Higher raw material costs hit Shaily marginsSHAILY - 325 Change: 9.15 (2.90 %)
News: Shaily Engineering reported its highest-ever quarterly sales with revenues of Rs 172 crore, an increase of 43 % YoY. In Q1FY23, volume growth registered at a 60 % YoY rate. The strong volume growth was led by improved traction across segments and ramp up in new projects. Revenue grew at a CAGR of 29% over the course of three years, with same amount of volume growth driving this rise. Gross margin declined by 642 bps YoY mainly due to higher raw material costs. EBITDA margin thus decreased by 439 bps YoY to 11.4%. PAT fell by 8% YoY to Rs 7.4 crore on the back of a lower EBITDA margin.
View: Shaily reported a mixed bag of results in Q1FY23. While increased wallet share and the addition of new customers resulted in good demand, the EBITDA margins were still under pressure due to a change in the product mix and the utilisation of high cost inventories. We are waiting for management commentary on how the EBITDA margin will improve going forward.