7 months old but good comprehensive analysis of Goodluck’s business. I think PE expansion is unlikely from hereon in near term due to lack of such a trigger from both revenue as well as margin front. At this price stock seems to be a 15-20% compounder.
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The stock has corrected more than 18% from tomorrow based on the guidence given by the promotor. Earlier, they mentioned their topline would be between 15-20% and based on the yesterday guidance it would 12% for FY26. Merely, difference of 3% the stock has correct so much. Am i missing some thing here? or approval of defence division would be taking longer time than expected
Three major points to note:
- Guidance revised downwards
- Defence approval still pending (market was presuming this has already come, especially after the recent entry by SBI Funds Management)
- Low float leading to slight overreaction
Overall, the interview was a little disappointing and was far from something that would increase the confidence of the investors
Disc: Not a recommendation
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just fyi the interview Devesh mentioned
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Expansion in production capacity to manufacture empty shells from 1,50,000 Nos. to 4,00,000
Nos. within one year with an investment to the tune of approx. Rs. 500 Crore.
Context - from the Q1 FY26 concall held on July 23rd:
" Mahesh Chandra Garg: As per our perception, there is a huge appetite for this kind of shell. Very huge appetite today"
and
“Ram Agarwal: The revenue, which we are expecting, it is just on the basis what the future will tell, but we hope it should be between – when full capacity will be utilized, it should be almost INR270 crores to INR275 crores”
So if we take 275 crores, 400000 shells at peak capacity should bring in around Rs 733 crores annually (of course domestic vs export mix would change the realisations).
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In recent interview of Ram Aggarwal in NDTV, he has mentioned that they have acquired relevant licences for new plant. And are looking to start trial run from Q3 of FY2026
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Solid concall for the quarter, good insights on Defence and Aerospace vertical:-
- Hopeful of H2>H1 and demand revival in H2.
- Debottlenecking a constant process, 50,000 tons capacity addition will be across the board.
- AMCA EOI bidded under Goodluck India, if won revenues will flow into Goodluck India.
- Hydraulics Plant: Expansion to 1 Lakh tons will happen once 80 pct utilization is done. Expect 70% utilization by the end of FY26. Q3 was 50% utilization.
- 100 Crores revenue expected from Defence vertical in FY26. There was an article recently that said we have also bid for Ramjet 155 MM Munition as well. Denied
- Operational:
a. Monsoon, low steel prices, geopolitical tensions led to subdued performance
in the quarter.
b. EBITDA margins improving by around 2 pct YoY. - Goodluck Defence:
a. 100 Crores revenue from Oct to March 26 . 30-40% utilization in FY26.
c. 400-500 Crores Capex. Equity:Debt- not finalized. Will finalize soon.
d. Margins will be 30-35% in Shells. Peak turnover will be 1000 Crores post this capex and ebitda will be 30-35%.
e. The entire capex of 500 Crores isn’t only for defence. Will be doing some outer parts of the missile. (More clarity pending here).
f. Expecting it to cease to be a subsidiary post public issue. Current shareholders will be rewarded with whatever ratio the company decides.
g. Aerospace: These pdts are being used by HAL, DRDO, Tata and Godrej aerospace. Expecting 800 Crores from Shells and 200 Crores from other businesses including Aerospace. - Solar Structure: Expect 500-600 Crores business from the solar structure business
alone in the next 2 years.
Goodluck India trades at a Mcap of 3700 Crores odd ; The core business will grow in lower double digits and Defence and Aerospace will add significantly to the company’s EBITDA and bottomline not as much to the topline in comparison. Fair to assume a utilization of 70-80% in FY27 (250-280 Crores Defence revenues at 30-35% EBITDA) and in H2 FY27, expect new capacity to kick in (Total 4 Lakh Shells capacity). FY28 can be 60-70% utilization(in case dedicated capacity for clients) on total capacity that brings about 2.5-2.8 Lakh Shells in FY28.
Each shell costs 25-28000 INR at current prices, a bit more for exports(and in some tenders upto 35k per shell). At 25000 Rs and 2.5 lakh shells sold- Revenue itself can be north of 600-650 Crores from Defence in FY28 and 180-220 Crores of additional EBITDA on consol level.
Hiving off the defence vertical will ensure no Hold Co discount for Goodluck India shareholders and better value unlocking by separate listing (that’s the indication given in today’s call). Good days ahead.
