Enriched portfolio + Defence to fuel growth ahead…
About the Company: Goodluck India (GIL), established in 1986, is engaged in manufacturing of precision-engineered steel products, catering to high growth sectors such as automotive, railways, defence, aerospace, solar, and infrastructure.
• Operates six manufacturing plants across Uttar Pradesh and Gujarat, with a total installed capacity of 5 lakh tons per annum.
• Moreover, it has recently commissioned 1.5 lakh artillery gun shells (155 mm) annual capacity, under its subsidiary Goodluck Defence & Aerospace.
Investment Rationale:
• Broad based focus on value added products bearing fruits: GIL has evolved over past three decades from traditional steel manufacturer into a precision-engineered steel solutions, with focus towards high value-added segment with capacity expansion from 3.6 lakh tons in FY23 to 5 lakh tons in FY25. Cold rolled sheets and pipes (CRSP), its largest segment (~37% of revenue) caters infrastructure; precision tubes- a high-margin segment catering to Auto OEMs; engineering structures supports high-speed rail, metro, and smart cities projects including Mumbai-Ahmedabad bullet train. Forging division further strengthens portfolio through aerospace and defence exposure, including BrahMos missiles. These shifts drove robust performance with Sales/EBITDA grew at ~15%/30% CAGR over FY22-25.
• New segments and products to support long term growth: GIL is expanding into new product categories, with hydraulic tubes being a recent addition, backed by a 50,000 MTPA capacity, catering to auto and construction equipment sectors with 12%-13% EBITDA margins. Also, its deepening presence in renewable energy sector through solar tracker tubes and transmission structures by leveraging existing capacities, aiming to aid margins in CRSP. In addition, announcement of seven new high-speed rail corridor projects under FY26-27 budget, provides growth opportunities. Further, GIL is expanding its capacity in forgings to enhance export and supporting domestic defence indigenization. With these initiatives in place, EBITDA/ton is projected to improve from ₹7,023 in FY25 to ₹9,250 by FY28E
• Defence vertical to unlock strong earnings potential: GIL has entered defence manufacturing with industrial license to produce 155 mm artillery shells. It has commissioned 1.5 lakh shells capacity and commenced its first overseas dispatches of ~US$ 6 million. GIL is further expanding its capacity by 2.5 lakh shells, taking total capacity to 4 lakh shells annually by early CY27, with capex of ₹400-₹500 crore. This positions GIL to capitalize on robust domestic and export opportunities, particularly in Europe amid rising defence spending. With such expansion in place, GIL is expected to report ₹817 crore revenue with 27% EBITDA margins in this segment in FY28, contributing 14% and 31% to GIL’s overall revenue and EBITDA.
Rating and Target Price
• Goodluck India has a capital efficient business model with controlled leverage on balance sheet. It is set to chart a healthy growth trajectory, driven by increase in value added product segment in its core business, and foray into the high growth defence business, offering a lucrative margins profile. With attractive valuation (~7.5x EV/EBITDA on FY28E) at play, we assign a BUY rating on stock with SOTP- based target price of ₹1,500.
