Shanthi Gears/Shanti Gears

Notes from the company AGM (E & OE):

1. Company has identified four performance parameters – PBT, Sales, ROIC and FCF which they want to optimize. This year they company has achieved revenue growth of 32 %, PBT growth of 54 %, ROIC of 55 % and FCF of Rs.39 crores (up 15 %).

2. Planning to make Rs.100 crore investment in the next 3 years in building capacity.

3. Plans is to grow 20 % year on year consistently through new product developments, operational efficiencies and quality customer engagements.

4. Sanand plant will be operational in H2 of this year. Company is making an investment of Rs.30 crores over three years at Sanand, which will be funded fully from internal accruals. The target customers for the plant will be from the steel, cement, mining and power sector.

5. Company booked orders of Rs.140 crores in Q1 FY24 and o/s order book as on 30th June 2023 is Rs.270 crores. The order booking is continuously growing, as the image here shows.

   

6. Presently, the segment-wise break up revenues is as follows: Steel 30 %, Material Handling 10 %, Mining & Highways 10 %, Tools & Plastic 10 %, Power 10 %, Exports 7 %, Others – about 20 %.

7. Around 20 % of the revenues presently come from the replacement market and this proportion will remain going ahead.

8. Currently 25 % revenue is from standardized gears and 75 % is specialized gears. Plan to enhance this order mix to 40 % over the next four years.

9. Expecting around Rs.8 to 10 crores of sales per annum from Vande Bharat trains

10. Company plans to grow exports at a CAGR of 30 % over the next 5 years, taking the proportion of exports to revenues to 12 % from the current 7 %.

11. Received aerospace certification for the first time. Focusing on ISRO and HAL space. Percentage is not significant presently but doing only capability building. Aerospace is only 1 % of the total size.

12. Plan to participate very selectively into parent company’s EV initiative, as EV is a very price sensitive segment.

13. Renewable energy space also involves very high investment and the ROA is not favourable.

14. Currently there are no concalls as they think they are a small company yet, they will think of it in future.

15. Will explore inorganic opportunities when they come.