International Conveyors Ltd

Sulabh_Anand · October 16, 2023, 5:34am

Business Details:

About the company: ICL was founded in 1973 and is engaged in the manufacturing and marketing of solid woven fabric reinforced PVC, which is basically a polyvinyl chloride fire retardant, anti-static belting. ICL conveyor belting was made in accordance with the British underground coal standards through its licensing arrangement with Scandura. ICL had actually a collaboration with Scandura up to 1991-1992 and when Scandura was bought over by our competitor Fenner, this collaboration broke but then ICL grew after that.
Products: The company manufactures the most extensive range of products comprising Type-3 to Type-6 that are most suitable for the domestic market and Type-3 to Type-18 which is more popular in the overseas market. When Companysay about Type-3 or Type-6 or Type-18. It basically talks about the strength of the belt. For Type-3 the strength of the belt is 3000 pounds per inch, whereas Type-18 when Companytalk it is 18,000 pounds per inch.

It’s one of the largest manufacturers of solid woven belting in the world and has a complete product range with the ability to make Conveyor Belting up to 3150 kN/m (type 18) in strength and belting widths ranging from 600 mm to 1800 mm. This is the widest product range of Solid Woven belts available from any one Company with a manufacturing capacity of 1 million meters per annum of PVC Solid Woven Conveyor Belting.

Market Share: The company is India’s largest listed company having almost 40% market share as far as domestic is concerned.
Approvals: The company is ISO 9001:2015 certified Company meets the international quality benchmark. The company also enjoys several certifications and endorsements from stringent global regulatory bodies. See for example, since this belting is going for underground mining, the Company needs to have approvals from the individual government. For example, if the Company is to supply to the US, if the Company is to supply to Canada, if Company is to supply to Europe, each government has its stringent requirements and the Company Needs to have approval from that and the Company is happy to inform you that Company has almost all the global approvals.
Subsidiaries: The company also has two international subsidiaries, International Conveyors America Limited and International Conveyors Australia Limited, and through our subsidiaries, the Company supplies to America and Australia.
The company is one of the major suppliers of FRAS. FRAS is basically a fire retardant anti-static belting for conveying coal and potash.
The company basically has two manufacturing facilities in India, one is in Aurangabad which is in Maharashtra, and another manufacturing facility which the Company has in West Bengal, the place called Falta which is part of our SEZ.
Clients: Our major export is to the US, Australia, and Canada, and Companyare considered the preferred supplier, the world’s largest potash manufacturing companies Companyare also supplying now to the UK, South Africa, and Latin America and our next endeavor is to supply to Europe and Central Asia.
Order Demand: It is a mixture of replacement as well as new demand because each mine has its own blocks and the company also explores the new blocks. So as on date, I think I would expect it to be 50-50.
our main raw material is polyester which the company buys from Reliance, as well as PVC, which The Company buys from Finolex or Chemplast Sanmar.
Indian clients: Companyare supplying to Shivani Colliery, Companyare supplying to Tata Steel, Companyare supplying to Earth Coal.
Treasury business comprises 25% of PBT: It has 225 crores invested in stock, mutual funds, and inter-corporate deposits.

Growth:

Growth opportunity: So, if you talk about growth, yes, the Company has good growth prospects, taking into the infrastructure.
Revenue growth in FY23 vs FY22: 1.60% growth in the topline resulted in 44.5% growth in the bottom line with margin expansion.

Corporate Governance:

Shares Buyback: The company had bought back 41,21,000 equity shares pursuant to the buyback offer by utilizing a sum of ` 2,311.85 lacs which represents 77.84% of the Maximum Buyback Size and it has completed the process of extinguishment of the entire 41,21,000 Equity Shares bought back under the Buyback Process.
Shareholding increase: Increased shareholdings from 48% to 70% in 3 years.

