Management Guided for total consolidated revenues of Rs. 450-500Cr by FY-25 with 18-20% Margins easily achievable.
Also, the company will close this year with consolidated orderbook of Rs.310-320Cr and expects orders worth 150-200Cr to flow in first four months of FY 25.
Also, the management was bullish on ME Energy which can give better revenues as post consolidation Balancesheet Strength would increase which could help ME Energy bid for high value orders going forward.
Robust Orderbook
M. E. Energy orderbook- 118.5cr. (recent acquisition)
FY24 estimated closing orderbook- 330cr+
Order Enquires- 1000cr!
Management Guidance:
FY 24 revenue: 330 cr
(Reduced from earlier guidance of 400 cr due to order spillover to Q1 FY25)
FY25 revenue target remains intact. (500cr)
OPM will be around 18-20%
Capex will be in the range of 15-20cr over the period of next 18 to 24 months.
Read full Q3 concall insights at: https://twitter.com/Bornwinner_VJ/status/1770825533946790254
Management also mentioned that post 2-3 years, ME Energy will enter into waste heat recovery systems for Cement industry wherein single order size is around 250Cr+ which could again give a boost to its revenues forward.
Hence, ME Energy can play on strong balancesheet of the group and get big orders in future.
Hi,
Can any one help me to understand this announcement of company.
bc39fb90-b54b-406f-a24d-70b7268b5ab7.pdf (382.6 KB)
Its just conversion of warrants allotted earlier and not fresh buying.
The company has secured new orders worth Rs. 1,903 lakhs, primarily for rotary and paddle dryers. This brings the total order intake for the year to a substantial Rs. 17,930 lakhs.
Notes from Q1 FY 25 call
At a group level, order intake of 500 cr expected for whole year
Capex outlook
With the acquisition of additional factory unit, some of projects being executed from existing Kilburn plant likely to move there and the core Kilburn plant likely to be used for more value added projects like - manufacturing of titanium equipment to be used in defence and other customized equipment
Guidance of 500 cr revenue and 20%+ profitability on consolidated basis for FY 25
Disc: Invested from lower levels, biased
Thank you Kartik for the update. Business is doing well. There is a little upside/ no upside left as per my analysis. Currently trading at 27x forward PE.
Disclosure: Only Initiated the tracking position at lower levels. One of my misses despite business doing well.
Continuing further on my notes and views on the business -
Capital goods as a sector continues to have tailwinds. Historically the sector tends to have prolonged upcycles and down cycle. The cycle bottomed out in 2019-20, I think we easily have 3-4 years, before signs of a peak start emerging.
Donât quite agree on this.
The company enjoys healthy cash on the books, has a manageable debt position, swelling order book and led by experienced management team. Base business / standalone entity has grown its revenue at CAGR of 40%+ in last 3 years. The order book has jumped by 51% from 212 cr to 324 cr. Enquiry pipeline has grown more than 2x YoY.
The management has a judicious and prudent approach when it comes to inorganic growth. The current factory unit with an asset turns of ~ 5x being a case in point. They believe in completing one acquisition at a time, stabilizing that business, and then pursuing the next one; rather than pursuing multiple acquisitions in a short span. Considering the healthy cash on books, wonât be surprised if they come up with another acquisition announcement towards the end of this FY / early next FY.
Synergies from the ME acquisition will start kicking in this FY; and we should see better margins too in coming quarters, aided by economies of scale and a better product mix. (Q1 FY 25 revenue for M.E was at 21 cr vs 5 cr YoY). Expecting M.E. to contribute approx. 65-75 cr in this FY. And around ~100 cr in FY26.
The newly acquired plant should start contributing to topline in Q4 (post completion of process by Q3). Going by the current run rate, expecting the consol FY 26 revenue to be around 730-750 cr (530~540 + 110 + 100).
Disc: Invested, biased
Hi Kartik, agree with your inputs. Missed reading Q1 Concall transcript before i posted my analysis. Thanks
Your prophecy came true. Another acquisition announced yesterday for 120 odd crores.
can you please share the source of the document?
New Acquisition-
https://www.bseindia.com/xml-data/corpfiling/AttachLive/9be99f42-21ef-44d4-b7bd-fd0b5e80b434.pdf
300 cr raise thorugh warrants at a price of 425 for current and future acquisitions, debt repayment, expanding operations and future expansion.
Major 200cr out of 300cr is by promoter group, 20crs by shareholders of Monga
Strayfield Private Limited and rest 75cr by non promoters.
Very well poised to achieve 500cr revenue this year and also hints on companyâs future acquisitions to increase synergies and grab group orders.
In the concall, company has guided for 100cr revenue of ME energy in FY25 which it acquired last year and had a revenue of 30cr.
So clearly the company enhances its possiblities of converting its enquiry pipeline (currently 2000cr) into orders by such acquisitions. Management also states that they do not proceed with another acquisition till they finish one. Management has walked the talk for the last 4-5 quarters.
Interesting thing is promoters infusing money into the company even after a big surge in stock price in last 1.5yrs.
press release for acquisition.pdf (320.0 KB)
Kilburn warrants disclosure.pdf (381.4 KB)
Disclaimer : invested from lower levels.
Naive question: whenever thereâs issuing of warrants or QIP, is there equity dilution? I would have preferred if they delivered a quarter or two of results with ME energy. After that, the Ambernath factory and now this Monga family - it makes for a heady ride but getting synergies at such breakneck speed isnât easy at all.
The Russian carbon black supply shortage has resulted in companies like PCBL benefitting, and their orders of rotary dryers are benefitting Kilburn. Weâve seen chemical companies getting stuck in heavy capex at the top of the cycle - hope Kilburn management knows what they are doing and not just blindly extrapolating the past and present into the future.
Yes, Kilburn equity was diluted a lot (~17-18% if I remember right, maybe off a bit), esp in FY23-24 for various fund-raising & ME acq.
For my query, Kilburn management did assure thereâll be no more equity dilution, but with this new binge thereâll be more dilution but not as bad as last FY. Interesting to note, promoters are getting warrants and not direct equity, checking details how these warrant payments are structured over years and if warrant holder can decide not to exercise in future.
While their profits are rising, we can see EPS isnât rising proportionately as denominator (share count) is also increasing.
True. From what I read, the promoters have the right to exercise the warrants during a period of 18 months. I may be wrong. I did not come across the info whether they have the right to not exercise warrants. I think that would be very unfair if they had that right- if the stock price is much lower, they wouldnât exercise and if itâs higher, they would. I think in previous round of warrants, they exercised at a cost of 70 rs over the face value while the stock price was 300 odd.
Came across this on Kilburn:
So people should exercise caution.
Definitely caution should be exercised for this reason and also for the valuations itâs trading at.
But sometimes valuation can sustain if the growth and profitability sustain. Also the management has guided about part of this quarterâs revenue to come in the next one or two quarters because their execution was delayed.
Hence there can be couple of lumpy quarters to follow.
When in doubt, better to play such businesses at expensive valuations with technicals.
