore and EBITDA of Rs 140 crore a
year.
Demand for manufacturing business
of the company is good and the order book of it is strong. The execution is
also fine as it could not be compared quarter to quarter. Standalone
manufacturing EBIT margin was pretty good at 14.1% in Q2FY24 and 13% in H1FY24.
The company expects the manufacturing margin to continue at around 12-13% in
H2FY24 as well. Robust order book for manufacturing and the
company expect the EBIT margin to be above 10% for FY25. Increased capacity in
foundry, boiler tubes and panels business and containers and these are
contributing to margin improvement.
The company expected to crush higher
cane in current sugar year compared to last sugar year. The company expects good profitability. The company commenced cane crushing from Oct
31, 2023 onwards and expect to crush 175 lakh quintals in current sugar year
compared to about 166 lakh quintal last sugar year.
EPC business the old legacy projects
are getting completed. As new order with better margin starts execution the overall
margin will improve in another 2-3 quarters. FGD - In next 8-10 months all the
FGD orders of NTPC will get completed. The one in state sector and private sector
will go on beyond that time line.
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