Top Mutual Funds
- 17 May 2024
- ICICI Securities
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OPERATIONAL PERFORMANCE WAS BETTER THAN EXPECTATIONS
News: Revenue increased by 18.2% YoY (+143.7% QoQ) to Rs 14768.8 crore in Q4FY24. During the quarter, the company has recognized additional revenue of ~Rs 549 crore pertaining to change of value of an old contract. EBITDA margin was at 40% (vs 26% in Q4FY24). However, the company has reversed the provision of Rs 1034 crore made in earlier years. Adjusted revenue growth during the quarter stands at 13.8% YoY with EBITDA margin at 30.4% (+439 bps YoY). EBITDA was up 81.8% YoY to Rs 5901.3 crore. PAT was up 52.2% YoY to Rs 4308.7 crore due to lower tax outgo last year in Q4FY23. For FY24, revenue is up 12.8% YoY to Rs 30381.1 crore with EBITDA margin at 32.1% (vs 24.8% in FY23). PAT for FY24 is up 30.8% YoY to Rs 7621 crore.
Views: Revenue growth at ~11% in FY24 (adjusted for additional revenue recognition) was in-line with the provisional revenue notified by the company for the year. However, the EBITDA margin of 27.3% for FY24 was better than expectations (even after adjusting reversal of provisions), possibly led by higher share of revenue from MRO (maintenance, repair & overhaul) segment, which generally is a better-margin segment. Also, there is employee costs optimization (in-line with management’s guidance) leading to improvement in margins. Going ahead, company’s revenue growth is expected to pick-up substantially in FY25E and FY26E, led by pick-up in execution of Tejas MK1A aircrafts (which remains one of the largest manufacturing contracts for the company in the current order book), and other manufacturing & MRO contracts. Order backlog remains strong at ~Rs 94000 crore (3x FY24 rev). Orders pipeline remains robust considering the large-scale upcoming projects in aircrafts, helicopters, unmanned aerial vehicles, aero engines etc.
Impact: Positive