Company Background
Kalyani Cast-Tech Limited was incorporated on 2012. The company commenced its operations with a casting business, commissioning a casting unit in Rewari, Haryana. Over approximately a decade, it has significantly grown and expanded its product portfolio, manufacturing facilities and in-house design capabilities, evolving into a key player in its sector.
The company is now engaged in the manufacturing of high-quality castings and specialized cargo containers, including ISO containers, dwarf containers and coupler components. The factory is located in Dist. Rewari, Haryana. The company’s shares were listed on the Bombay Stock Exchange (SME Platform) on November, 2023.
Key Management Personnel and Board of Directors include:
- Mr. Naresh Kumar: Chairman & Managing Director (also a Promoter). He has over 32 years of experience and boasts 5+ patents.
- Mrs. Jayashree Kumar: Whole Time Director.
- Devender Kumar: Non-Executive Director.
- Kumar Sharat Chandra: Independent Director.
- Sanjeev Negi: Independent Director.
- Amit Kumar: Chief Financial Officer.
- Pankaj Kumar: Company Secretary & Compliance Officer.
The company’s promoters are Mr. Naresh Kumar, Mr. Javed Aslam, Mr. Nathmal Bangani, Ms. Kamala Kumari Jain and Ms. Muskan Bangani.
Past Performance
For the financial year ended March 31, 2024, Kalyani Cast-Tech Limited reported significant improvements:
Key Financial Performance (in INR)
| Financial Metric | FY2023 (In Cr) | FY2024 (In Cr) | Growth (%) |
|---|---|---|---|
| Revenue from Operations | ₹63.36 | ₹95.11 | 50.2% |
| EBITDA | ₹11.65 | ₹14.13 | 21% |
| Profit Before Tax (PBT) | ₹10.76 | ₹13.00 | 22% |
| Profit After Tax (PAT) | ₹8.05 | ₹9.60 | 19.3% |
| Basic & Diluted EPS | ₹16.06 | ₹16.42 | - |
The company maintains adequate internal financial controls and has not had any significant material orders passed by regulators, courts, or tribunals impacting its going concern status or operations.
Their Patents
The company’s Chairman & Managing Director, Mr. Naresh Kumar, has 5+ patents. However, the company itself has not made any application for registering trademarks as of the Red Herring Prospectus date. It is in the process of filing an application for the registration of its logo and corporate name.
New Businesses
Kalyani Cast-Tech Limited initially focused on casting and manufacturing of railway parts. It has since expanded to include the manufacturing of cargo containers. This expansion has contributed to significant growth in the manufacturing of high-quality castings and specialized cargo containers.
The company is also exploring opportunities for diversification and entry into the global market. In this regard, it has engaged a consultant in Dubai to explore the possibility of setting up a container manufacturing plant in the UAE. This venture aims to leverage CEPA agreements with various countries. While plans for diversification are on the drawing board, definitive shapes will be disclosed later.
Kalyani Cast-Tech Limited also has a subsidiary, KMT Engineering Private Limited, which was incorporated in 2024, with Kalyani Cast-Tech holding a 51% stake. This subsidiary is part of the company’s diversification efforts, aiming to benefit from lower corporate tax and advantages for small-scale industries.
Future Ahead (Capex Plans in Detail)
Kalyani Cast-Tech Limited has a “very big expansion plan for the future”. The total estimated capital expenditure (capex) over the next 4 to 5 years is projected to range between ₹400 crores to ₹500 crores.
This expansion is intended to create a facility that will be “one of its kind in the world,” offering major mining solutions under one roof. Key components of this facility will include a rail terminal for loading and unloading containers and other cargo and a wagon factory for the supply of new generation wagons and containers. The company anticipates this new facility will be operational within the next 4-5 years.
Regarding the funding of this ambitious capex plan:
- It will be financed through a combination of internal generation, equity, debts and potentially through Foreign Direct Investment (FDI) mode.
