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- 12 Feb 2024
- ICICI Securities
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SHARP CONTRACTION IN MARGINS
MIDHANI - 413 Change: -3.60 (-0.86 %)News: Revenue increased by 8.8% YoY (+10.8% QoQ) to Rs 252.0 crore in Q3FY24. However, gross margin contracted sharply to 54.5% (vs 80.5% in Q3FY23) on account of sharp increase in raw material cost. EBITDA margin contracted by 1412 bps YoY (-171 bps QoQ) to 14.2%. Subsequently, EBITDA declined by 45.3% YoY (-1.1% QoQ) to Rs 35.9 crore. PAT declined by 66.9% YoY (-8.1% QoQ) to Rs 12.8 crore.
Views: For 9MFY24, revenue is up 26.5% YoY led by ramp up of recent capacity expansions and execution of order backlog, of which large part is short cycle orders. However, margins have contracted sharply in the last two quarters on account of increase in cost of raw materials like nickel and titanium. Also, usage of these materials in superalloys have gone up considerably. EBITDA margin stands at 17% in 9MFY24 vs 29.8% in 9MFY23. Order inflows during 9mFY24 are at ~Rs 1100 crore with order backlog stands at Rs 1762 crore as of Dec 2023 end (1.7x TTM revenues). Going ahead, revenue growth visibility remains healthy led by strong order backlog with robust pipeline for superalloys & titanium alloys. Margin trajectory will be the key thing to watch-out for in the coming quarters.
Impact: Negative