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GMM Pfaudler hosted a conference
call on Feb 1, 2024. In the conference call the company was represented by
Tarak Patel, Managing Director.
Key takeaways of the call
Order Backlog as end of Dec 31,
2023 stood at Rs 1625 crore. Order
Intake in Q3FY24 is about Rs 756 crore, up 21% Q-o-Q driven by Non-glass lined
Technologies and Services
Order backlog as end of Dec 2023 in case of standalone entity stood lower by
30%yoy to Rs 435 crore and that of
international (net of POC) down by 27%yoy to Rs 1234 crore.
The business environment
continues to remain challenging, driven primarily by a weakness in the chemical
sector.
Product diversification strategy
and subsequent entry into adjacent industries have resulted in improved order
intake for the company in Q3FY24 despite challenging market condition in
Chemical industry. Diversified away from chemicals and pharma driven growth in
order intake. The company has increased
its technology portfolio.
The company is now less GL
dependent as well as less
Pharma/Chemical industry dependent compared to few years back i.e. FY21. Today about
29% of revenue come from non glass line business to the top-line from about 12%
some years back. With acquisitions in mixer platform, the company
expects strong traction in non GL business of the company. Earlier Pharma/Chemical accounted for 84% of revenue
and that has now come down to about 54%.
Profitability in the
International business remains stable, however, India margins under pressure.
Expect to close FY24 with a
revenue of about Rs 3600 crore (against Rs 3700 crore guided earlier), thus
translating a revenue of Rs 900 crore for Q4FY24. On EBITDA front there will some pressure and
expect to close with an EBITDA of about Rs 500-530 crore for FY24.
Cost reduction measures continue
across geographies and the focus is also on improving efficiencies. And margin improvement expected
from next quarters i.e. Q1fy25.
Focus is definitely on building
backlog. Some large order that are stalled earlier start rolling and expect
them to get finalized soon apart from ramp up in orders from non GLE segment.
Order quality has not been best
in case of some GL orders but the mix is encouraging with increased
contribution from non GL and services.
Opportunity pipeline is strong
and gaining momentum across all business. Expect large deals will be converted
in next few months. With the current opportunity pipeline and the expected
closing of several large deals in the coming months, the company expects the
order intake trend to continue to improve.
Glass Line Equipment business
competition impacted India margin. Focus on efficiency to improve margin.
Mixing business - Acquisition
completed for MixPro, Canada in December 2023. Strategic acquisition completed
and now the focus shifts to capitalizing on it with go to market strategy. The acquisition
has given entry for the company in both Europe and china.
Patel family purchased 1% stake
from DBAG Fund VI at Rs 1700 per share.
Of the 20% of revenue growth of
international business, half of it is coming from inorganic growth and half of
it is coming from organic growth.
Business environ is challenging
by weakness in chemical business.
Ability to serve at shortest
possible time with commissioning of new facilities globally augured well for
the international business of the company boosting output and revenue. This
along with acquired Non glass line business and service are powering the growth
of international business. Large new orders have come from US few days
back.
Some large orders stagnated for a
while is start moving. Metals, minerals,
oil and gas are seeing traction despite chemicals is subdued.
Chemical slowdown is global
across the world. Order intake in china was also down. India chemical sector is
under pressure for last few quarters and see some large orders that was stalled
in India are start keep moving and may get finalized soon.
Heavy Engineering the company
recently bagged a lucrative large order
of Rs 80 crore.
Cash on hand is Rs 275-280 crore
as end of Dec 2023.
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