Pennar Industries Ltd Q4 2024 Earnings Call Transcript

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

Question: Mahesh Atal - Atal & Associates - Analyst : So first, my question is, what is our addressable market coming through railways? I see that railways order book is INR120 crores and how much of INR3,000-odd crores that we have done last year has come from railways? So first is an addressable market for us and the total revenue from railway in the last financial year. This is my first question.

Question: Mahesh Atal - Atal & Associates - Analyst : Fair enough. And coming to our debt actually in our books, so it's somewhere around INR780 crores. So as Mr. Shrikant has just communicated that we could expect because new capacities have come on stream, I think we have been needing additional working capital for that. So when he says that we could see some reduction in that by the end of this year, could you please quantify that how much it could be by the end of the year? 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 23, 2024 / 6:00AM, PENN.NS - Q4 2024 Pennar Industries Ltd Earnings Call

Question: Mahesh Atal - Atal & Associates - Analyst : No. See, it's about like once your new capacity, as they come on stream, and you'll be needing hugely for that capacity also. So do you really think that this will come down or this might be at the same levels going ahead because the revenues might also go up, right?

Question: Mahesh Atal - Atal & Associates - Analyst : Fair enough. Sir, if I remember last few quarters back, you said that there will be a multifold increase in the business that comes from the US side. So do you see kind of green shoots over there? How is the market, if you can please elaborate on that? How do you see that in the next financial year or maybe the next couple of years? Because if you can just please elaborate on that market as such.

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst : I have a couple of questions related to the new plant. I wanted to understand what kind of ballpark peak revenue number you're expecting from the new capacity coming in the first half of this year.

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst : Not the PEB.

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst : Not the PEB plant. I am talking about the boiler plant.

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst : What kind of margins do you get from that business segment?

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst : Second would be, since we're in multiple business segments and you're looking at the high growth opportunities, how does Pennar get or gain more market share? Like what are the active measures in your businesses because this is so widespread, how do you gain market share? What are the processes that you use to gain market share? 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 23, 2024 / 6:00AM, PENN.NS - Q4 2024 Pennar Industries Ltd Earnings Call

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst : So just wanted to understand your focus on any form of government businesses is reducing like railways, et cetera. So would that be beneficial to

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst :

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst :

Question: Rehan Laljee - Equitree Capital Advisors Private Limited - Analyst :

Question: Venkata Subramanian - Organic Capital - Analyst : Congratulations on walking the path on the restructuring exercise, taking out from businesses that you don't want to focus much on. Now that we have actually identified these five key focus verticals that you want to be on, can you possibly paint a larger picture in terms of what we can see in terms of growth on each one of them over the next two years to five years, that will be very useful.

Question: Venkata Subramanian - Organic Capital - Analyst : Now we all understand that giving quarterly or even yearly numbers can be a little difficult. But can you paint a picture for the next three to five years? You had a larger vision of becoming a billion-dollar company, meaning when do you think we can get there?

Question: Venkata Subramanian - Organic Capital - Analyst : That's very encouraging. On the PEB side, the current growth, are you a little disappointed where there are some challenges? And is this year panning out a little differently?

Question: Madhur Rathi - Counter Cyclical Investments - Analyst : I wanted to understand when I look on like the quarterly operating profit, they have declined from around 10% to 8%, excluding the other income. So why is this? Because we are moving towards high-margin business. So why is this the case? 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 23, 2024 / 6:00AM, PENN.NS - Q4 2024 Pennar Industries Ltd Earnings Call

Question: Madhur Rathi - Counter Cyclical Investments - Analyst : Sir, my next question would be just capital within the progress of INR218 crores, will be mostly towards our US and the Ascent PEB and the boiler plant, right?

Question: Madhur Rathi - Counter Cyclical Investments - Analyst : So sir, what is the time line to commission the US PEB building that will be doubling our capacity?

Question: Madhur Rathi - Counter Cyclical Investments - Analyst : Sir, just a last question just clarifying on the previous question. Sir, the 3.5% the finance cost as a percentage of revenue, so will this decline as the INR142-crore working capital that have been stuck in the low margin business if that's liquidated?

Question: Deepak Poddar - Sapphire Capital - Analyst : First, I just wanted to understand, you have mentioned about 5% to 7% of PBT margin and 10% which peers get in next few years, right? So do we have any time line to it? I mean, just for the medium term, what sort of time line we can look at for 7% PBT and 5% PAT margin?

