Shilchar reported fabulous numbers yesterday. Most notably(for me),GMs are at 40% now. This is head and shoulders above any peer in the sector. EBITDA margins are at 31-32%. Company’s concall was held today. Some KTAs:
→ Demand continues to be very strong mainly led by renewable sector in India. Foresee no oversupply or margin issues for atleast 1 more year. Demand should last 4-5 years atleast.
→ CRGO imports have become an issue owing to BIS norms implemented recently. There is no shortage in market just that new regulation has created some temporary hiccups. Shilchar is not facing any issue in this regard…as of now.
→ New capacity came online in Q2 and Sep was first month of operations. Co expects to be at full utilization in H2.
→ As mentioned earlier,company has enough land to go to 30,000 MVA capacity.
→ Export demand also continues to be very strong. Mgt believes owing to certifications and stringent approval norms,it will take atleast a few years for a new entrant to break in.
→ Company expects to do 550 cr revs in FY25 and 750-800 cr in FY26 with similar margins.
→ Call on next round of capex will be taken in a few months.
Overall company continues to be on a very strong wicket. I continue to believe there is adequate upside from here given peers like TRIL are trading near 60x FY25 earnings. Shilchar’s unit economics is superior in every regard and growth rates are also comparable,if not better. If current margins can sustain we can expect a PAT of ~200 cr at full capacity. Moreover,550 cr seems conservative since H2 should see a run rate of 180-200 cr revs leading to revenue nos. of 600 cr or more. My only issue is that inspite of capital and land being abundant,mgt is being a little conservative in adding capacity. One may note that till Q2 for 4 quarters co was stuck in the same revenue band. I hope co is able to aptly utilize this high growth period.
While the concall was good,it seemed most participants haven’t read this thread 
There were some issues with management’s internet & Mr. Shah dropped out for a few minutes while some participants couldn’t unmute themselves on time. One would prefer better management of calls in the future.
Disc.: Invested. Views are biased.
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