Disc: Invested and Biased
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How the ipo of defence and aerospace benefit to existing share holders instead of demerger?
try to understand
Goodluck India -
Q2 FY 26 results and concall highlights -
Q2 outcomes -
Revenues - 997 vs 980 cr, up 2 pc
EBITDA - 98 vs 75 cr, up 30 pc ( margins @ 9.8 vs 7.7 )
PAT - 42 vs 36 cr, up 18 pc
H1 outcomes -
Revenues - 1951 vs 1871 cr, up 4 pc
EBITDA - 193 vs 155 cr, up 25 pc ( margins @ 9.8 vs 8.2 pc )
PAT - 82 vs 72 cr, up 15 pc ( adjusted for exceptional items )
Company’s capacity utilisation stood at 90 pc at the end of H1 FY 26
H1 breakup of domestic : international revenues @ 73:27
Breakup of segment wise revenues -
Engineering structures and fabrications - 23 pc
Forgings - 16 pc
Precision pipes and Auto tubes - 25 pc
CR sheets and pipes - 36 pc
Company’s key clients and End user industries -
Precision Tubes and Auto tubes - BMW, VW, Skoda, Audi, Mercedes, GM, Renault, Toyota, Mahindra Electric, Tata Motors, Bajaj Auto, TVS, Ashok Leyland, Talbros, Gabriel, Suzuki
End user industries - automobiles, aerospace, defence, railways, oil and gas
Forgings - L&T, RIL, IOL, Toshiba, Mitsubishi, BHEL, GE, Allied Group, Saint Gobain, Bharat Petroleum, HAL, DRDO, ISRO
End user Industries - aerospace, defence, construction and earth moving equipment, nuclear power, oil and gas, general engineering
Engineering Structures - GMR, ABB, L&T, RIL, Toshiba, TRF ( Tata group ), Power Grid, Reliance group, Indian Railways
End user industries - roads, railways, telecom, boilers, turbine generators, steel and concrete grinders, solar energy, building structures
CR Coils and ERW Tubes - various Public and private sector EPC players involved in infra build up in the country, state Govts, NHAI, Railways
End user industries - railways, road bridges, support structures
Manufacturing plants -
06 plants near Delhi ( Sikandrabad and Dadri )
01 plant in Kutchh ( Gujarat )
05 major warehouses located @ Faridabad, Rudrapur, Ludhiana, Nahsik and Aurangabad
Key Business segment capacities ( as on Mar 25 ) -
Engineering structures and precision fabrications capacity @ 85k MTPA
Forging products capacity @ 30k MTPA
Precision Pipes capacity @ 170k MTPA
CR Coils, Pipes and Tubes capacity @ 215k MTPA
Comments from year ending Mar 25 Concall -
New Plant - In January 2025, the company commissioned a state-of-the-art hydraulic tubes unit in Bulandshahr, Uttar Pradesh, with a 50,000 MT capacity. These high-precision tubes serve as an import substitute for seamless tubes, supporting foreign exchange savings and driving topline and bottom-line growth for the company
Goodluck India Ltd will begin trial production in Q1 FY26 at the new facility of its subsidiary, Goodluck Defence and Aerospace Ltd, in Sikandrabad, Bulandshahr (U.P.). Designed to produce ~150,000 precision components annually; commercial production expected by end-Q2 FY26
Precision Pipe (CDW) Ramp-Up - CDW ( cold drawn welded ) facility is currently in the production ramp-up phase, with full-scale production expected by Sep/Oct 2025 to meet targeted demand
The new Defence manufacturing plant has a peak revenue potential of aprox 270 - 300 cr ( should be able to achieve the same by FY 27 ). Should be able to clock 100-120 cr revenues for FY 26. Company may go for further expansion on defence manufacturing capacity once they achieve > 70 pc plant capacity utilisation on this plant. The Defence manufacturing plant should clock EBITDA margins in the range of 20 pc or so
In medium term, company hopes to start clocking double digit EBITDA margins. Most of the fresh capex ( in near future ) shall be dedicated to Auto tubes and Defence manufacturing units. These segments have 12-13 pc and 20-21 pc kind of EBITDA margins respectively. These should pull up company’s consolidated EBITDA margins
Company is already supplying 155 mm Artillery shells to MoD and metal parts for Brahmos Missiles. Seeing a lot of interest from multiple customers wrt the upcoming defence manufacturing facility. Utilising those capacities should not be a problem for the companies. In all probability, they ll have to go for additional capex in not so distant future
The CR sheets and coils business clocks a 4 pc kind of margins. It’s a legacy but stable business. Even in this business, company is looking @ 100 bps kind of margin expansion over next 2-3 yrs
Margin profile for their engineering structures business is 9-10 pc
