My notes on Goodluck India:
GI was started in 1986 by Mahesh Chandra Garg, operates as a diversified engineering conglomerate involved in the manufacturing and distribution of a wide range of engineering products.
Without beating around the bush lets get straight to the point
Company has 4 segments that drive most of the revenue in:
- Engineering Structures & Precision Fabrication: They specialize in crafting Railway and Road Bridges and Girders, including Composite Plate Girders, Open Web Through Truss Bridges, Bow String Girders, and Special Steel Wire Bridges.
The company also excels in producing structures tailored for Roads and Highways, encompassing Bridges, Signage, Light Pole structures, W Beam Crash Barriers, Security Towers, Telecom Towers, Foot Over Bridges, and Under Bridges.
Recent updates:
A structures unit has been established in Kutch, Gujarat and the supply of materials to L&T is already in progress, and the management anticipates that it will take approximately 12-15 more months to fulfil this order. Company is a category-1 supplier to critical components required for various projects of L&T in the domestic infrastructure space.
Management commentary: “There is a huge scope of growth and expansion in this segment and we envision an order book of over Rs.1000 crore in the next 2 to 3 years”
This segment contributes 15% to the overall revenue and 16% to the entire EBITDA.
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Precision Pipes & Auto Tubes: Goodluck India is the second largest Auto grade precision steel tube manufacturers in India and this acts as a moat for the company as there are barriers to entry in this space while supplying to OEMs. 3 markets taking 85% of the exports (US, Australia and Europe). Existing unit is running at over 90% capacity, company is setting up another facility that will add 60ktps capacity, should start running by Q1 FY25. Mgmt is expecting strong growth in this segment (15% CAGR growth
in volume).
This segment contributes 24% to the overall revenue and 42% to the entire EBITDA proving that this is the high margin segment.
Management commentary: “The segment is a substantial contributor of export revenue to the Company. We are supplying to some of the most respected brands across the world in both in Roads and off-road auto segment (BMW, Audi, Mercedes etc). The Company has been gradually consolidating its export business. The excellent range of products and services have enabled us to extend our presence in hundred countries across the globe with a base of over 600 customers. The current domestic to export revenue stands at 58 to 42”.
- Forgings: Goodluck Specializes in Stainless Steel, Duplex, Carbon, & Alloy Steel Forgings & Flanges - supplied in more than 100 grade products. Company has increased their forging capacity. We can now forge a single piece of 14 tonnes which earlier was 7 tonnes. Subsequently, total capacity per annum has increased to 30,000 MT enabling manufacturing of VAPs. Supplies to some of the biggest name across Indian Aerospace and defense like ISRO DRDO, LMT Defense, Godrej Aerospace, Pralay missiles, BrahMos missiles, K9 Vajra, Tatra Howitzer, etc.
This segment contributes 14% to the overall revenue and 22% to the entire EBITDA and this might increase going forward.
Management commentary: “If you talk of forging Bharat Forge, very big name, we are very distinct cousin to him are making 10,000 tonnes. We are making 2000 tonne. But definitely we aim to. So, basically, we were on the defense side, so it will take some time to really identify the products. But the machinery is there and government has also to identify which products they want to source from India and what are the critical products they are they have to still import from overseas.”
“forgings, we are having a visibility of almost 5 to 6 months orders”.
- CR Coils, Pipes & Hollow Sections: The consolidated EBITDA per ton is being affected by the performance of GI pipes, given the intense competition in this segment and the limited presence of high VAPs. The management is actively working on changing this scenario by transforming GI lines into the production of Tracker tubes essential for the Solar energy sector. The company is experiencing substantial interest in this product from prominent domestic and international clients. This solar business is expected to drive EBITDA per ton of this segment from Rs 2,500-3,000 to over Rs 5,000/t led by rising high margin Tracker tubes volumes.
This segment contributes 47% to the overall revenue and 20% to the entire EBITDA and this might decrease going forward.
Management commentary: “One other sector is CR coils, pipes and tubes, which is our oldest sector here. We manufacture ERW pipes and tubes that find application precision tube, support structures and other infrastructure, agriculture, auto and many more”.
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