Steelcast Limited — Investor Meet, 17-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

Financial Performance: Steelcast Limited reported Q2 FY '25 revenue of approximately INR 75.9 crores, a 2% decline compared to the previous quarter. Despite this drop, the company's EBITDA margin improved to 27.8% from 26.8%, while EBITDA grew to INR 21.1 crores. Net profit (PAT) reached INR 13.3 crores, up from INR 12.9 crores in the preceding quarter, indicating a PAT margin growth to 17.5%. The revenue mix showed a strong export performance, contributing 52.9% of revenues, with exports growing 32% year-on-year.

Future Outlook and Growth Drivers: Management anticipates a turnaround in performance starting from Q3 FY '25, driven by an expected recovery in demand and strategic initiatives, such as diversifying customer bases and extending export markets from 15 to 18 countries. Additionally, improved localization in the mining and construction sector is expected to benefit the company significantly over the next few years.

Order Book and Operational Updates: Steelcast holds firm purchase orders worth around INR 100 crores, to be executed in the current quarter. The company reported production volume in Q2 at 2,900 tons, with sales volume estimated at around 2,532 tons.

Analyst Q&A Insights: Analysts inquired about revenue growth drivers, including potential shifts in the castings industry from China to India due to geopolitical changes and cost structures. Management expressed optimism regarding new part developments alongside a revival in demand, projecting an overall revenue increase of 20%-25% for the next quarter.

Strategic Focus Areas: Steelcast's strategic focus emphasizes capitalizing on government infrastructure investment, increasing capacity utilization from the present 45% to about 90% by FY '26, and maintaining a balanced export and domestic revenue mix.

Investor Insight: Financial stability, manageable debt levels, and a resilient margin profile position Steelcast favorably against potential market recoveries. Given the company's observed growth trajectory and operational resilience, it may be prudent for investors to consider a positive outlook towards Steelcast shares.