Comments from Q1 concall -
The hydraulic tubes plant in Bulandshahr, commissioned in Jan 2025, contributed meaningfully in Q1 FY26
This facility is an import-substitute initiative aimed at reducing India’s reliance on seamless tube imports,
while enhancing Goodluck’s margin profile
Notes form Q2 concall -
Goodluck Defence and aerospace ( plant inaugurated in Oct 25 ) has got license from MoD to artillery shells across all calibers ie 105 mm, 120 mm, 125 mm, 130 mm, 155 mm. Current capacity @ 1.5 lakh shells / yr. Plan to scale up production to 4 lakh shells / yr in next 12 months. This plant commenced production in Oct itself
Company is in active negotiations with domestic and international defence customers. Should unlock a significant revenue stream for the company. This also demonstrates company’s precision engineering expertise
Company is augmenting their capacity for solar support structures, including tracker tubes to cater to both domestic and export mkts. Over next 1-2 yrs, targeting a revenue of Rs 500-600 cr from this segment alone
Once the Hydraulic tubes plant reaches a capacity utilisation of 80 pc, company shall further expand its capacity by adding another 50k MTPA
Company expects its EBITDA margins to remain in the 9.5-10 pc band for foreseeable future
The eventual revenue potential of company’s Arty Shells plant ( @ production levels of 4 lakh / yr ) should be aprox 1000 cr / yr
H2 is likely to be much better than H1 as Govt orders and Private capex demand in H2 is always better + the weather is supportive
Company expects the newly commissioned hydraulics plant to ramp up to 70 pc capacity utilisation by Mar 26
Goodluck defence should contribute 100 cr and 300 cr in revenues in FY 26 and FY 27 respectively
Company as applied for ( EOI ) for supply of parts for AMCA program. Waiting for RFQ from GoI
Arty shells business is expected to operate @ > 30 pc EBITDA margins
Total capex requirement to reach an annual capacity of 4 lakh shells shall be aprox 500 cr ( out of which, 200 cr have already been spent to reach the capacity of 1.5 lakh shells / yr )
Still guiding for a 15-20 pc topline growth for FY 26 - indicating a strong H2
Wrt Arty shells, demand is > supply. Company has good visibility of revenues from this product for next 2 yrs. Should be able to realise 1000 cr in revenues by FY 28 from Goodluck Defence ( 800 cr from shells + 200 cr from aerospace parts )
Company shall also be manufacturing some aero space parts from the same facility ( ie of Goodluck Dfence and Aerospace ). Have not yet disclosed the details of those parts
Should clock 500 cr kind of revenues from solar structures and tracker tubes in FY 27 ( from 250 cr / yr at present ). EBITDA margins in this business are around 7-8 pc
Disc: not holding, planning to add, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes
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Here’s a quick model for Goodluck India:
The variance could largely be in the dilution that could happen in Goodluck Defence for the parent company during the 400-500 Crores fundraise. In the above interview Mr. Garg mentions his plans to forward integrate in the defence vertical (Complete artillery shell?- That’s where approx 2-2.5x value add is assuming 300-400 dollars for empty shell and 600-1000 dollars for complete artillery shell).
Only time can tell how the future evolves for Goodluck Defence as a company. Management although has guided for 800-1000 Crores topline at 30-35% EBITDA margins at peak however, one can assume 25-30% EBITDA margins in FY29, maybe trying to factor in the significant capacity additions expected across the industry.
In the near term, demand-side tailwinds remain strong, giving Goodluck India a window to capture meaningful market share and establish global customer relationships, especially as most new entrant capacities are still at least a year away from coming online. (Balu Forge, Reliance Infra, Tirupati Forge, Sunita Tools, Nibe Ordinance, Munish Forge etc). Domestic demand is largely tender-driven, which could lead to cut-throat competition as industry capacity expands but on export side- the vendor relationships, consistent quality controls, on time delivery schedules matters and might make cash flows predicatable and business sticky. Goodluck India is targetting export clients as well as planning to cater to the domestic demand.
Disc: Invested in Goodluck Defence, Biased!
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