Pennar Industries Limited

Insights of Q2 Concall,

  1. Aspirational Margin 5% : one point to note is that the revenue was flat or perhaps fractionally lower than the corresponding quarter last year. Now this is as per our stated intent to replace our low margin revenue with higher margin products and services. We had guided to this in the previous few quarters. Specifically, our water EPC, our solar EPC, our retail revenue, and this is well over 100 crores for the previous quarter in the previous financial year has been replaced with higher margin and sustainable revenue from our pre-engineered buildings (PEB) division, tubes division, and our process industry equipment business, and also body in white.
    Q2 PAT margin @ 2.75% (Track this margin on Q-o-Q basis)

2.Working Capital & ROCE : working capital. September 30th working capital days stood at 76 days. The annualized ROCE was at 21%, and our target ROCE for the year is 24%.
Our target working capital days is 72 days, and by the end of this year, we are confident we will achieve this target. However, working capital days in September at 76 days is a little bit higher than what we would have ideally liked to have been at. This is because of delays and liquidating some of our current assets in the revenue streams that we are closing. We consider this to be a short-term issue, and we will fully liquidate our current assets in the revenue streams that we are closing by the end of the year, and this will bring our working capital back to our target levels.

  1. Capacity / Assets Turnover Ratio: 8X of CapEx
    Aditya Sen: Sir, what would be the revenue potential of the CAPEX that we are going to commission by the end of this year?
    Aditya Rao : We typically aim to have an asset flip of eight on an annualized basis on the CAPEX that we spend. So, the revenue to asset flip is about eight. That’s what we are adding. And the vast majority of our CAPEX is at that level.

Any idea on why Pennar commands lowest PBV amongst its peers?

Historically … they have been in business with say 1.50% and they hit their margin in last Quarter they are reaching. 2.75%!!! Their aspirational PAT margin @ 5%

I think one of the reason is they are highly diversified business and 2nd may be because they are cyclical business.
But management seems to focusing on few products as mentioned in their concall.

“So, solar EPC is not a sector that is identified as a major growth area for us. We have strong
capabilities in that business, and we have a strong order book in that business as well, but the
businesses that we would want to grow year-over-year 5 years from now make them, build them
into multi-thousand crore businesses each of them, that would be the PEB business or hydraulics
business, PGI, tubes, engineering services, and a process equipment. And all of those have the
potential to all be multiple thousand crores, and if we focus on them, we will be able to scale.”

Pennar industries

I am very new in these forum. Posting first time. I have been studying this company from few days and wanted to update things here in these company.

  1. They are second largest pre engineered building maker in India. With a big growth opportunity in the same, management is doing a greenfield and brownfield capex. They have a US presence in the same with only 1% market capture, they have large room to grow there too.
  2. Their other three core sectors Precision tubes, Engineering services (highest margin), hydraulics, are high margin and growth products.
  3. Management is focusing on improving PAT to 4% from current 1.5% by improving product mix by increasing sales of high margin products and introducing new high margin products.

Market cap: 1845 Cr
PE: 20.8
ROCE: 13.3%
Promoter holding: 39.75%
FII holding: 4.69%

8 Manufacturing Plants
1,500+ Engineered Products


  • Pre Engineered Buildings (fastest growing business) (core)
  • Solar EPC


  1. Engineered Components Business (Core)

    1. Engineered Components Business
      1. Automotive Components, Braking and Suspension, Auto Electricals, Chassis & Body, etc.
      2. Hydraulics Cylinders
      3. Precision Sub Assembly Parts. Sheet metal components, assemblies, machined, welded & fabricated components.
      4. White good Components, Product for Rotary and compressor Shell, Tecumseh, Emerson Climate Tech India LTD, Venus Appliances.
      5. Solar Panels, Pennar Industries has set up a 2 Sqft state of the art photovoltaic solar module manufacturing facility, 250 MW Per annum
  2. Steel Products & Profiles (capacity: 240,000 MT per annum) (Core)

    a. Cold Rolled Steel Strips (CRSS)

    b. Cold Roll Formed Sections(CRFS)

    1. Electrostatic Precipitators Electrodes (ESP), electrostatic air cleaner is a particulate collection device that removes particles from a flowing gas (such as air) using the force of an induced electrostatic charge.
    2. Purlins
    3. Roofing / Cladding Sheets
    4. Decking Profiles
    5. Metal Crash Barriers
    6. Sheet Piles
    7. Automobile Products, sheet metal products for the Automobile Industry

    Clients for Steel products

    Clients for Steel products

  3. Precision Tubes (Production capacity: 60,000MT/Annum) (ERW – 5000 MT/month, CDW – 1800 MT/Month and Stainless Steel tube – 500 MT/month). (Core)

    1. ERW – 5000 MT/month
    2. CDW – 1800 MT/Month
    3. Air Pre-Heater
    4. Boiler
    5. Corten Steel
    6. Galvanized
    7. Stainless Steel Tubes – 500 MT/month
  4. Railways

    1. Railway Wagons
    2. Passenger & Metro Coaches
  5. Industrial Boilers & Heaters

    1. Turbosteam
    2. Ultrasteam
    3. Ecosteam
    4. Bi-drum
    5. Waste heat recovery boilers
    6. Thermic fluid heaters
  6. Aerospace

    1. Aircraft Engine Fixtures Assembles
    2. Long bed Machined Components
    3. Exotic Material(Hard Metals) & Components

Their clients include


You will attend next concall of the company and also read out earlier calls.They are focusing on margin improvement and Management in the same direction. From Low margin business to high margin sustainable business model.

Share pledged by Pennar Holdings Private Limited (holding 15.57%)
Total share pledged 2.8% or 15,00,000 out of 5,36,33,327
Overall 1.11% pledged of share outstanding.

Pledge value is not big. But have to look into the reason for pledge.

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@Take_The_Walk can you add news source?

ya sure.


not at all to worry about , its for working capital . they use LC instruments . company is sitting on close to 150+ Cr in cash . they can take out the pledge it in a flash


I hope so. Still need to be discussed in upcoming concall

Hot Stamping

Q3 Results are good. They achieved 10% margin which is 2017 level. From the next quarter PEB new plant will start producing from Feb 24. So, revenue growth will be there from next quarter. Re-rating expected.


Absolutely, must be attend concall and understand future outlook of the business. Net profit margin now 3.42% and aspirational NP 5%

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PEB in the US versus doing PBS in India?

It’s 15% versus 28% (Contribution margins). From an EBIT point of view, we expect going forward about 10% in India and about 15% in the US for the metal building business.

US market leader in this space : Cornerstone or Ukor. They usually do 6%-8% EBIT margins.

For Pennar :

And our engineering is all done in India for that. While we have our design teams there, most of the high manners get done in India. And there’s significant cost arbitrage based on that.

Another reason why our margin would be a little bit better than their margins would be the fact that we can also backward integrate into other metal products. So our more diverse steel buying experience also gives us an additional margin.

Lower Cost Advantage for Pennar vs Market leaders in PEB


Hydrulic Cylinder market

PEB advantages

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