Good set of results. YoY Q2 revenue is almost 4x (242 Cr v/s 66 Cr) and profit is ~4.5x (63 Cr v/s 14 Cr). Half year revenue has already surpassed the revenue for FY24. Looks like they are on track to more than double the revenue and profit in FY25. The MD has previously said that FY25 revenue will be about 900 Cr, which is about 2x of FY24 revenue of 441 Cr. So the management is walking the talk.
However the order book is a big worry. It stands at about 1000 Cr right now. Based on the management guidance, I am guessing that orders worth 500 Cr will be delivered in Q3 and Q4 FY25. So essentially for FY26 the company right now has an order book worth only 500 Cr. To justify the lofty valuations (TTM PE is ~80), the company needs to get additional orders worth at least 1300 Cr, which will help it double the revenue in FY26. We are already about 8 months into the financial year and it doesn’t look like this is going to happen. So it looks like the revenue growth will moderate a bit.
The MD has previously mentioned that the margins will moderate as well. I think we have seen a peak OPM of 41% in FY24. Expecting it to be around 35% in FY25 and 32% in FY26. A combination of lower revenue growth and lower margins will see the earnings growth moderate by much more than the revenue growth. So I don’t see a lot of upside from these price levels (~1880). A couple of big orders will change this, so need to keep an eye out for that.
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