Skipper Ltd., (Power and Water) a moat in making?

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108

Thanks. this was their in Q4FY18 concall too. I hope they will give clear bifurcation in next AR.

109

What I have observed is all infra EPC companies have a similar kind of financial cost structure and this is as per Ind AS as well.
While these numbers are essential as they eat a major part of the EBITDA.
However forecasting it or extrapolating one quarters number for the full year is also not feasible as Most of the costs are often impacted by timing of tenders.

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110

In the recent con-call they have mentioned that finance cost as a % of sales on full year basis, they try to keep it down as compared to the previous year. So one quarter interest movement is not something to focus on as per them. Last year i.e FY23, it was north of 5%. This year they are targeting b/w 4% to 4.5%

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Here are the key trackables as per my analysis of the recent con-calls:-

  • The company expects margin improvement in the polymer business as volumes increase.
  • The company is positive about its future outlook and expects a revenue growth of over 25% CAGR for the next three years.
  • The company aims to reduce debt and improve its margin profile.
  • The company’s capex plan for the year is Rs.75 Crores. (As per Aug-23 concall)
  • The order book stood at Rs.5372 Crores, the highest ever in the company’s history. (As at Aug-23)
  • The company secured new orders worth Rs.1215 Crores in Q1 FY2024, registering a year-on-year growth of 200%.
  • Engineering segment guidance is 12% OPM and polymer segment is in double digits going ahead (As per the CNBC interview on 8th Nov 2023)
  • Finance cost as a % of sales will come down each year. That is what the management is targeting. Last year in Sept 2022 it was north of 5%, this year it is 4.5%. hence the debt level should be looked at from this lens.
  • Order book is executable for 15 to 24 months

Growth Drivers:-

  1. The domestic T&D environment is showing signs of a strong rebound.
  2. Skipper is leveraging the China plus one trend and witnessing a surge in global enquiries.
    3.The company expects good traction in the international transmission line market.

Disc: Invested

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