Company won new order of 2752 cr!
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@rankamoksh - can you share how did you get this doc ? I understand the source is Nuvama Alternative research but from where to get it?
Sir I didnât understand what is this showing?
@sanni_kumar promoters generally have a lock in after IPO, post lock in expiry the are allowed to sell their shares.
@prabal_jain This was forwarded by a friend, I think you can find this on twitter.
Although it has been regularly sharing updates about the order wins of big figures, but i had written 2 times to investor relation regarding details about the order wins but no update received from their side. and secondly, if the future looks so gloomy why are the insiders selling.
In last few days itself it has disclosed order wins of around Rs.4,399 Cr, but yet the market isnât rewarding it. either someone knows more than us, or market is being irrational.
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Transrail Lighting | Management Interview
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Company has secured orders worth Rs 1647 crore this quarter, contributing to an overall order book of approximately Rs 15,000 crore.
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Total orders for the quarter stand at Rs 4000 crore, with the company projecting 28-30% revenue growth for FY25.
Watch the interview
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A few things worth noting about the business is:
Just comparing it with peers such as Kalpataru, KEC, Skipper etc the trade payables is higher by about 100 days (>3 months) and also if you look at the interest costs vis a vis the borrowings on the B/S the borrowings on the B/S is about 600 Cr on that the Int cost is about 200Cr and the company is guiding the COD ~ 11-12% so this high diff in interest cost and the very much higher payable days indicates that the company is doing reverse factoring which is leading to such high interest cost on such low debt.
Also coming to the growth prospects- The kind of growth the co is guiding for is the same growth other players are reporting in this segment so that might not be a concern achieving this growth, the concern that might be is what happens to the growth beyond next 3 years? will similar kind of growth sustain post the next 3 years? I doubt so.
Discussion on Valuations: If you compare it with peers you would argue that itâs trading at a cheaper earnings multiple. But thereâs a very good reason for that I feel. See the other players mentioned above have a mix of various businesses ranging from T&D, Data Centers, Railways, Oil & Gas etc etc and some of these segments are growing at a much faster clip and although the other players like Skipper are guiding for similar growth it is quite evident that their actual growth will easily surpass their guidance and hence the premium valuations they trade at. So we canât just extend their valuations to a pure play T&D business like Transrail.
In conclusion I feel that the company is fairly priced at these valuations and any upside re-rating feels bleak.
I also doubt that the business would stay at these valuations if we donât get a clarity on the kind of growth rates beyong FYâ28-29.
Disclosure: Not Invested!
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The T&D sector is currently undergoing major tailwinds, Skipper management in their concall mentioned how theyâve barely scratched the surface and hence see a huge runway for the next 10-15 years. So growth might not just sustain but even surpass the 20% guidance that these companies are giving after three years.
Transrail operates in multiple business domains including railways, T&D, renewables and infrastructure. Rerating, while not certain, is quite possible.
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Seems undervalued compared to KEC, Kalpataru and Skipper definitely. Ashish kacholia and Madhulika Agarwal also invested in July 24 (Pre-IPO small secondary sale by promoters). Current order book is around 16130 cr. (FY25 Rev : 5308 cr). Also doing work in HVDC transmission line.(khavda-nagpur).
However main problem is too much litigations. (Read from Pg 372 of RHP). Key ones - FIR for corruption in Gompti River Projects, Show cause notice from African bank, FEMA Notice in Jan 3, Tax demand of 7.93 cr from IT dep for FY24, Tax demand from Niger etc. Also both its CFO and CS, Compliance officer resigned recently
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Is there any MOAT Transrail has? Or
Is the current valuation justified only for the Growth prospects ?
Why did Asiana Fund owned by Asian Paints Promoters reduced a lot of their stake in Transrail the past 3 months?
Is it Costly?
Given its growth prospects and opportunity size, its execution and careful selection of orders isnât it cheap even now?
Am I Missing something?
Please try to give Pros and Cons both as much as you know. Thank you.
