Pennar Industries Ltd Q4 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mayur Liman - Profitmart Securities Pvt. Ltd. - Analyst : Thank you for the opportunity and congratulations on good set of numbers, sir.

Question: Mayur Liman - Profitmart Securities Pvt. Ltd. - Analyst : Okay, sir. No problem. Now it is good?

Question: Mayur Liman - Profitmart Securities Pvt. Ltd. - Analyst : Okay. I just want to guidance on what are the key steps we are taking towards the railway and tube to scale up the revenue.

Question: Mayur Liman - Profitmart Securities Pvt. Ltd. - Analyst : Okay, sir. And second question on the Ascent business. What kind of movement do you see in the Ascent Buildings business? And which things give you the confidence about the future performance about the Ascent Buildings?

Question: Mayur Liman - Profitmart Securities Pvt. Ltd. - Analyst : Yes, sir. And the last question, how do you see the FY24 in terms of the order book size and the domestic and the international business wise -- specifically Europe side?

Question: Mayur Liman - Profitmart Securities Pvt. Ltd. - Analyst : Okay. Thank you so much. That's all from my side.

Question: Venkata Subramanian Raman - Organic Capital - Analyst : Hi, Aditya, and team. Thanks for taking my question and congratulations on running a very tight ship under challenging circumstances. A couple of questions from my side. A, in the year that's gone by, what are the areas that have kind of made you happy and what are the areas where you could have potentially improved? -- A. Two, there is a fair amount of excitement in the railway's addressable area in the domestic markets. You, having gone through what you have, are quite circumspect there. So you wanted to concentrate in the railway asset on some other export opportunities or some more value-added opportunities, et cetera. Where are we with respect to that? And thirdly, we had a small tuck-in in Europe for -- which was one of our customers who we thought could open up some doors on the aviation side. So if you can just give some update on that. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 24, 2023 / 6:00AM, PENN.NS - Q4 2023 Pennar Industries Ltd Earnings Call

Question: Venkata Subramanian Raman - Organic Capital - Analyst : Understood. And lastly, Aditya, on the engineering services side, which is the software support that we provide out of Hyderabad and Vijayawada, how are the numbers scaling up there? What kind of additions have we seen? That looks like a fairly large opportunity. What kind of focus do we have there? And what are the challenges there?

Question: Venkata Subramanian Raman - Organic Capital - Analyst : Wonderful. Thanks a lot and all the best, sir.

Question: Gaurav Agarwal - Ninety One Capital - Analyst : Hello, sir. Thank you for the opportunity. Sir, if I see the difference between your consol and standalone on a quarterly basis, last quarter, the revenue was -- from the subsidiary, it was around INR156 crore, which has reduced to INR113 crore now. One thing is how much of this difference between console and standalone is relate to the engineering business sitting in the Ascent, USA?

Question: Gaurav Agarwal - Ninety One Capital - Analyst : Okay. And sir, just to get a bit more clarity, so last year, in FY23, full-year subsidiary numbers are INR600 crore revenue. So, when you say they will do much better, can it be a INR1,000 crore business in FY24?

Question: Gaurav Agarwal - Ninety One Capital - Analyst : Okay. And sir, coming to your margins, again on the subsidiary side, there is a lot of variability in margins. If I see the EBITDA margins of the subsidiary numbers, it was, let's say, 4.8% in Q2. Then it was 10.7% in Q3. Now it is 12.7%. So, now the revenues have declined, but the margins are improving. So, sometimes it doesn't add up. Even the employee expenses, they vary so much. The other expenses vary so much. So, what exactly is the nature of business in those subsidiaries?

Question: Ankur Kumar - Alpha Capital - Analyst : Hello sir, thank you for taking my question and congrats for a good set of numbers. Sir, my question is on this -- our plan to increase margin and reduce low-margin products. So what kind of profit growth can we expect for the coming year?

Question: Ankur Kumar - Alpha Capital - Analyst : And would that mean -- as in our revenue will continue to go down because in this Q4 it has gone down because we are looking at high-margin products?

Question: Ankur Kumar - Alpha Capital - Analyst : Got it, sir. And sir, on balance sheet side, our debt is increasing and also we have not been paying dividend for last couple of years. So any thoughts on those two things?

Question: Ankur Kumar - Alpha Capital - Analyst : Got it, sir. And sir, one last thing -- on this ROCE calculation, we are saying that we are at 20%. So would be great if you can put that calculation in the PPT going forward. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 24, 2023 / 6:00AM, PENN.NS - Q4 2023 Pennar Industries Ltd Earnings Call

Question: Ankur Kumar - Alpha Capital - Analyst : Thank you, sir, and all the best.

