ISGEC Heavy Engineering hosted a conference call on Aug 14, 2023. In the conference call the company was represented by Aditya Puri, MD.

Key takeaways of the call

Consolidated Order Book as end of Jun 30, 2023 was Rs 8411 crore (Manufacturing Rs 2100 crore; Projects Rs 6300 crore) up from Rs 8321 crore as end of Mar 31, 2023.  About 14% of the total Order Book as at end of Q1FY24 is international. Of the order book about 57% is private sector orders and 43% is PSUs/Government orders.  In terms of industry mix the 28% is from refineries, 21% from power, 13% from steel/cement/aluminum, 11% from Sugar, 14% from chemicals/petrochemicals/fert, 2% from railways and 11% from others.  

International Sales contributed about 8% of Revenue in Q1FY24 and Exports are expected to pick up as travel has opened after COVID

Order Book of Isgec Hitachi Zosen (JV with Hitachi Zosen of Japan) as end of Jun 30, 2023 was Rs 694 crore and of which Rs 484 crore is export orders.  And the order book (including those booked so far in Q2FY24) is close to Rs  800 crore.

Order intake in Q1FY24 was Rs 1152 crore compared to Rs 2482 crore in Q4FY23 and Rs 1221 crore in Q1FY23.  Typically the ordering for capital goods will be lumpy so quarterly ordering intake will not give the trend.    

Enquiries remain buoyant. Export enquires has also picked up. So there are no concerns as far as Order intake front.  Industries such as sugar, automobiles components, Ethanol, captive cogen are seeing traction in investments.   Refineries investments are to pick up in current quarter which was subdued in previous quarter. Expect some orders in international market as well as international travel has opened up after Covid.

Saraswathi Sugar - Enhanced Ethanol capacity to 160 tpd from 100 tpd and it commenced operation from Jun 2023.

Philippines Bio Ethanol plant is to start trial production by Sep 2023 with molasses as feed stock and start commercial production from Nov 2023.  Peak revenue from this plant is expected at RS 500-550 crore.  And will start generating revenue from Jan 2024.  So expect revenue of Rs 125 crore in Q4FY24.  EBITDA Margin expectation is 30%.  As of now the company is preparing to run the plant and if some good buyer comes then the company will consider of selling and move out of this project.     The % of allocation is done by Govt of Philippines. 

Continue to complete the legacy orders. Expect to complete two of the large legacy FGC orders will get completed within this fiscal. So surely the next fiscal will see significant improvement/expansion in margin and it expects just a marginal expansion in margin this fiscal.   

EPC revenue will be better for FY24 than that of FY23.  Product revenue on standalone basis for FY24 is expected to be better than that of FY23. And expect ISGEC Hitachi Zosen to maintain its good run this fiscal as well and it did put in strong show in Q1FY24. So Product revenue for FY24 will be better than FY23.  Expect 10% of growth is expected for products business.

Spending some amount of about Rs 20 crore in capex in certain lines of product business.

Boiler tubes and manufacturing the company has already invested and the growth will come from that.

Execution cycle varies according to the products boilers 17 months, complex casting 6 months simple castings 4 months. Average execution cycle for Project business of the company is about 18 months. 

Consolidated debt as end of Jun 2023 was Rs 1122 crore and the debt of Philippines project is Rs 393 crore.