Why are the manufacturers not the leasers themselves? Does that complicate the biz model?
It’s like asking why are Aircraft Manufacturers not leasers too, different businesses different requirements.
Leasing is capital intensive, cyclical and not very efficient use of capital.
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Those are essentially two different business models. If you manufacture the containers then your goal is to make as many as possible while reducing cost and sell fast. On the other hand leasing involves buying containers in bulk and deploy them while optimising cost. These are very complex logistics and need huge capital.
Hence, leasers are the customers of manufacturers.
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In my view, the main strength of Kalyani Cast Tech is its promoter, Mr Naresh Kumar. He is a mechanical engineer with a Master’s degree from the IIT Madras, has more than five patents in his name, and served for 17 years as a Class-A officer in Indian Railways. This is a strong background.
I believe the company is not focused on standard commodity containers but on more specialised products where technical knowledge and railway experience are important—for example, double-stack compatible containers designed for Indian railway.
If this is the case, then the real moat of the business may be the promoter himself.
invested -Biased
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This is about to change.
I see company doing 1000cr sales from ISO segment alone.
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Promoter pedigree is a moat but a risk as well. Too much dependence on one guy. This is a problem they would need to solve going forward.
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In most of the microcaps, bet is on business and one person as the management…
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I hope this happens but it depends on how the govt incentive materializes. Unless a significant chunk of the budget is given to existing players this is still on the fence I’d say.
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I wanted to bring in ROE generated by various players in the value chain:
- Leasers - Last 10 year average ROE of Triton is ~17% and Textainer is 7.8%
- Shipping lines - 10 year average of Maersk 13-14%. MSC is private, hence not available.
- Raw material suppliers - I believe these Corten steel producers must be producing other steel products as well. 10 year average of JSW Steel is 14%.
- Manufacturers - CIMC 8%, Singamas 3.2% and Dong Fong 5.5%.
It seems that manufacturers fair the worst in generating Returns on Equity.
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Please don’t look at RoE of chinese manufacturing companies.
They are not optimizing for return on capital.
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That’s an interesting point. Could you elaborate on the basis for that conclusion?
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Yes, of course.
Given a total CMAS outlay of 10,000 crore over 5 years, assuming 3,000 crore is allocated for CAPEX reimbursement and 7,000 crore for VGF.
This implies an annual VGF outlay of 7,000 crore ÷ 5 = 1,400 crore.
With an expected VGF of approximately $700 per container, i.e., around ₹63,000 per container, the total supported volume for the industry would be :
1,400 crore ÷ ₹63,000 ≈ 2,20,000 containers annually.
Assuming Kalyani captures a 20% market share, this translates to roughly 45,000 ISO containers per year, excluding specialized containers.
At current Indian price of ₹2,20,000 per 20-ft ISO container, the estimated revenue for the company would be :
₹2,20,000 × 45,000 = ~1,000 crore annually.
Important Point
I don’t expect the 20% market share to sustain over the long term, it will likely decline to single digits as more players enter the space. However, this is offset by the scale-up in the overall market.
The government is targeting an annual capacity of 10,00,000 ISO containers, while my calculations are based on just ~2,20,000 containers. As the market expands, any decline in market share should be compensated by the increase in total volume, thereby keeping the 1,000 crore revenue estimate broadly intact.
Additionally, I see significant potential in the wagon segment. Realizations per wagon is high, and the company is offering a differentiated, specialized solution.
Indian Railways will soon float a mega-tender to procure 2,00,000 wagons (in the second phase of National Rail Plan), over a period of next 5 years, so company will naturally get some allocation, not to forget a large part of wagon customers are private container train operators.
With a Phase-1 capacity of 2,400 wagons per year, the revenue potential works out to :
2,400 × ₹40,00,000 = ~ 1,000 crore.
On specialized containers, it’s anyone’s guess, but assuming 500 crore should be reasonably doable in few years.
So, the total medium-term (3-5 years) revenue potential is approximately 2,500 crore (± 20%).
This is a rough calculation and is subject to change. We do not yet have the fine print of the container policy, so this is merely an exercise to estimate potential numbers, which are very likely to evolve going forward.
A lot of this depends on the company’s ability to execute, raise the necessary working capital, and the stability of government policy.
A better way to view this would be to treat this number as an absolute upper bound.
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Good article on the current state and future plans for the container industry in India:
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BOOOOOOM !!!
CONTAINER CAPACITY IS BEING EXPANDED TO 1,25,000 TEU’S PER ANNUM
CORNER-CASTING-SET CAPACITY TO 500 SETS / DAY → 1 SET PER CONTAINER
LINK → https://x.com/nkumar3010/status/2028860524902174794?s=20
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Current container manufacturing capacity is 6000 TEU. They were adding another 10,000 TEU. Interesting to see how this 16,000 TEU moves to 1.25 lac TEU. This means an average daily capacity of 342 containers. This now leads to the need of corner castings.
In terms of corner castings, Naresh ji mentions 500 sets / day. When he mention set, does he mean 8 pieces in every set? Does that mean a capacity of 500*8 corner castings? Every container require 8 castings.
On the balance sheet side, H1FY26 total BS size stands at 82 crs. The capex for Gujarat facility is ~175-200 crs for wagons / container manufacturing, rail track, land and other related infrastructure. Why this capex is not visible in the balance sheet?
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1 set means a “set" which is for 1 container, i.e. 8 castings.
It’s a phased capex. The details of which management can tell better.
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