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Hi, sir. Good morning.

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Yeah, sir. I am good. Sir, most of my questions are around this PEB division. So initially, I just wanted to check with you that in the quarter, if I see your quarter-on-quarter revenue in this division, it's actually degrown and we've also seen some reduction in margin. So if you can highlight what was the reason for this.

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Sir, can you break up this number in terms of what was the Indian revenue specifically for the PEB and the margin so we can get a sense what has been the growth?

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Yeah.

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : So this number you have given for Q4 FY23 versus Q4 of FY22, right?

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Okay. Sure. And what kind of margins you do in the Indian business?

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : This 14% is only for the PEB division right? The margin?

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Sir, my next question is -- so you have shared this number that you have INR750 crore of order book for PEB. So, if you can highlight how many -- the number of customers from whom you have got this INR750 crore orders? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 24, 2023 / 6:00AM, PENN.NS - Q4 2023 Pennar Industries Ltd Earnings Call

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : If you can just share the number how much of this INR830 crore is from, say, top-five customers.

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Okay, sure. Sir, my next question is, if you can also highlight what kind of capacities you have for PEB currently? And what was your utilization in the current financial year?

Question: Darshil Pandya - Finterest Capital - Analyst : Hello, sir, good afternoon. Majority of the questions is answered. Just one question. What's the total order book across segments as of March 31? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 24, 2023 / 6:00AM, PENN.NS - Q4 2023 Pennar Industries Ltd Earnings Call

Question: Darshil Pandya - Finterest Capital - Analyst : Yeah. As of last quarter, it was INR2,500 crore as said by you.

Question: Darshil Pandya - Finterest Capital - Analyst : Yeah, absolutely. And sir, one last question that was -- on the last call you said that maybe 5% of PAT you would -- you aspire in 1 year or 1.5 year. So, what's the guidance now?

Question: Darshil Pandya - Finterest Capital - Analyst : All right, sir. Thank you so much. Much appreciated.

Question: Ankur Agarwal - Rc Wealth Solutions Pvt Ltd - Analyst : Hello?

Question: Ankur Agarwal - Rc Wealth Solutions Pvt Ltd - Analyst : (spoken in Hindi)

Question: Ankur Agarwal - Rc Wealth Solutions Pvt Ltd - Analyst : (Spoken in Hindi)

Question: Ankur Agarwal - Rc Wealth Solutions Pvt Ltd - Analyst : (Spoken in Hindi)

Question: Ankur Agarwal - Rc Wealth Solutions Pvt Ltd - Analyst : Okay. That's all from my side. Thank you.

Question: Vignesh Iyer - Sequent Investments - Analyst : Congratulations on good set of numbers. My question is on the two orders that we received. One, if I am not wrong, on February 17 for INR850 crore and May 8 for INR680 crore. And both the orders -- the notice stated that it has to be executed within six months. So just to understand the nature of those orders, it is more on this margin-accretive orders like PEBs and BIWs? Or it has some orders related to railways and all?

Question: Vignesh Iyer - Sequent Investments - Analyst : Right. But just to understand. The blend has improved, right? We are going more margin-accretive businesses than we used to, right?

Question: Vignesh Iyer - Sequent Investments - Analyst : Okay. Thank you. And what -- another thing is we have made a PBT margin of 4.58% for quarter four. Just to understand it, we will maintain -- this is more like a base, right? Moving ahead quarter to quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 24, 2023 / 6:00AM, PENN.NS - Q4 2023 Pennar Industries Ltd Earnings Call

Question: Vignesh Iyer - Sequent Investments - Analyst : I want to understand going ahead for each quarter, it will be more or less like a base, right?

Question: Vignesh Iyer - Sequent Investments - Analyst : Yeah. Okay, sir. That's all from my side.

Question: Gaurav Sachdeva - Further Investments - Analyst : Good afternoon, sir. My question is just regarding the EBITDA margins, which is 10% in this Q4. Just I want to ask can we maintain this EBITDA margins for the whole financial year 2024?

Question: Gaurav Sachdeva - Further Investments - Analyst : Okay. And sir, in how many years do you feel we can achieve a milestone of INR4,000 crore revenue for the company?

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Thank you for the opportunity. So just continuing with my previous question. You had highlighted PEB capacity, the total capacity which is -- so I had missed that number. If you can highlight that again?

Question: Deep Gandhi - Astute Investment Management Private Limited - Analyst : Yes. The total capacity which you have in PEB division currently. I had missed that number.