ISGEC Heavy Engineering hosted a conference call on Nov 15, 2023. In the conference call the company was represented by Aditya Puri, Managing Director; Kishore Chatnani, Whole-time Director and CFO; and Sanjay Gulati, Whole-time Director and Head-Manufacturing Units.

Key takeaways of the call

Consolidated order intake in Q2FY24 and H1FY24 was Rs 1545 crore (vs. Rs 1508 crore in Q2FY23) and Rs 2697 crore respectively.

Consolidated Order book on hand as end of Sep 2023 stood at Rs 8667 crore (as against Rs 8321 crore as end of FY23) and of which 73% projects and balance 27% is manufacturing.  Moreover of the OB about 85% is domestic and 15% is International orders. Of the order book about 38% is PSU/Government orders and balance 62% is private sector orders.

Interms of industry mix about 27% is refineries, 18% power, 12% steel/cement/aluminium, 16% sugar, 15% chemicals/fert/petrochemicals, 2% railways and balance 10% others.

Typical execution time period for manufacturing orders is about 3-15 months with average period being 9 months and for projects business the typical execution period is 15-18 months.

ISGEC Hitachi order book is about 842 crore.

Enquiries continue to be robust and further the export order enquiry has also picked-up. The company is confident of strong order inflow in H2FY24 as well.

Philippines Ethanol plant will commence commercial operation with all approvals by Dec 2023 end. Thus by next quarter it will start generating revenue.  Expect to reach full utilization level in 1-3 months.  On full year of operation the plant is expected to turn in a revenue of Rs 530 crore and EBITDA of Rs 140 crore a year. 

Demand for manufacturing business of the company is good and the order book of it is strong. The execution is also fine as it could not be compared quarter to quarter.   Standalone manufacturing EBIT margin was pretty good at 14.1% in Q2FY24 and 13% in H1FY24. The company expects the manufacturing margin to continue at around 12-13% in H2FY24 as well.   Robust order book for manufacturing and the company expect the EBIT margin to be above 10% for FY25. Increased capacity in foundry, boiler tubes and panels business and containers and these are contributing to margin improvement.

The company expected to crush higher cane in current sugar year compared to last sugar year.  The company expects good profitability.  The company commenced cane crushing from Oct 31, 2023 onwards and expect to crush 175 lakh quintals in current sugar year compared to about 166 lakh quintal last sugar year.

EPC business the old legacy projects are getting completed. As new order with better margin starts execution the overall margin will improve in another 2-3 quarters. FGD - In next 8-10 months all the FGD orders of NTPC will get completed.   The one in state sector and private sector will go on beyond that time line.