Key takeaways of the call

For 9mFY19 the company registered revenue growth in excess of 30% as expected. Despite increase in steel price managed to improve margin on qoq basis. Revenue for 9mFY19 was up by 45% to Rs 1043 crore, which is close to FY18 full year revenue.

Expect revenue growth might be little subdued in Q4FY19 but the margins would normalize. Considering delay in ordering due to forth coming elections, the company expects only about 5% growth in revenue in Q4FY19. However, the company expects to close FY19 with a revenue growth of 30% plus.

The company expects to close FY19 with an EBITDA margin of about 8% compared to earlier guidance of around 9-9.5% for current fiscal.

The company expects the exports to account for about 6-7% of revenue in FY19 but in next fiscal targeting 10% revenue from exports.

Order book for cranes and Construction Equipment which will be about 1-1.5 months of sales but now it was just standing at 25 days. The ordering has not slowed down but this current subdued ordering activity is just a pause due to elections. Once elections are over, the ordering activity is expected to pickup as investments in infrastructure are not expected to go down.

Backhoe loaders continue to grow and expect to register 50-60% growth in revenue for FY19 albeit on a low base of about Rs 90-100 crore in FY18.

The company expects the tractors (agri equipment) is expected to close FY19 with a revenue of Rs 225-230 crore with the company close 9mFY19 with a revenue of Rs 172.1 crore (up from Rs 127.5 crore in 9mFY18). Volume increase has resulted in margin expansion of tractors. It is easily sustainable. Next year expect 25% growth in volume of tractors.

BY mid of Dec 2018 the NBFC funding was back to normal after suffering in November 2018 due to NBFC funding issues.

While the EBIT margin of material handling and agri equipment stood higher by 120 bps and 510 bps to 13.3% and 6% in 9mFY19 that of cranes and construction equipment declined by 160 bps and 250 bps respectively to 8.5% and 0.5%.

Increased Price increase of 4% across all models this is following 5% increase in price upto Q3FY18. Competitors also followed suit with price increase. During the period the steel price increased by 12%. With current price increase and 1-2% RM cost decrease; the company expects at least 2-4% expansion in margin during Q4FY19.

New product lines are expected to replace some of the existing product models/lines etc.

Cost of RM accounts about 77-79% in case of current portfolio of cranes and that might be lower at about 60-63% in new models.

The company expects 10% EBITDA margin for current quarter i.e. Q4FY19 as well as next fiscal.

The company expands its product offering to include truck cranes in excess of 50Tonne, which is currently catered by Chinese players. Truck cranes of greater than 50T is of a market size of 150-200 units per year. In value terms the market size of this segment of cranes is about Rs 250-300 crore with average realization in the range of Rs 1.20 crore/unit. This market segment of cranes is expected to Rs 400-500 crore going forward.

Capacity utilization for cranes was about 80% and for construction equipment was Rs 40-50%. The capacity utilization for material handling and agri equipment was around 60%.

Pick n carry cranes volume was higher at 1677 nos in Q3FY19 compared to 1191 nos in Q3FY18 and 1549 nos in Q2FY19.

The company currently manufacturers crawler cranes of upto 75 tonne but its launching heavy cranes of 120T and 150T.