Question: Deepak Poddar - Sapphire Capital - Analyst : The 5% PAT margin that we have.

Question: Deepak Poddar - Sapphire Capital - Analyst : FY25 or FY26.

Question: Deepak Poddar - Sapphire Capital - Analyst : And my second question revolves around, I mean, a few minutes back, you mentioned that our ambition is to grow on a quarter-on-quarter basis, both on the revenue front as well as on the profit growth. Now this quarter, I think we had some other income, which was one-off -- a INR16 crores kind of other income. So how should we look at it? I mean quarter on quarter, we should adjust this other income or on this reported number, we

Question: Deepak Poddar - Sapphire Capital - Analyst : And what about the profit?

Question: Deepak Poddar - Sapphire Capital - Analyst :

Question: Ashish Golechha - Growth Sphere Ventures LLP - Analyst : First of all, congratulations for fabulous numbers and walking the talk. Sir, two questions. The first question is, if you could give us clarity on the road map, which BCG is preparing for you? Where are we at the current juncture? And if you could throw some light on basically, the BCG is focusing on the strategy road map for Pennar. And other thing, if you could give us a picture of what CapEx you have lined up for current year, next year and after that because that will also help us to understand that what capacity expansion plans we have in place.

Question: Mithun Soni - MJ Investment - Analyst : Congrats on a good set of numbers. I just had a couple of questions. So the PEB business, both in India and US being one of our large businesses now, which is two out of the five, which we are going to focus. So what would be the GTM of PEB business? What is the go-to-market strategy? How do you do it in India? And obviously, US might be a little different. So can you throw some color about it?

Question: Mithun Soni - MJ Investment - Analyst : But my question was more on the marketing side. So how was the go-to market happening in the sense, which channels do you sell through, or do you directly go through contractors? So how does the sales happen on the pre-engineered building space specifically on the US?

Question: Mithun Soni - MJ Investment - Analyst : So you have substantial manpower deployed in US for this? How do you acquire the DMs? I mean I am still not able to understand the concept, if you can elaborate a little bit more on that.

Question: Mithun Soni - MJ Investment - Analyst : Okay. And one follow-up on this. So this DMs would be on our rolls? Or are they commission based? How would the dynamics work in that scenario?

Question: Aditya Thakur - 5G Capital - Analyst : Congratulations on good set of numbers, sir. Sir, we will have incremental revenue from the new CapEx as well as loss of revenue from discontinuing operations, keeping both in, will we be able to achieve double-digit revenue growth for FY25 and FY26.

Question: Chirag Gandhi - Astralit Investment - Analyst : I just have a couple of questions. Is it possible for you to break up our sales number between focus segments and defocus segments? First question is that. 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 23, 2024 / 6:00AM, PENN.NS - Q4 2024 Pennar Industries Ltd Earnings Call

Question: Chirag Gandhi - Astralit Investment - Analyst : And just to clarify, you have said that we will have a good double-digit growth in the focus segment while the revenue leakage from the defocus segment will stop from here, and we will have a BU status from this year onwards. That is what you said, right?

Question: Chirag Gandhi - Astralit Investment - Analyst : But the revenue leakage from defocus will continue is what you are saying?

Question: Chirag Gandhi - Astralit Investment - Analyst : Next question is in terms of what is the size of our PEB business in India?

Question: Chirag Gandhi - Astralit Investment - Analyst : So INR780 crores of revenue, so we have one-time revenue as our order book currently in our hands. That is what you are saying, right?

Question: Chirag Gandhi - Astralit Investment - Analyst : And just a last question, what is typically the market opportunity size for the PEB business? Can you give some sense like how big is the opportunity size here? 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 23, 2024 / 6:00AM, PENN.NS - Q4 2024 Pennar Industries Ltd Earnings Call

Question: Chirag Gandhi - Astralit Investment - Analyst : Yes.

Question: Chirag Gandhi - Astralit Investment - Analyst : INR7,000 crores to INR8,000 crores.

Question: Chirag Gandhi - Astralit Investment - Analyst : Basically a last clarification, you said the PAT, PBT or the PAT margins, we should be comfortably doing around 7% in the next couple of years. That's the PBT margin, right, 7%?