Key highlights of the 3QFY24 Result
Strong performance; In-line with our expectation
The Company during quarter reported 90%/150% YoY growth in consolidated net sales and profit to Rs 99.5 cr and Rs 29.8 cr respectively. The EBITDA margin for the quarter expanded by more than 1,000 bps to 42.7%. The growth is driven by strong execution supported by robust order book. The performance is broadly as per our expectations and we believe, the company may outperform its own guidance of Rs 450 cr plus topline for FY24.
Solid order book; Healthy medium term revenue visibility:
The company has a strong order book Rs 1,434 cr which is 3.8x of its 9MFY24 annualised earnings thus offering healthy revenue visibility for medium term. The order book comprises of 35% export and rest domestic. The management expects more orders to flow in during 4th quarter. We expect the full year FY24 revenue to cross Rs 500 cr milestone.
Guided for 50% CAGR in revenue between FY25E-FY28E:
The management is extremely positive on defence sector given ongoing geopolitical tensions on multiple fronts. For FY25, management expects Rs 900 cr plus revenue and 50% CAGR growth henceforth till FY28E. The export order which is 35% at present may surpass in overall order pie while anti-drone which is just a fraction of overall revenue may take a big leap from here.
Exploring for inorganic growth opportunities; To raise Rs 1,000 cr:
The management is also exploring the inorganic growth opportunities and has received board approval to raise up to Rs 1,000 cr through QIP or any other equity route. The maximum deal size would Rs 500 cr. Interestingly above growth projections does not include revenue flow from possible inorganic candidates.
Valuation still attractive; Maintain buy rating- Target Rs 994/-
At the current price, the company is trading at 51.6x/28.3x/22.1x of its FY24E/FY25E/FY26E earnings respectively. We maintained our buy rating on the stock with upgraded price target of Rs 994/- thus providing an upside potential of 24.2%.