Roto Pumps - Fluid Engineering Company

[Jitendrapd94]

Company consistently maintained average margin of 24% over last 4 year and as per my observation it will operate in similar type of margin ahead might be my view on margin wrong …

[Shanki_Bansal]

Highlighted above about margins…

Roto Pumps - Fluid Engineering Company

The company has incurred a cumulative phase wise capex of Rs. 75cr for downhole, mud motors and solar pumps. Some scuttlebutt indicates that ROTO has best quality pumps and hence command some brand value. At the annual meeting, management also stated that, in contrast to positive displacement pumps, which have operating margins of 20% plus, solar pumps will be a low-margin product with operating margins of 14–16%.

Guidance on sales of new product…

Roto Pumps - Fluid Engineering Company

As per recent announcement, Company has commenced commercial production of Downhole Pumps at Greater Noida. The same will be available for both domestic and international market (mainly for Middle East in view of primary usage of downhole pumps in oil and gas segment). ROTO Pumps, commercial production of downhole pumps.pdf (236.9 KB) Financials Performance of FY 2023-24 The company recorded a top- and bottom-line growth of 22% and 18%, respectively, which is somewhat less than the average of…

[jsmehra]

Not so impressive numbers this quarter.
51743def-d4cf-41ac-9a81-3eb38baa1599.pdf (1.4 MB)

[salman_khan]

depreciation and higher employee cost is hitting the profits also i think geopolitical issues are affecting companies export

[Surender]

Incase anyone joining AGM today, please update the thread with details around the below point:

[Shanki_Bansal]

New orders awarded to Roto Energy…

03f3b53b-9ab1-41c0-8c45-f7caa856223a.pdf (648.6 KB)

[harshpshah]

At this juncture, where top line is not growing nicely, pat and EPS and down, margins contracted, what could be the motive for such a generous bonus issue?

How are company and shareholders, going to be benifited by giving bonus?

Any thoughts?!

[UrsRafeek]

When company growth stagnant they give bonuses buy backs dividends..etc to keep share price floating. Many companies follow this.

[Ravi_Visvanathan]

If that is the case, it is not a good sign.

[Shanki_Bansal]

I agree with your point of view that there has been a slowdown in topline growth and margin reduction in recent years. However, if you noticed the gross profit margins of the company in FY 25 has been improved from 61% to 65% and contraction is EBIDTA margins is primarily due to higher employee cost.

The company has significantly diluted its earnings in the last few years by a stock split (Rs2 to Rs1), bonus issue (1:1), and a recent bonus issue(2:1). I don’t have any idea about the motive of such dilution.

However, the recent quarter result has shown improvement, where we can see the company is able to achieve their best EBITDA margins despite elevated employee cost.

Way forward:

Impact of Tariff: Since US imposed flat tariff of 10% on imports from all countries except China, the impact of the same is minimal on the company. Most of their competitors manufacture their products in Europe or the UK. Leading firms are based in Germany. So they’re subject to the same tariff as India, unless the U.S. administration makes an exception, which seems unlikely.

Recent Launch of new range of progressive cavity pumps: The new PE range of progressive cavity pumps designed to meet the customer expectations. Typically, traditional progressive cavity pumps are quite long and consume higher space. New PE range pumps has below advantages:

• These compact PE pumps are competitive and can directly compete with European and British pumps.
• Company has developed an MIP (Maintenance-in-Place) version. Users can replace the stator and rotor with only a few part changes, eliminating the need to dismantle the suction or supply lines.
• These type of pumps can be further customized to cater specific industries especially for wastewater treatment and biogas plant.

In FY 25-26, company will manufacture 15000 total progressive cavity pumps which includes 5000 new ‘P’ range pumps. Company has allocated a sum of Rs 10 crore for the same.

In the last 2 quarters company has won various prestigious orders in last couple of quarters. Few are listed below:

• Won order to supply 2 mining stations (biggest mining station order to date) to handle mine dewatering. Expecting 15 mining station order in next 12 months.
• Bagged significant order for supply of 60 progressive cavity pumps in Europe which will be used in wastewater treatment processes.
• Bagged significant order from UK water company for supply of 23 progressive cavity pumps for waste water treatment.
• In India:
• Secured order for 16 Pumps, including the Biomix Pump, from a leading power plant for their new biogas plant project.
• Secured largest orders for 39 Progressive Cavity Pumps from a recently launched water treatment project.

Roto has set an ambitious target to reach $100mn(Rs 850cr) topline by 2028. I expect the company will grow steadily in the next years.

Disclaimer: Above study is for educational purpose only and not a buy sell recommendation by any means. Invested from lower levels and added more recently.

[inxs_22in]

@Shanki_Bansal

The company has significantly diluted its equity in the last few years by a stock split (Rs2 to Rs1), bonus issue (1:1), and a recent bonus issue(2:1). I don’t have any idea about the motive of such dilution.

The actions you described — stock split and bonus issues — are not equity dilutions in the conventional sense. Equity dilution typically refers to a reduction in ownership percentage of existing shareholders due to the issuance of new shares to raise capital. The end result of equity dilution is decreased EPS, lower ownership percentagewise, further capital is raised. However in case of split/bonus, percentage holding remains same and no capital is raised. Example of equity dilution is Right issue, ESOPS etc.

[manidhar]

Anyone still tracking this?

Management is Ambitious in achieving 900cr revenue with 13-15% PAT margin