Loans granted to companies:

Industry Tailwind:

Conveyor belting is critical for the bulk transportation of materials like coal, potash salt, etc and no substitute has been found.
• First company to have BIS Certifications • Our team has been involved in such projects.

Cement Industry Outlook:

Strategic Intent:

New products and customers: From 2014 to 2019, the Company diversified into a new customer segment because prior to that Company was just concentrating on the coal industry and then the Company had diversified even to potash. So ICL moved forward in the export market to serve the needs of miners of potash, phosphate, etc. in North America as favorable regulation led to a growth in coal mining in the USA. Company design and development based on the customer’s requirement like for example, the requirements of potash or gypsum is slightly different than those of coal. So, Companyhave developed products accordingly and then the company started supplying them.
Customer addition: Penetrate further into Australia’s underground coal mining segment to grow in the South African market, start supplies to Europe, which Companyhave already started now, and then start working with Central Asia.
Industry Diversification: This diversifies broader books from multiple industries. Recently, Companyhave also started supplying in the cement industries and other aggregate industries like crusher industries and other peers. So, companies are not just restricting to coal and potash but are now diversifying to other industries. now Company is supplying into gypsum industry, recently company started supplying to the cement industry. waste management industries

Competitive Advantages and Intensity:

Regulatory approval acts as an Entry Barrier: The Company has regulatory approvals with the products using underground mines in India, the US, the UK, Canada, Australia, South Africa, and China.
Use of Wind power : ICL is constantly working on initiatives that focus on sustainability that Companyproduce more green energy than Companyconsume.Companyhave five windmills which are situated basically in Karnataka, Maharashtra, Gujarat and Andhra Pradesh and Companyproduce more green energy than Companyconsume.
Pricing power: So, saying that Companyhave either a monthly or fixed, yearly contract, where Company revise the price. This is the pre-agreed formula of the movement in the price from the international indices.Company at least have around 10-15 raw material which are going into production and what Mr. Udit was saying that Companyhave a contract with all our customers where the price gets either increased or decreased based on the indices movement on a six-month basis. The company should have double-digit EBITDA most of the time assured
FOB stands for “Free on Board”. It is a pricing model in which the seller is responsible for getting the goods to a specific location ie. Indian port and rest clients take the responsibility.
No Import Substitution: As far as rubber belting is concerned, you have a ‘N’ number of layers of the fabric whereas PVC belting is concerned it is a single fabric. So always in the case of rubber belting, you have an issue related to the separation of the different fabric layers which is not there in the PVC belting. Secondly, the advantage of PVC is mainly underground because PVC has the inherent property of fire retardancy which rubber does not have.
ICL design team can undertake full in-house design starting from preliminary design of systems from power and tension calculations all the way through to detailed design • The ICL team has years of experience in solid woven conveyor belting both for underground and above-ground applications.
Inhouse Manufacturing: Complete integrated in-house manufacturing - from yarn preparation, fabric weaving, compound mixing to finishing - to ensure total process and quality control at each step of manufacturing activity.

Risks:

Raw materials: polyester or PVC, all are petroleum base and there was an abnormal increase in the raw material and that is the exact reason why the raw material to sales price has gone up so high.
Related party transaction: The company had an equity even in Elpro International and it amounted to Rs.111 crores and it has been liquidated.

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Financials:

For more such stories, one can visit my page.

Disclosure: Tracking position, for educational purposes.

murarisumit · October 29, 2023, 3:59am

thank you, other than explanation also got to know about various other parameters to look for from your screener screenshot.

Agni · November 27, 2023, 3:49pm

Problem with this company is that the sales is de-growing YoY while profit is increasing primarily due to other income.
Since, they have contracts that move up and down based on companies material cost, the company should have consistent margins but that isn’t the case here. Margins move up and down based on raw material cost, so I am not sure how the contracts are negotiated.

