This company is at an interesting juncture now. A lot depends on how well they execute on their plans for KSA and the GCC region. It seems like the right strategic decision as competition in the crane business starts diluting their margins there (at least in the domestic business). Their focus on IPPs and prudence in managing receivables means they are unlikely to take on government contracts which is a good thing in terms of reducing exposure to working capital risks. However, EPC is a much more difficult business and they are new to this – remains to be seen how well they are able to execute. If they execute well with reasonable margins, it can be a much bigger growth driver.
Anything positive in terms of growth in the crane rental business will be an unexpected benefit as the market seems to have discounted that fully now. Probably rightly so, given what the management said about the on-ground execution delays and funding challenges.
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