Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Skipper Ltd (BOM:538562, Financial) achieved its best-ever revenue quarter, reaching INR1,153 crores, a 76% increase from the previous year's quarter.
- The Engineering segment revenue hit an all-time high of INR701 crores, a 41% increase from the previous year.
- The Infrastructure segment revenue saw a remarkable growth of 3034%, totaling INR349 crores.
- Consolidated EBITDA increased to INR108.6 crores with an operating margin of 9.4% for the quarter.
- The company secured significant domestic and international contracts, contributing to a total inflow of INR1,141 crores, with a current order book standing at an all-time high of INR6,215 crores.
Negative Points
- Gross profit margins fell significantly from 36% in Q3 FY24 to 21% in Q4 FY24.
- There was an increase in the cost of goods sold, which impacted the overall profitability.
- Long-term borrowing has increased, and the company will continue to use a combination of internal accruals and further long-term borrowing to fund CapEx plans.
- The Polymer segment revenue decreased by 30% in Q4 FY24 compared to the previous year.
- Potential slowdown in order inflows and execution due to upcoming elections, which could temporarily impact revenue.
Q & A Highlights
Q: There has been a significant fall in gross margins year-on-year and quarter-on-quarter. Can you explain the reason for this?
A: Our margins should be viewed on a 12-month basis. We have delivered consistent EBITDA margins of 9.7% for both the previous and current 12-month periods. Quarter-on-quarter margins can be misleading due to the quality of contracts being executed.
Q: The net working capital cycle has improved to 88 days from 131 days. Can we expect this level to be maintained?
A: We aim to maintain a net working capital cycle between 90 to 100 days and will strive to improve upon this.
Q: There has been an increase in long-term borrowing. Is this for capacity expansion, and will further borrowing be required?
A: The company will use a combination of internal accruals and further long-term borrowing for CapEx plans. Previous long-term debt was for debottlenecking and optimization CapEx. We have not yet planned the debt amount for this year's CapEx.
Q: What is the revenue expectation from BSNL orders for FY25?
A: We executed close to INR1,000 crores in BSNL orders in FY24 and expect around INR700 crores in revenue from BSNL projects in FY25.
Q: Can you provide guidance on segment-wise growth, especially for the engineering and polymer businesses?
A: We do not have segment-wise guidance readily available. However, we are currently at about 70% capacity utilization in the engineering segment and expect to benefit from enhanced capacity towards the end of the year.
Q: What are the expected margins for FY25?
A: We aim for EBITDA margins to be around 10% plus in FY25. Any margin between 9.5% to 10% is comfortable for us, with higher revenue driving better PBT margins.
Q: What is the current market share in the telecom towers segment, and what is the expected peak market share in the next two years?
A: We are a market leader in telecom towers with a current market share of 15% to 20%. We expect to maintain or grow this share.
Q: What is the company's strategy for managing high interest rates and finance costs?
A: We have reduced finance costs from over 5% to around 4.7%. We aim to further reduce this through operational efficiency, better working capital management, and improved credit ratings.
Q: What is the expected impact of elections on order inflows and execution?
A: There might be a temporary slowdown in order inflows in Q1 and Q2 due to elections, but the overall bidding pipeline remains robust, and we are optimistic about strong order inflows for the year.
Q: What is the capacity utilization in the Polymer division, and what is the peak utilization achievable?
A: The current capacity utilization in the Polymer division is about 55%, with a peak utilization potential of 75%. We aim to reach close to this by year-end.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
