Key takeaways of the call

Order book of the company as end of Sep 30, 2019 was Rs 340 crore with the company bagged orders worth Rs 100 crore in Q2FY20 and Rs 170 crore worth of orders in H1FY20. Of the order book about 15% is industrial orders and balance are orders from Indian Railways, which are tender driven.

Of the order book the company expects about Rs 160-170 crore to be executed in H2FY20 and balance will be executed in next fiscal.

Orders are not a concern. The company has placed lot of bids including few large tenders worth over Rs 350 crore for which the company is either L1 or L2. The company expects these tenders to get finalised by Jan 2020. After Feb 2020 with new budget, the next cycle of tendering based on new outlay will commence.

The company maintains the revenue guidance of Rs 300 crore in FY20 given earlier in Q1FY20 call.

Confident of sustaining the H1FY20 EBITDA margin of 15.3% for H2FY20 as well. The margin of new products are bit lower compared to established one till they get the approval from IR or clients. This will take a minimum of 9 months. The margin of FY21 may be hurt by new products which may impact the margin marginally by about 1% points.

The company is diamond supplier for Bombardier Transporation for its global requirement of auxiliary converter.

Debt of the company currently stands at Rs 70 crore of which WC loan is Rs 50 crore and balance is TL. About Rs 20 crore is used as EMD for quoting in IR tenders. With the revenue growing the company needs another Rs 25 crore. So the company may end of next fiscal with a debt of Rs 100-110 crore.

The business potential for the company in a railway electric locomotive is about Rs 6-6.6 crore [for electrical parts]. Of which the company currently have products and taps only for about Rs 2.5-3 crore and expects to supply for entire Rs 6-6.5 crore by next fiscal. The new products developed by the company is partly towards that. In case of LHB coaches the potential is roughly about Rs 50 lakhs. Indian railways added about 600 locomotives last fiscal and targets 650 locomotives this fiscal.

The industrial orders are short cyclical and are executed within three month of receipt of it. But IR orders will be executed over 18 months.

Order size for the company ranges from Rs 50 lakh to few crores.

Five products of the company i.e. Semiconductors, rectifiers, inverters, converters and transformers contribute about 80% of the revenue of the company. Next year the company expects eight products to account for majority of revenue for the company.

The company on an average will roll out one new product each month going forward. It has rolled out battery chargers for passenger coaches 15 days ago. The company is currently working about 47-48 products in its R&D and of which about 39 products are for Railways and balance are for industries. Of these 33-34 products are to be launched within this fiscal. Propulsion Systems is one of the new products in the pipeline.

Competitors for the company's products in IR jobs are BHEL, CG, ABB etc.

The company does not have any capacity constraints.