Goodluck India Ltd

Is there any succession plan laid out by company yet?

When I was hearing to one of M. C. Garg interview, he was not able to properly hear or understand the questions asked by the analyst. Is that the reason why no Mutual fund house are not tracking this company? Is there any ED or any other legal cases earlier against this company?

Happy Investing,
Disclosure: Tracking many infrastructure play theme. Not having any exposure to this counter.


Was looking at some of the resolutions passed in recent AGM with regards to upper limit for renumeration revised

Mahesh Chandra Garg & Ramesh Chandra Garg - upper limit of 40 lakhs per month - 4.8 cr per annum + PF, other benefits and gratuity contribution
vs. 1.38 cr renumeration drawn last year

Nitin Garg and Shambhunath Garg - upper limit 25 lakhs per month - 3 cr per annum + PF, other benefits and gratuity contribution
Vs. 1 cr and 10 lakh renumeration drawn last year respectively

Also revision in renumeration of both sons
Manish Garg and Umesh Garg -
upper limit 25 lakhs per month - 3 cr per annum + PF, other expenses and gratuity contribution

So almost 34 CR renumeration at upper limit
How does this compare to other infra companies?

Disc: Was holding earlier.


Goodluck is the listed approved vendor for FABRICATION OF OPEN WEB, COMPOSITE & OTHER STEEL PLATE GIRDER
Screenshot 2023-10-05 at 9.00.14 PM

There are 112 approved vendors listed for the item that goodluck provides. It is unusual to have too many approved vendors for an item in railways.
Contract is given to the company with the lowest price. It seems as it is bulky product hence the L1(lowest price) price quote is possible to be given only by the nearby vendors to the project location.
Hence, it seems there are many vendors for a product.

Therefore I have shortlisted the vendors which have good capacity and are present in same state as Goodluck registered factory in railways

Major competitors of it in Railways
M/s GOODLUCK METALLICS (A Unit of GoodLuck India Ltd)(Bhacchau (Kutch),Gujarat) - 24k MT

Uttar Pradesh
M/s GOODLUCK INDIA LIMITED(Sikanderabad Bulandshahar, UP) - 50k MT

Difference between Approved vendors and Developmental vendors.
When a vendor gets listed in the railways it gets listed as the developmental vendor.
Then its one year performance is tested over atleast 1 year and then they become the approved vendor.

If there is contract for an item, mostly 80 percent of the contract is distributed to the approved vendor with the lowest price quote and 20 percent is distributed to developmental vendors.

There is a catch here, sometimes the contract is divided among several approved vendors. After the lowest price is determined, the negotiator from railways tries to manipulate the other approved vendors who have not given the lowest price to give products at the L1 price determined.
Here also, though the vendor to first quote the lowest price gets the majority part of the contract.

Dis - Invested and biased


How does Goodluck look now, after this recent spike? Is it still under/fairly valued? Or do you see some short term correction?

Let me share my opinion.
My thesis was to hold till end of FY26, Considering the profit will rise to 240 and the Co would be valued at 20x PE.

With th I above estimates my return expectation was 32% cagr. With recent 18% run up my expectiom from here on would be 25.5% CAGR.

While that’s just expectations based on numbers, there are other factors to consider.

  1. The recent runup gave some momentum and break out
  2. buying from samit vartak sir in Sage one validates my thesis and so added comfort
  3. New subsidiary for the Defense and aerospace business is a positive surprise for me.

So, does the bove mentioned points raise my exoecation of FY26 Profits higher than 240cr and pe more than 20x? May be

Am I selling? No
Am I buying? May be if there’s small correction towards 650, why not? (considering promoters and PMS bought around 600 rs)

Todays price action suggests the momentum was lost after just one day of spike. So, small correction in next week possible (I’m a novice in fundamentals let alone technicals)

All in all, I’d say it all boils down to return exoecation in your time frame and compare against other Market opportunities available

