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  • 30 May 2024
  • ICICI Securities

REVENUE GROWTH REMAINS HEALTHY BUT MARGINS CONTRACTS ON HIGHER RM COST

MIDHANI - 293 Change: -1.05 (-0.36 %)

News: Revenue increased by 17.7% YoY (+60.9% QoQ) to Rs 405.5 crore in Q4FY24. However, gross margin contracted sharply to 51% (vs 65.8% in Q4FY23 and 54.5% in Q3FY24) on account of increase in raw materials cost. EBITDA declined by 19.7% YoY to Rs 80.4 crore as EBITDA margin contracted by 924 bps YoY to 19.8%. Sequentially, EBITDA margin improved by 558 bps on positive operating leverage. Thus, PAT came in at Rs 46.3 crore (-30.1% YoY, +262.2% QoQ). For FY24, revenue is up 23% YoY to Rs 1073 crore with EBITDA margin stands at 18.1% (vs 29.5% in FY23).

Views: Revenue growth at 23% YoY in FY24 (in-line with provisional number reported by the company) remains healthy led by strong execution and ramp up of recent capacity expansions. However, margins have contracted sharply in the last three quarters on account of sharp increase in cost of raw materials like nickel & titanium. Also, the usage of these raw materials has gone up considerably in manufacturing of superalloys for defence & space platforms, which led to overall increase in raw material cost for the company. Order backlog position is healthy at Rs 1580 crore (1.5x FY24 revenues) as order inflows remains strong at Rs 1322 crore during the year. Going ahead, we believe revenue growth visibility remains healthy, led by strong order backlog with robust pipeline for superalloys & titanium alloys. However, recovery in margins will be the key monitorable in the coming quarters.

Impact: Neutral