Key takeaways of the call

Order inflow in Q3FY22 and 9mFY22 wasRs 49.4 crore (81% production; 18% developmental and 1% service contracts) and Rs 220.1 crore (50% production; 48% developmental and 2% service contracts) compared to mere Rs 95.4 crore in corresponding previous period.

Order backlog of the company as end of Dec 31, 2021 stood at Rs 577 crore (down marginally from Rs 581.30 crore as end of Sep 30, 2021). So far in Q4FY22, the company have announced bagging of Rs 27 crore orders.

The company expect to receive Rs 500 crore plus orders in the next 12 months and some of it are expected to come in Q4FY22 as well.

The order book is diversified with production contracts making up 68% of the order backlog, development orders 22%; and service 10%.  

Further of the current order backlog (excluding Rs 350 crore tender orders) balance are single vendor orders and moreover majority of the Rs 500 crore order under pipeline will be single vendor orders.

Component supply/availability is not an issue for all components and it is only for few, which the company tackled/ sorted out by building inventory, making design changes, building alternate sources. The company have built up enough inventory to carry out the timely delivery of current orders on hand.

The company is looking at a revenue mix of 70:20:10 ratio of production, development and service contracts.

Revenue seasonality reducing as the company is witnessing more production contract contribution to topline. But still Q4 will account greater than 50% of the yearly revenue. In FY21 about 70% of the revenue came in Q4FY21. The company expects Q4FY22 will still account for about 60% of the FY22 revenue.  

The company is currently a zero debt company and it currently has a cash position of Rs 280 crore.  

Well Positioned to benefit from GOI thrust on ‘Make in India' - About 68% of the outlay for defence procurement will be set aside for buying from domestic industry. About 25% of the allocation for defence research and development (R&D) will be kept for collaboration with the private sector. Govt increased the defence expenditure from Rs 4.8lacs cr to Rs 5.2lac cr in FY23 ith a major push on procurement of weapons and military platforms from domestic manufacturers. 

The company expect to close FY22 with a sales revenue of little more than Rs 300 crore and about 30-40% growth in FY22.

EBITDA margin more sustainable will be about 40-41%.

Gross margin will not be uniform but will depend on the projects it take up during that time points. It was in the range of 65-70%.

Not having many Rs 100 crore plus orders. The company expects orders of Rs 50 -70 crore size will keep coming. The product profile is large.  

Talking to lot of companies Sweden and Germany and start doing co development for addressing global demand.  

Service model either as a division or subsidiary of the company. Trying to work on this front.  

Aruthra Radar - enquiry has come from BEL and the orders will get finalised in FY23. From Ashwine the company expects Rs 500 crore business.

Update on expansion project - In next 4-5 month construction will over and 3 month the complete facility will be over. Additional land purchase will be there. Not much of capex beyond rs 80 crore is planned immediately unless very large contracts come in.

The company expects orders from Brahmos this month. The company which is a supplier of avionics for LCA is also expect some repeat orders.

Order flow – Rs 500 crore largely production contracts and some development contracts. Brahmos export order bagged. Negotiation is happening Rs 50 crore contract may happen. LCA mark 1 A the company is the avionics supplier and received order enquiry

The company manufacturers complete radar systems. It entered10 years back to radars for ISRO. Of the eight radars on order the delivery of first radar will happen by March and rest will be delivery one every month. The company does both subsystems and complete radar systems in radar verticals. The company expect order for both airborne and ground systems as well.