Analyst Meet / AGM     01-Jun-24
Conference Call
Order Book as end of March 31, 2024 stood at Rs 3860 crore

WPIL hosted a conference call on May 28, 2024. In the conference call the company was represented by Prakash Agarwal - Managing Director and   KK Ganeriwala - Executive Director.

Key takeaways of the conference call

Order Book as end of March 31, 2024 stood at Rs 3860 crore [ against Rs  4300 crore as end of Dec 2023] and of which domestic order book is Rs 3402 crore [against Rs 3835 crore as end of Dec 2023] and that of international was Rs 458 crore [ against Rs 421.1 crore as end of Dec 2023]. Of the domestic order book the product orders were Rs 348 crore (up 11%) and the domestic project order book stood at Rs 3054 crore.  

In FY24, domestic revenues grew by 7.4% year-on-year to Rs. 1,077 crores with the domestic product business up 19% to Rs 261 crore and domestic project revenue up 4% to Rs 816 crore.  Growth in project revenue was driven by strong order execution in Q4FY24 which saw order execution to the tune of Rs 343 crore. 

Strong domestic product order book gives a strong revenue visibility and a positive outlook for FY25. The outlook for the product division has also improved considerably with the successful development of new products for the oil and gas and sewage and drainage segments.

Domestic Project Business:  Project execution has gained strong momentum and the company is ahead of schedule on a few projects in the state of West Bengal. Barring one all other 8 projects of Madhya Pradesh Jal Nigam are on track. One of the Madhya Pradesh Jal Nigam contracts was terminated by the client due to slow progress.  About Rs. 11 crores bank guarantee has been encashed by the client.   However the company has disputed the termination citing that the land for construction was allotted only in December 2023 causing the delay. The un-executed part of the  terminated contract was about Rs 155 – Rs. 160 crore. It is exploring all contractual remedies to protect the Company''s interest.  The unexecuted portion of other 8 Madhya Pradesh Jal Nigam contracts which are in various stages of completion aggregate to about Rs 1100 crore.

Unexecuted portion value of MP Jal Nigam order that got terminated was taken out of the current orders book of the company. 

The outlook for the core industrial pumps business of Gruppo Aturia remains strong, driven by robust demand in the MENA region and strong aftermarket revenues from Finder.  The successful divestment of the nuclear business of Rutschi has allowed the company  to focus on its core industrial pump business. The company is pursuing inorganic opportunities in industrial pump business and hoping for positive outcomes by mid FY25.

WPIL South Africa is also performing well with the continuous focus on the water sector and significant aftermarket contracts from Eskom Power. Both Sterling Pumps and United Pumps Australia have robust order books and are expected to post strong growth in FY25.

WPIL Thailand posted record revenues in FY24 and expect this momentum to continue with opportunities arising from the new Thai Government’s focus on irrigation and drainage projects.  

Navy order (frame work agreement for Rs 17-18 crore for supply of new types of pumps for which type test is completed and ready for shipyards to place orders for subsequent ships)  execution is on track and expects to supply all these in next 6 months.  This will contribute to a strong revenue growth from FY25 onwards.

In domestic business the mix currently is 76% project and 24% products. But the company looks at a ratio of 2:1 (that is 66% projects 34% products).   So it is working with an active trust on products. In case of domestic projects business it wants to be margin focused and not volume focused.   The company typically looks an EBITDA margin of 15-20% in project business. 

The product orders are generally shorter duration tentatively between 4 to 8 months depending on the type of product. Project order book execution timeline is normally 24 to 30 months.

Enhancing its execution rates in the domestic project business and in product business the strong demand is providing traction. Thus the company expects strong growth in domestic business in FY25. 

In FY24, the project business execution in first half was affected by  supply chain challenges. But with strong focus on execution it has turned in a quarterly burnout of Rs 343 crore in domestic project in Q4FY24.   Based on this strength and the achievement in Q4FY24 the company expect to see good revenue growth for domestic project business in FY25.  

In India product business earlier it used to have more thrust on power and irrigation but now both industrial especially oil & gas and municipal water & sewerage is giving a strong support in domestic market.  See  a very strong outlook going ahead in these two sectors  because the order book remains strong and the inquiry flows are very strong. 

The two segment that are growing strongly now are Navy and sewage/drainage.  This two segment gives a margin of about 15-20%. 

Project order enquiry pipeline or work that is put out is quite significant in the country and thus replenishing the project order book is not a challenge.  Recently there was a contract worth about RS 5000-8000 crore in Rajasthan for about 10-12 jobs. 

Fiscal 2022-23 was a growth year for the company when it grew from RS 1100 crore to RS 1800 crore. In FY24 it have consolidated and strengthened its execution and hope to start growing to grow again henceforth. And all its order books are strong enough to support this growth.

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