If someone can shed some light, that would be great

KamaMan · June 29, 2024, 4:42pm

Investor Presentation - 1a4e1f05-c710-4379-898a-79cfa98270a7.pdf (bseindia.com)

Bull_Miller · April 20, 2025, 6:18pm

I was screening for stocks with export exposure amid the tariff tantrum and stumbled upon this.

Why invest in something that has

Massive related party transactions/loans to promoter entity
large treasury operations with their stock holdings not exactly screaming a deep value investment style
key management personnel dominated by finance professionals than industry vets(other than 84 year old MD - succession plan?)
sunset industry, ESG concerns
FY24 capacity utilisation abysmal at 26%
lack of interest from large investors, doubling of retail shareholder count from Dec 2023 to March 2024, no shareholder returns
despair/lack of buzz around this stock in valuepickr/elsewhere online

All of this seems misplaced/doesn’t matter because the ground underneath has shifted
(pun intended)

Coal now contributes less than 20% of U.S. electricity, down from 50% in 2000. Donald Trump wants to change that. Announcements since he came to office:

1. Executive Orders and Regulatory Rollbacks

Reclassification of Coal: Coal has been designated as a “critical mineral,” streamlining permitting processes and prioritizing coal in energy planning. Business Insider
Environmental Regulation Exemptions: Nearly 70 coal-fired power plants have been granted two-year exemptions from stringent Biden-era environmental rules, including the Mercury and Air Toxics Standards (MATS). Inside Climate News+4AP News+4Reuters+4
Federal Coal Leasing: The Department of the Interior has ended the moratorium on federal coal leasing, opening new lands for mining activities. U.S. Department of the Interior
Defense Production Act Invocation: Authorities under the 1950 Defense Production Act have been unlocked to boost coal production, aiming to prevent the retirement of aging coal plants. Reuters

2. Justification: Meeting Rising Energy Demands

The administration argues that coal is essential to meet the surging electricity demands driven by:AP News

Artificial Intelligence (AI) Data Centers: The rapid expansion of AI technologies has led to increased energy consumption, with coal positioned as a reliable energy source to support this growth. Business Insider
Electric Vehicles (EVs): The proliferation of EVs requires substantial electricity, with coal-fired plants contributing to grid stability.
Cryptocurrency Mining: The energy-intensive nature of cryptocurrency mining operations has been cited as a reason to maintain and expand coal energy production.

3. Health and Safety Concerns

Critics highlight significant health and safety issues arising from the administration’s policies:Reuters+2The Guardian+2AP News+2

Budget Cuts to Health Agencies: Approximately 900 employees were dismissed from the National Institute for Occupational Health and Safety (NIOSH), including staff monitoring black lung disease. The Guardian
Closure of MSHA Offices: 34 regional offices of the Mine Safety and Health Administration (MSHA) were shut down across 19 states, raising concerns about miner safety oversight.The Guardian
Delayed Enforcement of Silica Dust Rule: The administration has proposed delaying enforcement of a crucial silica dust rule, potentially exacerbating health issues among miners

International Conveyors seems firmly in line to benefit from this sea change in industry prospects.

Quick Porter’s five forces analysis

Force	Intensity	Notes
Threat of New Entrants	Low to Moderate	High entry barriers due to certification and capex
Bargaining Power of Suppliers	Low	Commodity inputs, fragmented supply base
Bargaining Power of Buyers	Moderate to High	Large clients, price-sensitive
Threat of Substitutes	Low	Limited viable alternatives in this use case
Industry Rivalry	High	Global, aggressive, and well-capitalized competitors

Now, with Chinese tariffs at 245%, the industry rivalry aspect also suddenly isn’t bad which puts it in an excellent position to capitalise on these developments.

