Notes from Kernex’s AGM (one of HBL’s competitors in TCAS space):
1) TCAS Orders received by Kernex
a) ICF Rs 32 crs + NCR – 255*2 = c. 540 crs confirmed +
b) ECR/Ashoka Buildcon under finalization / negotiation (where Kernex was L2) Rs 140 crs
2) TCAS – Annual revenue potential
a) c. Rs 1000 crs with Medha/HBL/Kernex each having 1/3rd share, Any new players will take atleast 2-3 years’ time for product development, field trials, certification etc. Currently, there are 2 players who are working on product development – Quadrant Future Tek and GG Tronics.
b) TCAS has export potential too since it is globally certified – in markets like Africa etc.
c) This product has been in development for 15 years and now has reached an inflection point where Indian Railways are ready to implement high speed trains etc.
d) Also, instead of retro fitting the Kavach system, Indian Railways has decided to install Kavach at loco manufacturing stage itself.
e) Budget 2023 is in works; TCAS expenditure estimates are for c. 4000 crs (c. 2x of 2023).
-
Unit Metrics of Kavach – Estimated EBITDA margin at c. 25-30% and net profit margin at c. 15%
-
Total WC requirement for 600 crs of order is c. 80 crs (c. 45 days) – To be financed by c. 30crs of incremental WC funding from banks and 50 crs preferential issue of equity shares (dilution of c. 12-15%). There are no funding issues with Railways. Get paid < 7 days of arising an invoice. Also, there is a bonus clause for early completion. Initial WC requirements might be slightly higher due to site preparation etc.
-
How much capex required for execution of TCAS – Existing set up will suffice for next 3-4 years upto 500-1000 crs topline, no significant capex, small upgradation may be required
-
Billing Cycle – Of new TCAS orders of c. 600 crs – FY 23 and 24 topline guidance – c. 60 crs in Q4 FY 23, c. 70 crs per quarter in FY 24 and balance in FY 25
Cheers
Yachna
Disclosure: Same as before
| Subscribe To Our Free Newsletter |
