Technocraft industries

Concoll notes for Q4(Taken from screener)

Scaffolding Division:

• Saw a decline in volumes due to slowdown in European market and delays in infrastructure projects in India.
• Output in October 2023 to February 2024 was at 2000 tons a month, dropped due to market conditions.
• Currently back to 3000 tons a month with increased demand from US, Middle East, Australia, and domestic markets.
• MACH ONE business saw an increase in volumes.
• Sustainable margin for Scaffolding business is about 20%.

Margin Expectations:

• For Formwork and MACH ONE business, margin is around 15%.

Export Markets:

• Majority of export for Scaffolding is to the US (75%), Europe is around 5%.
• US demand remained strong, while other markets experienced a decline.

Textile Business:

• Shifted operations from Bombay to Amravati for cost and efficiency benefits.
• Expecting improvement in garment sales and EBITDA margin in the coming year.
• Fabric business impacted by global retail segment standstill, expecting recovery post US market pickup.
• Historic negative EBITDA issue addressed by shifting operations to Amravati.
• Received capital subsidy for capex, no plans for further capex in spinning.
• Expectation of positive EBITDA to continue in upcoming financial years.

Drum Closure Business:

• Market share in Europe is around 30%.
• Dependence on chemical sector in Europe, affected by capacity shifting to China and India.
• Continuous expansion in China, running at over 90% capacity.

Aluminum Extrusion Plant:

• Capex of INR 280 crores for the plant.
• Expected to double the output of MACH ONE product with additional capacity.
• Backward integration for captive consumption, but will also contribute to additional sales.

Market Strategies:

• Focused on aggressive sales in other markets to compensate for the decline in Europe.
• Bullish outlook for Europe with certification in progress.
• New capex in Aurangabad to increase top line as per previous statements by management.

Expansion Plans:

• Trials for additional top line to start in July, fully operational by end of December.
• Production to start in phases this financial year, with full effect seen in ’25-’26.
• Incremental revenue from MACH-ONE to be around ₹450 crores in ’25-’26.
• Aurangabad plant to contribute to growth in scaffolding and formwork division.

Engineering and Design Services:

• Revenue and profitability increased by 40% last year.
• Strong demand from US, Western Europe, and UK markets.
• Margin slippage in last quarter not abnormal, demand remains strong.
• Turbulence in logistics due to Red Sea crisis, freight costs have now stabilized.

Revenue and Capex:

• Total revenue from MACH-ONE product line to be around ₹850 Cr in ’25-’26.
• Order book close to 2 lakh square meters in aluminium formwork.
• INR27-28 Cr expected from the sale of textile assets in Bombay.

Defence Business:

• Successfully developed Joule-Thomson coolers for missiles and equipment for mass moment of inertia measurement.
• Expecting growth in defence business with government spending.
• Considered as an investment for future growth opportunities.

Plastic Closures and Other Opportunities:

• Developing rapidly in plastic closures with good margins.
• Facing resistance in the US market, but growing in other markets.
• Engineering design services division expected to show double-digit growth.
• No active pursuit of new lateral opportunities, focusing on existing verticals for growth.