The Chinese share is likely to be shifted to other vendors instead of new ones due to long lead times:

ICL has secured certifications from various stringent global regulatory bodies:ICL Belting+3ICL Belting+3MarketScreener+3

United States: Mine Safety and Health Administration (MSHA) approvals under Part 14 and Part 18 of Title 30 CFR.
Canada: Compliance with CSA-M422-14 Type A-1.1 standards.
Australia: TestSafe Australia certification conforming to AS 4606:2012 Grade ‘S’.
South Africa: Approval from the South African Bureau of Standards under SANS 971:2003.
China: Certification conforming to MT914-2008.
India: Directorate General of Mines Safety (DGMS) approval as per IS 3181:1992.ICL Belting+2ICL Belting+2ICL Belting+2 ICL Belting+2ICL Belting+2ICL Belting+2 ValuePickr Forum+3ICL Belting+3ICL Belting+3

Each of these certifications requires rigorous testing and compliance with specific safety and performance standards. ICL Belting

Estimated Timelines and Degree of Difficulty

The approval process for each country varies in complexity and duration:Volza+2ICL Belting+2MarketScreener+2

United States (MSHA): The MSHA approval process is notably stringent, involving detailed documentation, rigorous testing, and compliance with federal regulations. The timeline can range from 6 to 12 months, depending on the completeness of submissions and responsiveness to MSHA queries.
Canada (CSA): Achieving CSA certification involves comprehensive testing and adherence to Canadian safety standards. The process typically takes 4 to 8 months.
Australia (TestSafe): Certification through TestSafe Australia requires meeting specific fire resistance and anti-static standards, with an estimated timeline of 3 to 6 months.
South Africa (SABS): The South African Bureau of Standards mandates thorough testing, and the approval process can take approximately 4 to 7 months.
China (MT914-2008): Compliance with Chinese standards involves both documentation and product testing, usually spanning 3 to 5 months.
India (DGMS): While being a domestic process for ICL, DGMS approval still requires detailed testing and documentation, typically taking 2 to 4 months.ICL Belting+3ICL Belting+3ICL Belting+3 ICL Belting+1ICL Belting+1

These timelines are approximate and can be influenced by factors such as changes in regulations, backlog at certifying agencies, and the need for additional testing or documentation

We’re already seeing signs of the shift:

Record export revenues in Feb and March(via eximpedia)

The top importer Rosebud is a coal miner

Company specific developments:

Domestic revenue inching up, now includes clientele from diverse industries like cement

All revenue figures are presented in Lakhs of Rupees (` in Lakhs), unless otherwise specified, to maintain consistency.

Financial Year	Domestic Revenue (` in Lakhs)	Export Revenue (` in Lakhs)	Domestic Revenue Growth (%)	Export Revenue Growth (%)	Sources
2010-2011	24,255.57	55,696.85	NA	NA1
2011-2012	26,219.37	74,915.33	8.10	34.511
2012-2013	41,891.25	78,266.74	59.77	4.472
2013-2014	45,885.40	92,714.68	9.53	18.462
2014-2015	33,271.39	67,172.69	-27.49	-27.553
2015-2016	28,337.52	49,328.29	-14.84	-26.573
2016-2017	24,759.1	32,976.4	-12.62	-33.154	(Standalone)
2017-2018	2,833.75	4,932.83	14.45	49.604	(Standalone, Values in ` in lakh)
2018-2019	3,010.95	4,654.45	6.25	-5.645	(Standalone, Values in ` in lakh)
2019-2020	1,758.49	7,268.24	-41.59	56.166	(Standalone, Values in ` in lakh)
2020-2021	2,565.03	13,987.64	45.86	92.467	(Standalone, Values in ` in lakh)
2021-2022	3,195.12	16,860.30	24.56	20.547	(Standalone, Values in ` in lakh)
2022-2023	34.7 * 100 = 3,470.00	180.3 * 100 = 18,030.00	8.60	6.948	(Consolidated, Values converted from Crs)
2023-2024	50.8 * 100 = 5,080.00	83.1 * 100 = 8,310.00	46.37	-53.919	(Consolidated, Values converted from Crs)

