Q1 2027 Steelcast Ltd Earnings Call Transcript
Key Points
- Revenue from operations grew 17% YoY to INR 124.82 crores in Q1 FY '27, with EBITDA and PAT also up 17.37% and 19.26% respectively, maintaining healthy margins.
- Management guided for a strong 25% volume growth in FY '27 (with potential for 30%) and a 20% CAGR over the coming years, supported by robust demand across all nine end-user sectors.
- The company is investing in a new Greenfield Foundry with 8,500 tonnes capacity (INR 120 crores) and expects to commission it by March FY '28, with a peak revenue potential of INR 300 crores.
- Renewable energy projects (2.4 MW hybrid and 1.4 MW solar) are on track for commissioning by December '26, which will reduce carbon emissions and lower energy costs.
- The company has a strong order book of INR 140 crores (about 3-4 months of visibility) and is developing over 100 new parts, with GET (ground engaging tools) expected to contribute 3.5% of sales in FY '27 and 6% by FY '29.
- Management expects to pass on all input cost increases through its sales price variation formula, effective July 1, which should improve margins further.
- The company remains debt-free and plans to fund the INR 120 crore CapEx through internal accruals, maintaining financial stability.
- Export diversification is progressing, with sales now spread across 16 countries (down from just 2 a decade ago), reducing dependence on U.S. and Germany.
- Capacity utilization is expected to rise to 63% for FY '27 (from 48% in FY '26), with operating leverage benefits kicking in as volumes scale up.
- The company has derisked its revenue mix: mining exposure reduced from 84% to 27%, while earthmoving and construction now contribute 43% and 15% respectively.
- Energy costs remain elevated due to geopolitical tensions and sustained pressure on fuel prices, impacting input costs.
- Natural gas prices have surged about 50-55% compared to February-end levels, and the company is still evaluating whether to transition to electricity-based systems.
- The U.S. railroad segment, previously a growth opportunity, has been deprioritized, and no timeline is given for re-engaging with it.
- Defense business is being given low priority (currently ~1% of sales) due to better opportunities elsewhere, limiting potential in this high-growth sector.
- Inventory levels have risen due to production ramp-up, which may temporarily tie up working capital before converting to sales.
- The company faces a one-quarter lag in passing on input cost increases, which could pressure margins in the short term.
- Management is conservative on guidance, initially stating 25% growth but later admitting 30% is possible, which may create uncertainty for investors.
- The new Greenfield Foundry will not contribute significantly to revenues until FY '29, meaning the full benefit of the CapEx is delayed.
- Export mix is expected to decline slightly to 47% in FY '27 (from 49-50% in FY '26), potentially reducing exposure to higher-margin overseas markets.
- The company's focus on non-defense sectors means it may miss out on India's defense manufacturing push, which could be a long-term growth driver.
Ladies and gentlemen, good day, and welcome to Steelcast Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Arpit Mundra from EY team. Thank you, and over to you, Mr.
Mundra.
Thank you, Renju. Good morning, everyone. We welcome you all to Steelcast Limited earnings call to discuss the Q1 FY '27 financial results. Today from the management side, we have with us Mr. Chetan Tamboli, Chairman and Managing Director; Mr.
Rushil Tamboli, Whole-Time Director; Mr. Subhash Sharma, Executive Director and CFO; and Mr. Umesh Bhatt, Company Secretary. Please note a copy of all the disclosures is available in the Investors section of the website as well as on the stock exchanges. Further, a detailed safe harbor statement is given on Page #27 of the investor presentation of the company.
Please note that anything said on this call, which reflects the outlook for the future or which could
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