Usha Martin –
Q3 FY 24 concall highlights –
Revenues – 797 vs 834 cr
EBITDA – 157 vs 127 cr ( margins @ 20 vs 15 pc )
PAT – 108 vs 84 cr ( margins @ 13 vs 10 pc )
Segmental revenues –
Wire Ropes – 561 vs 562 cr ( despite YoY reduction in volumes and RM prices. Enhanced realisations and value added products supported the revenues )
Wire and Strand – 74 vs 83 cr
LRPC – 92 vs 118 cr
Geography wise revenue break up –
India – 45 pc
EU – 24 pc
Asia Pacific – 15 pc
Middle East – 10 pc
Americas – 6 pc
EBITDA/Ton for the company @ Rs 34018 vs Rs 25526 YoY
Net Debt @ 110 vs 191 cr YoY
Wave 1 Capex – poised for commissioning is a testament to company’s commitment to expand in high end value added products across their business verticals
Contribution from high margin Wire Ropes segment up at 70 pc vs 67 pc LY
Have set up another subsidiary in Saudi Arabia to take advantage of high growth Saudi Mkt. Operations to start in Q1 FY 25. This should eventually be a large and fast growing market
Have acquired remaining 50 pc in their JV company in Thailand from the Japanese partner
Planing to enter Synthetic slings Mkt through their UK subsidiary
The ongoing capex ( Wave 1 ) should be complete by q4. Sales from this capex may start flowing in from Q1 next FY. Full ramp up may take some more time
Have supplied to a number of premium customers in US, EU over last 1-2 yrs. Expecting order flows from them to flow through for the company as we go forward
Company intends to get into value added LRPC segment like – plasticised / galvanised / PVC coated LRPC etc as the plain vanilla LRPC is a commodity / low margin kind of business
Expect descent volume growth in the high margin Wire Rope segment in next FY as the new Capex goes on-stream
Aim to maintain the high margins seen in Q3 in the next FY as well. This should be possible as the share of value added sales is steadily improving
Company’s subsidiary in the Gulf is the only meaningful company in the wire rope segment in that geography. Plus the Govt’s there are encouraging local companies. However, expect competition from Japan, Europe, Korea etc to join in the party as the business picks up
Red Sea issue is a short term headwind for the company. This may also lead to increased travel time for export deliveries and hence higher working capital requirements
Company’s foray into Synthetic Slings is an exiting, high end, high value added area. May bear descent returns in 2-3 yrs time
Wave – 2 capex completion should take another 18 months from now. Capacity addition should be around 50k Tons ( wave – 1 and 2 combined ). Current capacity is around 200k tons. So the total capacity would expand by 25 odd pc for the wire ropes segment
India growth continues to be strong. Company has aprox 60 pc Mkt share in India. Govt’s focus on setting up new Wire-Rope connected destinations should act as a further tailwind
Disc: holding, added more recently, biased, not SEBI registered, not an investment advice
| Subscribe To Our Free Newsletter |