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Capacity
Existing Post Ongoing Post future
T (MTPA) 84,000 1,73,000 1,96,000
C (Km) 24,000 40,800 49,500
Business Verticals:
a) Power transmission and distribution
b) Railway Electrification
c) Civil Construction
d) Poles & Lighting
Sale of Products /Services ~5%,
EPC Contracts ~95%
Customer wise Revenue Split - FY24
Government ~83%, Non Government ~17%
Geographical Revenue Split - FY24
Exports ~59%, Domestic ~41%
Int. = Cameroon, Kenya, Tanzania, then Mali and Niger
Order Book
Execution
Concentration Risk to Bangladesh
It has better margins compared to other EPC players
PPT
Q4FY25:
Cr Q Q QOQ (%) Q YOY (%)
R: 1,946. 1,358 43 1,392 40
E 237 180 32 169 41
EM 12.20% 13.24% 12.11%
P 127 93 36 100 27
PM 6.46% 6.82% 7.04% Comment: Excellent Results
Concall:
D: current order book is around INR14,500 crores
G: revenue by 23% to 25% , 12% to 12.25% EBITDA Margin
D: Credit cost is 11%
D: 24 months to 30 months execution for HVDC period
C:325cr+50cr, 15-18 months completed
D: Substation EPC in international
Dependence on T&D Sector: 92% of the order book is in T&D, which, while a strength, exposes the company to sector-specific risks such as policy changes or competition.
Substation Segment Underdeveloped: Substations constitute only âš1,000 crores of the âš14,500 crore order book, indicating limited scale in this high-potential segment compared to transmission lines.
T: Subcontractiong expenses Reason: starting phase of project huge amount of construction
D: construction is 30% of a normal EPC job
D: 325cr
Tower Capacity: Increase from 84,000 MT to 1,73,000 MT by June/December 2025 (Phase 1)
Conductor Capacity: Increase from 24,000 km to 40,800 km by December 2025 (Phase 1).
Project-Specific Timelines:
HVDC Projects: 24-30 months, depending on contract terms.
Transmission Lines and Substations: Typically 18-24 months, as seen in completed projects in India (East, North-East) and Africa.
Railway Electrification and Rural Electrification: 12-24 months, based on completed projects in South and Central-East India and African countries.
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No EPC company has a moat. You have KEC/KPIL and Bajel, which are listed. They are larger firms. There are numerous unlisted companies that do state-level contracts.
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I feel, such high valuations for such business is not very justified, like itâs kinda fairly priced. At the end of the day it is an EPC play!
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Looks like good results. I couldnât find anything negative in the results. Are there any red flags, that I missed?
Q1 FY26 CONCALL UPDATES
- Company has done 12.03% EBITDA Margins in Q1 which is in line with the management guidance hand highest in the industry as well.
- Management mentioned 11.5%-12% in RHP. 12% margins will be sustainable going forward.
Order Book
- Company has total order book of 14654 Cr and also has 983 Cr L1 orders which will be converted into LOA in next in next 2 months.
- Upgrade in Credit Rating in recently this will take interest cost down. We can see impact after next 6-9 months.
Capex Plan
- 516 Cr capex cost which will be executed in next 18 months. This funded by 90 Cr from IPO and rest will be done with internal accruals and 300 odd Cr of debt.
- Company has bidded for 800 Cr already and waiting for results. And will be going to bid for 25000 Cr of tenders in next 2-3 months and out of which 8-10% winning rate.
- Bangladesh work is going as per plans and we will left with 5-6% as of total order book from Bangladesh by the end of this financial year and will complete it by the middle of next year. Company is not taking any new orders from Bangladesh.
- Company is executing all the orders on time properly. And stay with the revenue guidance of 22-25% same as earlier.
- Company is working as per execution timeline and as per current execution scenario company will easily achieve higher than what they have guided.
- Company entered into new segment i.e. Solar EPC mostly Overseas because of good margins are there in Overseas markets.
- In domestic market Company has 70-80% Government Clients and rest were private clients and in International Markets company is doing business through only Multilateral Finance Agency.
- Company is working on 95% Capacity utilisation.
- Last year company has receivables of 1300 odd Cr, at present receivables were 1500 odd Cr, Bangladesh exposure is around 300-400 Cr.
- Company doesnât face any challenges in Employee sourcing and managing well.
- Company only enters into civil and railway contract if they get good margins and select the projects with taking proper planning.
- Company has debt of 600 debt this will increase but in a managed way.
- Company has already factored Monsoon; there will be 15-20 days delay in the affected areas but rest will be on time.
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Transrail wins âš837 cr. T&D orders pushing FY26 order inflows beyond âš3,157 cr.
âš837 cr. T&D orders boosts FY26 inflows to âš3,157 cr., reflecting 57% YoY growth in a robust and diversified orders.
Domestic T&D order from a very large & prestigious business conglomerate
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Red flags like?
I was reading it from initial threads, to see what people think about this business, and couldnât find much of negative views for it.
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