Key takeaways of the call

Order book as end of Dec 31, 2018 was about Rs 753.5 crore [Domestic Rs 401.8 crore (up 14%yoy); Exports Rs 351.7 crore (up 3%yoy)], a rise of 8% compared to Rs 696.5 crore in corresponding previous period. Of the current order backlog the product order book was Rs 666 crore (up 6%yoy) and after market was Rs 87.5 crore (up 26%yoy).

Order booking for 9mFY19 was about Rs 645.0 crore [Domestic Rs 327.3 crore (up 26%yoy); Exports Rs 317.7 crore (up 2%yoy)], a rise of 13% compared to Rs 571.4 crore in corresponding previous period. Of the 9mFY19 order booking the product order booking was Rs 470 crore (up 10%yoy) and after market was Rs 174.9 crore (up 23%yoy).

Order intake on quarterly basis has been lump and expects the order inflow for full year will even out on year on year basis. The company expects the Q4FY19 order booking will be better than Q3FY19.

The 10% growth in product order intake for 9mFY19 was largely driven by domestic market order intake, which showed a growth of 40%yoy.

Sugar & distillery co-generation and process co-generation are the segment that drove the domestic order flow in 9mFY19 and expect to continue that momentum in near term as well.

Enquiry book for less than 30 MW size in domestic market was about 1.5GW in 9mFY19. With the current enquiry book which is at various stages of finalization, the company believes that the order finalization for the domestic market is expected to improve in the coming quarters. The enquiry generation in domestic market has been good and wide spread from across all key user segments with majority coming from process co-generation industries such as paper, cement distillery, food processing including sugar etc. Apart from these segments, during 9mFY19, the company also witnessed enquiries from infrastructural industries such as steel.

Focus of GoI on ethanol blending programme, there has been significant number of projects which are under implementation for setting up new distilleries and the 9mFY19 witnessed generation of over 50 enquiries.

Similarly there was steady order inflow for the company from Cement sector and it has also generated good enquiries for waste heat recovery systems from this sector. Only sporadic orders from steel and sponge iron sector.

Expect export order booking for FY19 to be in line with that of previous year. The enquiry pipeline from international market is strong from most of new geographies showing good leads.

Margin of international orders is better than domestic orders.

Order book of GE Triveni was Rs 164 crore as end of Dec 2018.

Buy back successful and bought back shares were extinguished on Feb 5, 2019.

RMC as % of sales at 57.6% (against a normal of 51% of sales) is a cause of concern. Of this 660 bps increase about 300-400 bps is largely due to one off expense incurred on new model introduction and the balance is largely due to despatch mix for the quarter as well as lumpiness of the orders etc. Since new products are technological intervention/innovations, the 300-400 bps escalation in RMC is largely as the company is learning to get the new product to market right from design, tooling, product development, testing, reacting to feedback etc. Going into Q4FY19, considering the temporary movement/escalation in RMC will normalize back leading to normal NP margin. The company targets to introduce 4-5 new products every year. So the company is expecting return of EBITDA margin of 20% soon.

The company continues to maintain its strong market leadership with more than 60% market share of turbines for less than 30 MW. And it will strive to maintain this market leadership.