Steelcast reported another solid set of earnings yesterday.
Revenue up 50%,EBITDA up 80% & PAT up 140%. Margins are up big time vs. Q1 from 23 to 26% now. The concall just concluded some highlights:
→ Did ~4000 MT vols in Q3,will do similar in Q4 as well. For FY24 company has enough visibility to do a run rate 5000 MT,translating to 70% capacity util.
→ Seeing no slowdown in end user industries and at customer end.
→ Broad margin range of 22-25%,very happy to be in this band being a B2B business. However,no one-off in Q3 either. Had around 1 cr of Fx gain.
→ Railroad orders & power cost saving plans are on track.
→ Have purchase orders in hand of 125-30 cr,good for 3-4 months. Keep inventory of not more than 30-40 days.
→ Company is envisaging capex plans,will share final decision after Q1FY24. Capacity addition will be done in phases even if idea is to expand capacity by 50%.
Lot of questions were around slowdown & analyst community seems to be in disbelief on seeing no impact on revenue growth or guidance. Company continues to deliver well. Markets like analysts seem to be in disbelief with stock consolidating since 4-5 months now,valuations much cheaper now. Company should be able to do 90-100 cr kind of PAT next FY,looks great for a debt free company growing at good rates & prudent with capital.
Disc.: Invested. Views are biased.
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