Disc : No reco by any means


Few important points

  1. Freight cost are not passed to any customer in any of the business division(Ref 1)
  2. Hot rolled tubes raw material prices can not be passed to the customer of CR Sheets & Pipe & Hollow Sections. They are short term contracts. The margin that the company earns in short term contract busines is dependent upon the raw material prices.(Ref 2)( Ref 4)
  3. Zinc raw material price is not passed to Pipe & Hollow Sections customers as it is a short term contract. Pipe & Hollow Sections is the regular low margin, short term contract based business.
  4. In case of structures business also Engineering Structures, there is partial cost passing in some of the products(Ref 2)
  5. Precision tubes business there is direct passing of the cost of zinc and other raw materials. Though there seems a limit upto which they can pass through the prices.(Ref 3)(Ref 2)
  6. While negotiating new order contract for the their value added products, it does not seems they have considerable power. If the prices of the raw materials remain in certain range, there business is supposed to do good, as it brings some pricing power to them in value added products. Though if the material prices increases very sharply there margin in the value added products gets impacted for the existing orders. The impact in the margin of the CR coils and other regular product is huge as it is more of the commodity business.(Ref 3)
  7. As it is a low margin business, even 1 percent point increase in margin, is like more than 10 percent point increase in operating profit. Therefore, it is equally important as the new capex utilisation.
    In the near term(upcoming 1 or 2 quarter results) it is more important than the capex in precision tubes and forging.
  8. I tried to find the percentage in volume of zinc is utilised in CR Sheets & Pipe. It seems the percentage in terms of volume is 1-1.5% and in cost terms it is 4-6 percentage of the raw materials utilised. I have assumed the zinc coating to be 20 µm thick and the wall thickness of 2 mm to calculate higher end percentage. Also I am assuming that all the CR sheets and pipe will require galvanisation.
  9. Freight cost is nearly $2- $4 per kg per 1000KM through sea route for the items shipped based on my estimates. This can be way off though. In percentage terms, it is low. It can not be passed to the customers.
  10. They buy the materials on month on month basis. Therefore if they have the order book of 6 months, the margin might get fixed considering that time raw material price. If it is high earlier, then there margin might expand in coming quarter and two. If was less earlier, there margin might contract in coming quarter or two. The effect of the margin change mostly occur due to their old regular business of CR Sheets & Pipe(commodity business) and structural division(little cost passing).

Price trend of zinc over months

Price trend of hot rolled coils

As from the graph we can see the price has cooled down for this JAS quarter, hence we might be looking at the margin expansion in the coming quarter by near to 1 percent point. It will mostly help them in the structure business for which they have fixed the price as per high raw material prices. Also there will be margin revival in the regular business.

  1. They also get impacted by the anti dumping duty on their raw material HR coils. Capacity of HR coil in India is low and hence they are dependent upon import.(Ref 5)


  • The reason this business gets low valuation is that thier more than 50 percent of the business is directly impacted by the raw material prices. Structure business margin though gets impacted for only 1-2 quarters(until they start getting new orders) but the impact on the regular volume business seems, is kind of permanent until and unless the raw material prices corrects due to its commodity nature.

  • The margin impact on the structure division might go over 1-2 years also. As there is whole bidding process. Currently we are in tailwinds due to low raw material prices.

  • If there sales from the precision tubes and the forging division grows, it might bring the stability to the business. For few coming years still the impact due to their regular volume business will be there as when raw material price increase.

  • In short term as china going through the recession kind of thing, hence the raw material prices has decreased and it seems that china might take atleast some time to recover this time. Helping them in the commodity business of theirs.

  • Engineering Structures & Precision Fabrication might eat their cashflows as the vendor with which they work with to get the contract have very bad payables days like L and T. Hence I don’t like this division.

  • Change in PE Ratio with time, see it in compared with the raw material prices. It gets the valuation of the cyclical industry.

Ref 1(Q2 and H1 FY2022)
It impacted greatly. We have been negotiating with our customers to pass on the freight, but
we are an exporter of the last 20 years so we have to honor our commitments and some of
the customers have obliged us. Of course, it will in the subsequent times the freight they
will have to pay but for some time we have taken a hit on the freight also.