Business optimism picking up as seen in headcount
|Financial Year Ended|Headcount|Median Raise in Remuneration (%)|Source(s)|
| — | — | — | — |
|March 31, 2015|111|8.35% (for FY 2014-15)||
|March 31, 2017|78|7.70% (for FY 2016-17)||
|March 31, 2021|71|3.25% (for FY 2020-21)||
|March 31, 2022|75|1.73% (for FY 2021-22)||
|March 31, 2023|95|11.34% (for FY 2022-23)||
|March 31, 2024|94|6.63% (for FY 2023-24)||
Company has more than enough capacity to service upcoming demand boom
|FY | Capacity utilisation in %|
|— | —|
|2021 | 38.94|
|2022 | 43.16|
|2023 | 40.03|
|2024 | 26.6|

Now that the business prospects have been established, here comes the important part.
In every cyclical company, capital allocation is the most important barometer. Management has wisely chosen not to reinvest heavily. However, instead of returning all of the capital to shareholders, they’ve been running large treasury operations.

And…they’ve not been bad at it so far.

Here’s the interesting part though:
As of FY24,
Around 250cr in quoted investments and 111.26cr in loans to related parties(at a fair enough yield)
Ever since SEBI mandated companies to disclose companies’ acquisition of quoted instruments as and when they happen, they’ve been pretty measured in their investments. They have stepped up their purchases big time in this Feb-March dip

Exhaustive list of acquisitions of quoted instruments in FY25:

Name of Stock	Amount Spent (Crore)	Shares Acquired	Date of Acquisition
V.I.P. Industries Limited	5.29	1,13,632	July 10, 2024
Bajaj Finance Limited	2.59	4,000	August 14, 2024
IIFL Finance Ltd	4.28	85,390	September 25, 2024
IIFL Finance Ltd	5.35	1,08,800	September 26, 2024
Sterling and Wilson Renewable Energy Ltd.	6.89	96,996	September 20, 2024
Sterling and Wilson Renewable Energy Ltd.	2.88	41,860	September 23, 2024
Syngene International Ltd.	5.00	56,640	October 24, 2024
Globus Spirits Ltd.	9.13	1,10,715	November 18, 2024
Aptech Ltd.	2.60	1,41,573	December 09, 2024
Sterling and Wilson Renewable Energy Ltd.	5.84	1,38,856	January 14, 2025
Care Ratings Limited.	3.1414	25,329	January 14, 2025
Thangamayil Jewellery Ltd.	4.3759	25,334	January 21, 2025
Balrampur Chini Mills Ltd.	1.97	41,038	January 24, 2025
Multi Commodity Exchange of India Ltd.	14.744	26,363	January 27, 2025
Blue Jet Healthcare Limited.	3.4833	48,247	January 31, 2025
Gulshan Polyols Limited.	1.890	94,041	February 01, 2025
Agro Tech Foods Limited.	3.0702	41,271	February 11, 2025
IIFL Finance Ltd	11.1041	3,33,289	February 13, 2025
Can Fin Homes Ltd.	4.994	86,484	February 25, 2025
Sterling and Wilson Renewable Energy Ltd.	3.498	1,38,856	February 27, 2025
Ganesha Ecosphere Ltd.	2.996	22,782	February 28, 2025
La Opala RG Ltd.	2.654	1,29,685	March 13, 2025
Central Depository Services (India) Ltd.	2.946	27,228	March 13, 2025
TD Power Systems Limited.	1.996	48,213	March 26, 2025
Gulshan Polyols Limited.	6.118	3,44,668	March 27, 2025
Ganesha Ecosphere Ltd.	1.7840	11,466	March 28, 2025

115 cr!!! of shares acquired this FY. If this is all from the debt part of their portfolio(hopefuly not), this is probably a mildly uncomfortable(to some) debt-equity mix in the investment portfolio. Will be interesting to see their balance sheet in FY25.

Noted investments of the promoter Elpro International include PNB metlife and paper boat.

