Thank you Sagar for the detailed write up of the concall. Just to add to your notes:
The capacity expansion of 3500 MVA is expected to cost 30cr and will be covered by internal accruals. No debt will be taken on. The management also confirmed that they like to go step by step and be prudent instead of a more aggressive expansion even though the land exists.
Now coming to their moat. It seems that their quality and technical know how plays a huge part as these renewable energy transformers are difficult to manufacture. It is a market that is difficult to penetrate. This along will approvals from foreign customers are not easy to obtain. Their land bank could be a moat as well as they can continue to do brownfield expansions.
Q3 sales had 45% export of which the break up was roughly 30% North America and 70% MIddle East. The North American transformers built in the 50s and 60s are being replaced.
Shilchar has the know how to manufacture upto 132 KV transformers but the majority of transformers they sell are of 66KV and lower. Renewable energy transformers constituted about 60% of sales.
Right now they receive no govt subsidy.
One interesting nugget that management shared was that the increased focus in the renewable energy segment could be beneficial for industrial players like Voltamp to solidify their position in that segment.
Disc:Invested and Biased.
Subscribe To Our Free Newsletter |