- As of June 10, 2025, the company has already purchased approximately 144 acres of land for this expansion. They have also placed orders and paid advances for almost 80% of the machinery required for wagon manufacturing, without taking any debt yet.
- For the railway wagon component, the plan requires a railway line inside the factory, at least 800 meters long. An in-principal approval for this plan has been received from Western Railways and the detailed project report is currently submitted for approval, expected within another month.
- The net proceeds from the Initial Public Offering (IPO) are primarily proposed to be used for working capital requirements, up to ₹2,375.00 Lakh and for general corporate purposes, which will not exceed 25% of the amount raised through the issue. The entire net fresh issue proceeds are slated for deployment in the Financial Year 2023-24.
- The company has not raised any bridge loans to be repaid from the net proceeds and may use overdraft or cash credit facilities to finance additional working capital needs until the Issue is completed.
From an operational perspective, the company’s current plant utilization is around 70% to 75%. Management is confident about achieving 40%-50% top-line growth for the current financial year (FY25) and expects a 30%-35% growth to continue for another 4-5 years. This growth projection is based purely on domestic demand and does not include potential contributions from the planned Dubai plant, which would be an “additional bonus” if it materializes. The company has a current order book of INR 110 crores, which they expect to execute by October. The management states that their strategy involves innovation not only in products but also in customer engagement and payment terms, which attracts customers. There is no plan for a dividend or buyback at this point, as the company is in expansion mode and requires capital.
Long-term Revenue Potential from Capex:
- The total estimated capital expenditure (capex) over the next 4 to 5 years is projected to range between ₹400 crores to ₹500 crores.
- The management indicated that the revenue potential of this capex could be achieved by multiplying the capex by 10, implying a potential of ₹4,000 crores to ₹5,000 crores in revenue once the new facility is fully operational and ramped up.
- The planned wagon manufacturing unit alone is designed for an annual capacity of approximately 8,000 units, which at an estimated cost of ₹40 lakhs per wagon, translates to a potential revenue of approximately ₹3,200 crores from this segment alone. However, the ramp-up of this capacity will be gradual.
In summary, Kalyani Cast-Tech Limited anticipates strong revenue growth of 30%-35% annually for the next four to five years following FY25, with a quantum jump expected from FY26-27 due to significant capacity expansions. The company targets maintaining PAT margins between 9% and 12%. This growth is projected primarily from domestic demand, with international expansion considered an additional opportunity.
Government Initiatives Supporting Rail and Logistics Sector:
- Increased Freight Share for Indian Railways: Indian Railways aims to substantially increase its share of total freight transportation from the current 17-23% to 45% within the next 5-6 years [As per conversation history, not explicitly in new sources, but implied by efforts to increase commodity basket and efficiency]. This ambitious target necessitates a significant increase in wagon and container capacity.
- PM-Gati Shakti Cargo Terminals (GCT) Policy: Launched on December 15, 2021, this policy aims to boost industry investment in developing additional terminals for handling rail cargo. These terminals can be constructed on either Railway or non-Railway land and will all be commissioned as GCTs.
- Schemes for Private Investment in Rolling Stock: Indian Railways has introduced various schemes to encourage private sector participation in procuring wagons and rakes for freight traffic, including:
- Wagon Leasing Scheme (WLS) : Promotes public-private partnerships for leasing railway wagons.
- Automobiles Freight Train Operator Scheme (AFTO) : Facilitates private parties in operating special-purpose rakes for transporting automobiles.
- Liberalized Special Freight Train Operators Scheme (LSFTO) : Introduced in 2020 to boost railway transportation of non-conventional cargo.
- General Purpose Wagon Investment Scheme (GPWIS) : Allows entities to invest in general-purpose wagons for diverse commodities.
Benefits to Kalyani Cast-Tech from Government Initiatives during Capex:
- Gati Shakti Cargo Terminal Development: Kalyani Cast-Tech plans to set up a Gati Shakti Cargo Terminal as part of its major expansion plan. This directly aligns with the government’s policy to encourage such multimodal terminals.
