Titagarh Wagons hosted a conference call on Aug 13, 2018. In the conference call the company was represented by Anil Agarwal, CFO of the company.
Key takeaways of the call
Order book of Titagarh Wagon as end of June 30, 2018 stood at Rs 2800 crore and of which India orders book is Rs 1400 crore and foreign order book was Rs 1400 crore. Of the India order book about Rs 850 crore is that of Titagarh Wagon standalone and Rs 550 crore is that of Cimco. Of the standalone Titagarh order book about Rs 260 crore is of IR order and balance are from private players. Of the Rs 550 crore Cimco order book Rs 300 crore is IR orders and balance are from private customer. Order book of French subsidiary was Euro 40 million and that of Italian was Euro 125 million. Majority of the OB is executable during the fiscal.
Of the total TWL order book of 850 crore, wagon orders were Rs 500 crore, coaches orders were Rs 75 crore, bridges & defence orders were Rs 85 crore and balance Rs 120 crore orders are for ship building.
Good growth in standalone sales and this will get better in next quarter. Sales and profitability of both TWL and Cimco will improve in FY19.
Fall in Wagon & coaches profitability and margin: As IR Wagon orders were received only by last week of Dec 2017, the execution of that starter only by end of May 2018. So on lower execution of IR orders has impacted the segment margin.
Cimco incurred loss due to Rs 7 crore and with good execution plan going ahead the loss will be curtailed and turn profitable.
Current order book of Italian entity is good enough till June 2019. Good number of order booked.
The French subsidiary was able to resolve lot of issues and work is now going well. The company expects a revenue of Euro 40 mln for French subsidiary and Euro 100 million for Italian subsidiary for current fiscal with break even at profitability level. So far the performance of French and Italian subsidiary is in line with the expectations of the company.
Expect French subsidiary to get back to an EBITDA margin of 7-8% next fiscal.
TWL now got a development order for propulsion systems from ICF. It is a prestigious order and successful execution of it will result in regular supply orders for propulsion systems, which is a Rs 2500-3000 crore market in India.
IR order for 22000 wagon is due by end of this month.
For Mumbai metro order worth Rs 5000 crore the company is eligible to participate along with its Italian subsidiary. Bid is due this for Mumbai Metro order. Similarly for Pune Metro order which is worth Rs 1200-1300 crore the bid is due by Oct 2018. Execution time for Mumbai metro is 4 years.
Lot of traction in the last 4 months for wagons from the private sector. Currently private sector demand is from Wagon leasing and container train operators and WIS will pick up going forward.
TWL – a sales turnover beyond Rs 700 crore will fetch an EBITDA margin of over 10%.
Of the Euro 125 million order book of Firema, Italy about 65-70% is inherited contracts and balance is new contracts. The company has already provided in H2FY18 for whatever losses are expected from the inherited orders.
MERMEC S.p.A., Italy have sophisticated diagnostic signaling systems, the market size of it is about USD 2-2.5 million. The JV is primarily a marketing company, with basic equipment is manufactured by TWL in India. Since it's a marketing company there is not much of capex.
Titagarh Wagons - Wagon production capacity 6000 wagons wagon is only 2000 wagon so only 30-35% of capacity utilization.
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