Ref 2(Q1 FY18 Earnings)
Look, I tell you the auto tube division is totally insulated, we get the price variation. Structure division, only some of the products like lattice has a price protection, but solar division does
not have any price protection because the order tenure is very short. As you think of
percentage, it could be 50-50 almost, you can assume as a whole for the company. But one
thing I can tell you the price volatility of our raw material prices definitely impacts us. In the
long run, neutralizes when the prices go down, so we get the advantage. When the price go up,
we take some hit, but on a long-term basis, we will see it does not impact. On a month-to-
month or quarter to quarter, it may have an impact, but one quarter it will have a negative
impact, the other quarter will have a positive impact.

Ref 3(Q3 FY17)

Margins reduced 9.6 to 6.44 QoQ

Mr. Garg has pointed the third quarter results, the rampant unrelenting
increase in raw material prices by as much as 30% to 40% coupled with a mega event of
demonetization has impacted demand badly.

Price increase is normally passed through with a
time lag, but this quarter is unique because every month raw material prices have been
increased and price increase could not be settled by major auto and OEM customers. Heavy
price increase month after month has affected our net sales margins, it was difficult to cut
through steel weights, all the price increase affected by the steel producers.

Ref 4
When asked about the margins of different products at different timeframe.
In Q4 FY16
Cost of the raw material prices Q4 FY16 with the
Crude WPI near 60,
Hot Rolled (HR) Coils & Sheets WPI near 90
zinc WPI near 120

Like if you talk of railway work it is between 15% to
16% but if you talk of this transmission and towers it will be only 10%. And
solar if you talk it may go to 14% to 16%. And this is a demand dynamics. If
demand is more we can get more prices.

Basically now we have this value added segment, it has moved to 53%. So in this sector the margins are in the range of 10% to 15% but in the regular Good Luck Steel Tubes Limited sector of pipes and cold rolled sheets ERW pipe what we were discussing it is
in the range of 5% to 6%

In Q2 FY22, when asked about the margins of different products when
Hot rolled pipes WPI → 160
Zinc WPI → 170
Crude WPI → 170

The structure is almost 10% EBITDA and
our CDW Tube it is 14%, forging again 14% to 15% and the precision tube section it takes
9% to 10% and our regular volume product, it gives almost 2% to 3%.

Ref 5(Q3 FY17)
From concall
Sir, let me clarify, there is no MIP on HR Coil as on date, there is only minimum price which
government has set below which we cannot import, that is $471. And as soon as we import at
$471 then we are involved with the custom duty and safeguard duty and anti-dumping. Antidumping is already in place for HR coil for three years, safeguard is also there for three years.
On HR coil it is already in place, there are other products of steel which government is thinking
of putting the duties. So, HR coil anti-dumping regime exists today. MIP is not there. But today
landed price of HR coil from international market is much lower than what we people have
priced, there is no threat of import to HR coil manufacturing in the country. So they have got
absolute pricing power and we will there, they have increased prices unwarranted in a very,
very aggressive manner which has affected the processing industry as a whole.

Please verify it from your end. I am invested and biased.


Few takeaways from Q4 FY23 Concall.