- Wagon Manufacturing Unit Support: The company’s vision to become the “biggest wagon manufacturer in India” is bolstered by the growing demand for freight wagons driven by Indian Railways’ expansion and increased private participation.
- Strategic Alignment and Recognition: The company’s innovative efforts in designing and developing special containers to reduce unit cost of transportation are aligned with the government’s focus on reducing logistics costs. Their plant was visited by the Minister for Railways, Mr. Ashwini Vaishnaw, along with 150 railway officers, to appreciate their innovative ideas. The company positions itself as a “true ambassador of Make in India initiative” and contributes to “import substitution”.
- Domestic Market Advantage: Management notes that import of containers for domestic requirements has been negligible since 2021. This situation benefits domestic manufacturers like Kalyani Cast-Tech, allowing them to capture a larger share of the growing Indian market.
- Government Orders for Credentials: The company has taken government orders on a tender basis to establish its credentials in the public sector, even if these orders initially had slightly lower margins. This helps build a track record for future government-related business.
Risks Involved
Investing in Kalyani Cast-Tech Limited carries several risks that prospective investors should consider:
- Past Default : The company had a past default in payment of interest and repayment of a loan to Allahabad Bank during FY2019 due to a miscommunication. Although promptly cleared, any future defaults could adversely affect the company(As per RHP).
- Creditor Information : The company is still in the process of compiling information regarding total outstanding dues to MSME creditors. An inability to accurately forecast these amounts could adversely affect business operations and cash flows.
- Future Funding Requirements : The company’s future growth plans may require additional capital or loans and the terms of such funding could be prejudicial to existing shareholders.
- Risks of New Ventures : Any future acquisitions, joint ventures, partnerships, or strategic alliances could fail to achieve anticipated benefits, lead to unanticipated liabilities and generally harm the business.
- External Factors : The company is exposed to economic uncertainty, market fluctuations, changes in government regulations and natural calamities, which can influence market conditions and business performance.
- Competition : The company faces competition from both Indian and international manufacturing companies, which is expected to intensify with new entrants and existing competitors expanding operations. This may impact financial condition and operations.
My conclusion
- Kalyani Cast-Tech has established a commendable track record over the years, demonstrating consistent performance and reliability in its operations.
- The management adopts a conservative approach when providing guidance, which often results in cautious projections; however, there is a general expectation that the company will meet or exceed its set targets based on current performance indicators.
- Kalyani Cast-Tech’s portfolio includes unique businesses that hold patents, creating a substantial economic moat that provides a competitive advantage despite intense rivalry within the wagon industry. This patent protection helps safeguard market share and profitability against competitors.
- The promoter’s extensive experience in railway infrastructure-related businesses adds strategic value, leveraging industry knowledge and networks to support growth and operational efficiency.
- Currently, the stock is trading at Rs 516, with a market capitalization of approximately Rs 370 crore. It is valued at a price-to-earnings multiple of 26, which suggests a reasonable valuation given its earnings potential and growth prospects. The company maintains an almost zero debt profile, further enhancing its financial stability and attractiveness to investors.
- The capex will be financed through a combination of internal generation, equity, debts and potentially through Foreign Direct Investment (FDI) mode. Notably, the company has already made significant progress on its expansion without incurring debt for this specific capex. They have purchased approximately 144 acres of land and have placed orders and paid advances for almost 80% of the machinery required for wagon manufacturing, all without taking any debt yet.
- Kalyani Cast-Tech is planning a combination of organic growth (internal accruals), equity infusion (Preferential issue), potential partnerships (JVs) and judicious use of debt facilities to finance its significant capex, with a strong emphasis on maintaining financial flexibility and minimizing external borrowing for initial stages.
- Given its classification as a micro-cap stock, it presents a higher risk profile, making it suitable primarily for investors with a high-risk appetite who are willing to conduct thorough due diligence.
With thanks
Be and make
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Disclosure: Had holdings
