Company is at interesting juncture at this point of time with multiple initiatives taken by company and also capex cycle which is expected to start…
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Company is exiting from loss making material handling division → Blended margins will improve.
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Debt repayment and refinancing of high interest loans. Interest cost is expected to go down by 20-25cr → Increase in PAT by 15-20Cr
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Gear division capacity utilization is only at 50%. Significant operating leverage with increase in capacity utilization. (Capex cycle →Capex in cement, steel, power, chemical industries expected to go up)
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High receivables : Receivables will go down further as significant portion is held as retention money which is maintained with material handling division customers. With the exit of material handling division, company guided for 100cr of receivables recovery in 12-18 months (key monitorable)
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High contingent liabilities: CL mainly on account of corporate guarantees of 350cr to overseas subsidiaries. Since subsidiaries are profitable and outstanding debt is only 100cr, company is in talks and expect significant reduction in contingent liabilities.