Management clarifies key business concerns
Company hosted a conference call to address key business-related concerns, during which management provided detailed clarifications on the accounting treatment of goodwill vs intangible assets on account of Iskraemeco and sensonic acquisitions, progress on receivable management, and the steps taken to improve accuracy in related-party transactions, margin reporting, purchase price allocation, and related-party disclosures. Company also provided clarity on cash flow reconciliation and broader working capital metrics. Management indicated that financing arrangements such as bill discounting and factoring are not expected to materially impact on overall profitability. Smart metering will constitute a declining portion of the portfolio as other verticals—including automotive, industrial, EV, railways, aerospace, and defense—continue to scale. The company reiterated its ongoing efforts to strengthen internal controls, enhance disclosure quality, and improve receivable management.
We downward revise FY26/FY27/FY28E earnings estimate by 1.8%/11.5%/7.8% and maintained our ‘BUY’ rating with our DCF-based TP is Rs 5,624 (earlier Rs 7,565), implying PE of 45x FY28E earnings. We estimate FY25-28E revenue/EBITDA/PAT CAGR of 46.4%/48.4%/41.2%, with EBITDA margin expansion of ~60bps.