Q4 FY 23


  • Turnover increased by 66% to Rs.2,617.10 crores. EBIDTA increased by 53% to Rs.186.89crores and PAT stood at Rs.75.02 crores as compared to Rs.30.05 crores. The volume stood at264,418 tons as against 224,603 tonnes in FY2021, a growth of more than 17%. Realisation and volume led growth.
  • It is headquartered in Ghaziabad with 364,000 tonne manufacturing capacity, spread across six facilities, five in Sikandrabad, Uttar Pradesh, and one in Kutch, Gujarat.
  • Capex- This year the company has added 18,000 metric tonnes in the forging division and 20,000 metric tonnes in the precision tube engineering division.
  • Four major verticals, which are ERW Steel Tube, Precision tube, Precision engineering and fabrication and forging.
  • End User Industry- cater to many diverse sectors of the economy that include auto, infra, high speed railway, specialized infrastructure, solar, defense, aerospace and defense components.
  • Engineering structures and precision fabrications- a key segment, not only in terms of our engineering expertise and passion, but also in terms of growth opportunities, provide both fabrication and services for infrastructure solutions. Be it road bridges, smart city structures, or supercritical bridges for high-speed railways corridor.
  • Forging- specialize in stainless steel, duplex, carbon alloy, steel, forging exotic material and flanges, which is supplied in more than 100 grade products. Forging for defense is to start.
  • Precision pipes and Auto tubes- very few players to manufacture high quality CDW tubes, segment is a substantial contributor of export revenue to the Company. Industry caters to our aerospace, nuclear power, and wind energy.
  • CR coils, pipes and tubes- which is the oldest sector, manufacture ERW pipes and tubes that find application precision tubes, support structures and other infrastructure, agriculture, auto and many more.
  • Utilization around 80%.
  • L&T LOI work has already started, from June onwards, we can we can see the project on the floor.
  • Competitor- forging Bharat Forge, very big name, they are making 10,000 tonnes. We are making 2000 tonnes.
  • Target to be longterm debt free, short term debt to remain as cash is raw material.
  • The increased prices will be passed on to the consumer, always with little time lag times, but they are passed through. It is a complete pass-through.


  • Increasing the share of value-added products in our total product portfolio.
  • Envision an order book of over Rs.1000 crore in the next 2 to 3 years from engineering structures and precision fabrications segment.



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Diwali pick SBI securities.

Not a recommendation, invested and biased


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Is this QIP beneficial for existing shareholders and sudden spurt in prices related to this in someway

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Q3 Con-call FY24

Defense capacity is expected to go up by in FY2026 Q1 onwards.


As per Con-call Q3 FY 24

Operational Performance:

  • The company has been improving its product mix by expanding its footprint into value- added, high-margin products.
  • Successfully closed a QIP round of Rs. 200 crores, with support from investors like Bank of America and Morgan Stanley.
  • The positive momentum on the demand side is attributed to the robust economy, rising capex, and the China plus strategy on the export side.
  • Maintained export momentum, with exports accounting for roughly 25% of its sales in value terms.
  • New plant in Sikandarabad, meant for hydraulic tubing, is expected to boost exports.
  • Ventured into defense and aerospace, with production expected to begin in the first quarter of the next financial year.
  • The Government of India’s decision to replace all diesel buses in the urban renewal mission program with electrical vehicles is expected to create a huge demand for the company’s tube products.
    Future Outlook:
  • The company expects to be on track for the guidance given for FY26.
  • Anticipates a top-line growth of 4,000 plus for FY25 and 4,500 plus for FY26.
  • Geopolitical conditions and changing demand dynamics in the defense sector pose uncertainties for the company’s future revenue and export market share.
    Other Points:
  • The company has invested in measures to offset millions of kg of CO2 emissions during the project lifetime.
  • Taken steps to reduce power costs by investing in solar power.
  • Made significant inroads in the road safety sector by adopting European design and reducing the cost of crash barriers.
  • Completed almost one-third of the order for the high-speed rail corridor and expects more orders from L&T and the dedicated freight corridor.

  1. capex
  • defence building work is going on and commercial production in q1 next financial year in which forging would be done for this only they made subsidiary company

  • here they will make artilery and aerospace material

  1. profitability
  • have increased accross the board and bottomline has grown faster than topline due to margin expansion
  1. industry tailwinds -
  • expect good demand from solar rooftop projects as framing is required
  1. management -
  • guidance stays intact

  • fy24 -3500+, fy25 4000+ , fy26 -4500+

  • margin this year 8.5% , next year 9%+ , fy26 9.5% plus the defence margins

  1. business details
  • business now bearing fruits of the seeds sown in the past

  • mix changing towards high VAP

  • exports are 25% , even in difficult times of export we have nbeen able to grow exports and maintain last years rate

    • additional capacity in gujarat is just on time that we can make up value added products

    • secundarabad new hydraulic tubing plant will also cater majorly to exports will give good boost to export

