Skipper Ltd., (Power and Water) a moat in making?

The following points I noticed in Q 2 results:

1. Management has started con call after the long time. This is very poisitive sign, it appears that managament is now confident about future growth.

2. Although, YoY quartely revenue slightly decreased but EBITA ( even with forex loss) is increased, it means margins have gone better. Since, they are now dealing fairly good amount of international orders, gain/ loss due to currencey fluctuation will be routine featue. They want to grow export to the tune of 75% of revenue up to FY 24.

3. Higher debt is eating their profits. Although, it has come down to Rs. 585 Cr in comparison to 628 Cr. in Sept Qtr FY 22. The interest payment is slightly lower in this quarter in comaparison to previous quarters. Management in threir investor presentation has mentioned to reduce it significantly in second half.

4. Although revenue from polymer segment is slightly reduced but profi increased. Comapny is aggressively expanding the dealer network. Considering drop in PVC prices, these results are good. Much pressure on this front is seen in big companies like Astral etc.

5. Rs.905 Cr. are stuck in inventories in comaprision to Rs. 786 Cr. in Sept Qtr FY 22. Management in their investor presntation has mentioned that this is due to maintaining high inventory level to avoid raw material fluctuation. But, such a high level inventory may lead to invenstory loss also in next quartes, especially when RM prices are on down turn.

6.Cash flow from Operation are quite good ( Rs. 93 Cr.) significantly better than many previous quartes. It means realisation are better.

7. Order book is Rs. 2163 Cr. , thus providing revenue visibiltiy for next few quarters. They are having good bidding pipelines.

Conclusion: In my opinion, the skipper is working hard to grow profitibility and margin. Starting Investor conference intimation shows management confidence about future visibility. Macros are also favourable due govt. push on infrastructure.

Disclosure: Invested. No transaction in last 30 days.