Promoters seem to intend to maximise value at the ICL level:

bought back 6.1% of TSO between FY22 to FY24
dividend yield has been meaningful since FY21
Consistent investor presentations since FY21(unlike in Elpro)
MD remuneration structure is aligned with SH: 25LPM + 1% of profits
Insider buying recently(no wonder they did after the export numbers in Feb and March)

The MD’s son is a non-executive director. However, he does not possess the industry expertise that the octagenarian MD does. Not sure about the strength of management below the MD but I trust an aligned promoter to take care of it.

The global PVC conveyor belt market is valued at approximately USD 10.7 billion as of 2023.

Given the step change in demand due to policy changes, I will refrain from projecting financials since my projections might look outrageous and deluded.

12% book value growth on their quoted investments+related party debt in 3 years implies that their treasury operations would be worth the current market cap in 3 years.

Invested; pushback invited

(Assisted by AI. Apologise if the numbers are wonky in some places. The broad strokes are valid even if there’s a small error somewhere)

Jigar_Mehta · May 15, 2025, 5:47am

bad results by international conveyors ltd,company has posted loss ,stock not doing anything from 4 years ,its a wealth destroyer

Pratik_Patel9 · May 18, 2025, 9:35pm

Very good analysis with a good details and high enough view point. What is the reason for such high other income?

From credit report I understand it might be from investing operations. If that is so the primary business of company has not been profitable for last 2 years.
"The improvement in PAT is attributable to booking of non-operating
income of around Rs 65 crore which majorly pertains to profit arising from fair valuation of o/s equity investments of Rs 48.09
crore, profit on sale of investments of Rs 5.37 crore and interest income of Rs 9.92 crore on unsecured loans extended to group
companies. " (for 2024)

Why Net PAT is Less Than Other Income

In FY 2023-24, the company’s operating profit (₹19.60 crore) was not enough to cover interest (₹9.32 crore) and tax (₹14.50 crore), leading to a shortfall. This made net PAT (₹62.13 crore) less than other income (₹66.35 crore), as other income boosted profits but couldn’t fully offset the gap.

Primary Business Performance

Despite the gap, the primary business generated positive operating profits in both years. In FY 2022-23, it was around ₹31 crore, and in FY 2023-24, ₹19.60 crore, indicating profitability, though weaker in the latter year.

Another counter point is Canada slowdown. While US-India trade deal would be good for the company, Canadian economy might go down.

One more thing about capacity utilization, the table you shared can also be interpreted as lower demand realization and reduction in scale as described in credit report

Bull_Miller · May 19, 2025, 7:01am

Hi,

Yes, the other income is from the treasury operations but the primary business has been profitable for many years now.

What you’re citing from other sources shows the lack of growth in core profitability; not lack of profitability.
I pointed out to the capacity utilisation being lower to imply that there’s room for plenty of growth without requiring to put up additional capacity(i.e. operating leverage).
Both true due to the sectoral/economic downturn.

Interest and tax expenses should be considered for the whole business; not just core. Investing operations have interest and tax expenses too.

Canada’s potash production is projected to continue to do alright like it was before and in fact was the reason to hold up the company’s topline over the last few years while coal demand went down(from investor presentations).

The bull case isn’t contingent on the trade deal; it is on revival of Coal due to strong policy support/ AI led energy demands. The US has already put tremendous(please read this word in Trump’s voice) weight on coal.

Any slowdown in Canada wouldn’t materially offset this massive upswing in demand from coal.

The tariffs/trade deals are cherries on the cake.

