Release Date: May 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ratnaveer Precision Engineering Ltd NSE:RATNAVEER has shown consistent growth with a CAGR of over 25% in the last three years.
- The company is expanding into the copper clad laminates (CCL) market, which is expected to substitute 100% of imports, marking a significant opportunity.
- Ratnaveer Precision Engineering Ltd has a strong export presence, serving 31 countries globally and receiving numerous export awards.
- The company is planning significant capital expenditure projects, including greenfield and brownfield expansions, to support future growth.
- Ratnaveer Precision Engineering Ltd is exploring inorganic growth opportunities, including potential acquisitions in Europe to expand its customer base.
Negative Points
- The company faces challenges in maintaining consistent operating cash flow, with a negative operating cash flow reported for FY26.
- There is a significant increase in trade receivables, which have grown from 65 crores to 175 crores, indicating potential cash flow management issues.
- The company is heavily reliant on government incentives and subsidies for its CCL project, which could pose risks if these are delayed or reduced.
- Ratnaveer Precision Engineering Ltd's expansion into the CCL market involves significant risk as it lacks prior expertise in this area.
- The company's effective tax rate has been inconsistent, which could impact financial planning and investor confidence.
Q & A Highlights
Q: Can you provide more details about your CCL project, including your technology partner and the status of BIS certification?
A: The CCL project, which involves copper-clad laminates, is a significant development for us. We have partnered with a Chinese company for technology and have already placed orders for machinery. The project is expected to commence production by November 2026, and it aims to substitute 100% of imports in this sector. We have received government approvals and incentives, which will support the project's financial viability. (Respondent: Managing Director)
Q: Are the warrants issued at INR 196 going to be converted to equity, or will they be forfeited?
A: The warrants were issued at INR 159, not INR 196. We have already paid 25% of the amount, and they will be converted to equity within the 18-month period ending in September 2027. (Respondent: Managing Director)
Q: What is the rationale behind entering the CCL business, given the competition from Chinese and Korean companies?
A: There is no anti-dumping duty on imports currently, and we are competitive with a 10-13% cost advantage. Local PCB manufacturers prefer indigenous products due to logistical and cost benefits. Additionally, the government offers a 2% cash subsidy for local purchases. We are confident in our ability to compete on quality and cost. (Respondent: Managing Director)
Q: Can you explain the guidance of achieving a 2,500 crore top-line, with 750 crores from CCL, in the next two to three years?
A: We achieved 1,078 crores last year and aim for 1,350 crores this year, with a 25% CAGR in our stainless business. The CCL business is expected to contribute 750 crores once fully operational, leading to a consolidated top-line of 2,500 crores. (Respondent: Managing Director)
Q: What are the top industries contributing to your stainless steel business revenue, and how fragmented is it?
A: We serve various industries, including automotive, transportation, aerospace, and FMCG. The revenue contribution is fragmented, with no single customer dominating. Top customers contribute around 2-5% each, depending on the product line. (Respondent: Managing Director)
Q: Why was there a negative operating cash flow this year, and what was the CapEx of 115 crores used for?
A: Our operating cash flows are in place, but the net cash flow includes FDs from QIP funds. The CapEx is for ongoing projects, and once completed, cash flows will stabilize. (Respondent: Finance Analyst)
Q: Can you clarify the capital allocation and fundraising plans, including the QIP and promoter infusion?
A: We raised 185 crores through a QIP for working capital and CapEx. We plan to raise an additional 330 crores for the CCL project and working capital. Promoter infusion through warrants will also contribute to funding. (Respondent: Managing Director)
Q: What is the expected promoter holding post-QIP and warrant conversion?
A: After the warrant conversion, promoter holding will be around 47-48%. Post-QIP, it will be approximately 42-43%. (Respondent: Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
