The last two days have been extremely eventful incase of HBL.
a) The announcement of award of Kavach tenders of around 660 cr.
b) Annual report.
The following is my reading:
Kavach order win is a vindication of a long journey of over a decade and the pain/struggles/mental and financial stress that a promoter/business owner goes through while working on something as complex as Kavach. What one does not also see are the numerous Kavach like projects which fail to see the light of the day. In my opinion the most important thing in this year’s Annual Report is the +ve announcement of Electronic Interlocking being ready for field trials:
On TMS:
In my opinion the most important thing in this year’s Annual Report is the +ve announcement of Electronic Interlocking being ready for field trials. EIS is another extremely complex system dominated by MNCs like Siemens/Alstom/Kyosan and Medha being the only Indian player.
On the direction of the company:
Looking at the investments that the company has made in TCAS/TMS/Interlocking/EV it is very clear that the revenue profile of the company could completely change in next few years. In all likelihood Electronics could overtake the revenues of the battery segment in few years.
On the battery segment the focus is on value addition and differentiated batteries with a constant reduction in the standard VRLA for telecom with increase in PLT. As expected PLT seems to be evolving as a major growth driver
The second growth segment in batteries is the defence segment and there are details sprinkled all over:
Submarine | Battery Type | Comments |
---|---|---|
Type 1 (Kilo class) | Manufacture and deliver | |
Type 2(HDW class) | Initiated Development | |
Type 4 (Scorpene) | Manufacture and deliver | |
Varunastra | Manufacture and deliver | |
Advance LW torpedo | Made progress to deliver development orders by FY24 | |
Advance LW torpedo | Made progress to deliver development orders by FY24 | |
Missile | ||
Thermal Batteries | Delivered and got repeat orderfor exports | |
Agni Prime missile | Delivered and supplied | |
Tanks | PLT batteries |
The most intersting thing here is:
and as always there are some long shots at Electric drive trains/P-75i
What is also interesting is this year’s AR is:
Nickel price fluctuated significantly during the initial days of Russia Ukraine conflict. It would be interesting to understand the inventory gains/losses this year.
In conclusion the Kavach order win and improvement in battery segment should ensure a healthy topline and bottom line performance over the next two years. This will give ample time and cash flow for business like TMS/EDT/Li-ion/Interlocking etc. to move forward. The next year’s budgetry allocation for Kavach is a key monitorable as that will ensure further order flows for Kavach as promised by the government.
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