Besides, I wanted to reserve my thoughts on Q4 till the investor presentation is out but for now:

Core operations see triple digit growth in revenue and profits.
Investing operations have done well: segmental assets-liabilities up nicely outperforming the market(P&L shows realised losses which is good/ok. Trim the weeds plus interest costs have to be paid till you hold the pf)
the only major fear I had with the company has been allayed - THEY’VE NOT LOST THEIR MIND TO FOMO . Asset allocation is still on their mind: Debt in their portfolio up from 112cr to 125cr

image849×826 132 KB
Exports continue to be on fire for April(triple digit growth) showing that it is not a one-off frontloading by the US importers anticipating the tariffs

image783×169 13.3 KB

Overall, my thesis has strengthened. I continue to be invested

Bull_Miller · June 11, 2025, 6:22am

I joked around with a friend during the results season that they avoided putting up investor presentation for the quarter so that they can buy more.

They just bought on Monday

Bull_Miller · June 13, 2025, 3:08pm

Investor presentation is out but with very scant incremental information about the future prospects/market dynamics.

However, another day of insider buying! 0.11% as of now

Edit:

0.27% bought till last Friday

Investment of 40cr in JSW One(valued at a billion dollars)

kautuk · June 21, 2025, 10:47am

HI @Bull_Miller
I too am interested in this company and read by and large your thesis. I had some questions if you are kind enough to provide your views on:

What are your views on the related party transactions?
Since the past 2 years I guess, the industry was at a cylical downturn. So is the worst behind us as far as coal and potash is concerned?
Do you know the reason why the company ventured into the treasury business in the first place?

Disc: Tracking, Not invested

Bull_Miller · June 21, 2025, 11:40am

Not ideal but fine considering the context . Decent yield. No writeoffs. In cases like these(refer Hinduja Global Solutions not so long ago), the primary concern is whether the promoters want the maximization of shareholder value in this entity. I think they do due to reasons outlined above.

That’s the play/hope. I think that the odds offered by the market are great that’s why I took the bet. I do not/cannot determine with confidence as to whether the worst is actually behind

Lack of investment opportunities in the core business is my best guess. I do not mind this at all in this particular context since the business is deeply cyclical and the promoters have been “investing” in Elpro as well as their private companies for quite some time.

kautuk · June 21, 2025, 11:55am

Thanks.
Also the company claims to be the second largest player in the world in its “niche” segment. I was reading their CARE ratings and report and they reported that the company had “modest operations”.

If I am not wrong “Fenner” of the Micheline Group is the only competitor they have named so far. Have you figured out any more? The competitor list is pretty hard to decipher since the business is niche.

SITARA · June 22, 2025, 8:47am

avithegre8 · June 23, 2025, 12:40pm

Was curious to understand your valuation frame here. My back of envelope calculations didnt point to anything exciting. Based on 25-30% capac utilization in FY 24/25, they could do a topline of about ~500 cr with existing Block at theoretical full utilisation. At 15% OPM- that should yield about ~75 cr profits. At 15x exit core business may be valued at 1000 cr, 2000 cr at 30x PE. Add financial investment of about 500 cr. Thats between 1500 - 2500 cr in exit valuation, or 3-5x from here. Hence 2 questions- answers to these would be helpful-

With tailwinds, how soon from now can company do 3-4x sales/ 100% capac utilisation
How did company manage to do about 1400 cr sales (10x of current levels) in FY 14- Was the gross block much higher? What happened to those machinery- have they been fully depreciated but still remain in use? Screener seems to indicate the net block was roughly 2x of current levels back in 2014

Bull_Miller · June 23, 2025, 2:02pm

Hi, may I know why the assumption is 15% OPM?

Per screener, In FY17, wind turbines’ gross asset value dropped from 26.71cr to 4.66cr. Similarly, a significant drop is seen in the plant machinery as well. But the installed capacity hasn’t decreased. So perhaps a devaluation of these assets.
FY16:

FY24:

“Excess of 1 million meters per annum” in FY15(no info in FY16) vs 1.125 million m in FY24

I’m sorry I cannot provide you with a confident estimate + I don’t feel the need to at this valuation. It depends on the management execution so it’s gonna have to be a “don’t predict; react” approach till valuation reaches uncomfortable levels for me.