  • auto tube will have improved demand as and when more and more EVs comes

  • 7000 tonnes of fabrication done in railways

  • auto sector - entering constriuction machinery by making hydraulic tubes of 15 mm thickness thus replacing seamless tubes , one of the few plants in world

  • conducting RND continously

  • new software is helping

  • upgrading and changing tube mills to make different sizes to cater to export demand

  • company has made significant in roads in road safety sector by adopting european desiogn but reducing cost of ncrash barrriers

  • segment wise revenue

    • structural pipes - 50%

    • precision (erw, cdw) precision tube -25%

    • structure division 10%

    • forging -15%

  • defence can give 350-400 crs revenue but only after rampup from h1 of fy25 this 350-400crs will only come from fy26


    • only 2-3% of revenue

    • margin profile in defence should be 20% + ebitda

  • measures to reduce power cost

    • 30-40% of requirement is coming from 30 mw plant

    • agreement to get at 4rs per unit by signing 6 MW in up

  • railways -

    • new notification of building FOB(foot over bridges)

    • getting into stainless steel FOBs

    • will get good portion of fabrication if LNT or any big players bag the contract

  • revenue split with en user industries

    • infrastructure 60% many thing structure tubing , solar structure, railways. electrical towers , telephone towers

      • margins in railways and electrical line margin 9-10%

      • structure tube - 3-4%

    • forging 15% 12-15%

    • auto - 25% 12-15% , hydraulic tubes, precision tubes

  • major defence business will come in fy26

  • in bridges and railway business they get the material from 70% of their suppliers so the supplier fincance the WC

  1. one time events
  • fund raise of 200 crs via QIP

  • red sea-

    • only 75% exports throgh red sea and out of this 70% is FOB value so not effected so effect is minimal

Q3 FY 24 Concall summary


  • The sales increased to Rs. 878.27 crores as against 705.94 crores during Q3 of previous year, registering a growth of 24%.
  • PAT was at Rs. 31.75 crores in Q3 as compared to 18.40 crores in Q3 of previous year up 72%.
  • QIP around Rs. 200 crore with good support from names such as Bank of America and Morgan Stanley.
  • Exports are roughly in value terms, almost 25%.
  • New plant in Sikandrabad, which is coming for hydraulic cooling, will also primarily mean for export and it will give a good boost to the exports.
  • All the buses will be replaced by electrical vehicles and there is going to be huge demand for the tube which we manufacture.
  • We are in the auto, defense and infra sectors.
  • Completed ​​first bullet train project under a joint workshop of L&T, IHI Japan and Good Luck at Bhuj, Gujarat.
  • Goodluck Defense And Aerospace Limited where we will make those parts for the Artillery and aerospace sector.
  • CDW and DRW precision contribute 25%, forging division contribute 15% defense is part of forging but companies have created Subsidery for defense which will do 350-500 when it will be at the full capacity. margin profile should be 20% plus.
  • We have taken almost 30 MW of solar power for our total plant and it is almost 30 to 40% of our demand. So, this way our power bill will be reduced in the coming future.
  • Foot over bridge- , we are bidding with L&T, when they get it, so we will get a good portion of fabrication in that.
  • The infrastructure section is almost 60% auto section, it is almost 25% and our forging division is almost 15%.
  • Infrastructure section includes structure tubing which is being used in the bus bodies, we are giving solar structures and in railways, we are giving Foot Over Bridges, we are giving railway bridges like we are supplying to this bullet train first bullet train from Ahmedabad to Mumbai. We are talking of electrical towers talking of telecom towers.
  • Railways and the electrical lines, there is normally 9 to 10% EBITDA and in the structural tubing because it is a general type of thing. So, there the margins may be 3 to 4%. In CDW it is normally 12 to 15%. In forging again it is 12 to 15%.


  • Next year the topline should be 4000 plus and by FY26 it should be 4500 plus excluding the new defense subsidery which can do 350-400cr.


  • The Red sea crisis will impact 75% of exports but 70% is FOB.