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Kalyani Cast-Tec
Our verdict on Kalyani Cast-Tec isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Based on the formula provided by management (INR 133 crore revenue / 2.60 lakh realization), the company manufactured approximately 5,115 containers. (1 met, 1 exceeded across 2 tracked commitments)
“And FY25 what is the number we are targeting sir? Around 5,000.”
The company reported a substantial increase in PAT and an EPS growth from 16.43% to 19.84%, indicating margins exceeded the prior sustainable target. (2 exceeded, 2 met across 4 tracked commitments)
“PAT will be between 10% to 13%, anywhere 13%. Yes. Basically, you see, this time, we are expecting to grow by 40% to 50% during this year. And our PAT will be around 10% to 13% of that.”
See the full cited Management analysis of Kalyani Cast-Tec
How durable is the business?
Capacity utilization is currently at 70-75%. The company is targeting a volume of 5,000 containers in FY25, up from 3,550 in FY24, and is investing INR 1 crore in incremental capex to reach this target. (1 expanding)
“This will be one of its kind facility in the world as many of these activities will be under in the one premises only... in order that the logistic cost of the nation can be reduced.”
The company is experiencing significant revenue growth, with total income increasing 50% year-on-year to INR 95.11 crores in FY24. Management has guided for 40-50% top-line growth in FY25, supported by an order book of INR 80 crores to be executed by October 2024. (5 expanding across 1 engine)
“the total income has increased compared to the first half-yearly of the last year by 33%. That is INR94.24 crores against INR70.60 crores last year for the same half-yearly.”
See the full cited Business Model analysis of Kalyani Cast-Tec
Where does growth come from?
The company is increasing its volume target from 3,550 containers in FY24 to 5,000 in FY25, supported by incremental capex in machinery. (1 accelerating, 3 new trend across 4 signals, 1 leading indicator)
“We will be setting up the wagon manufacturing unit with annual capacity of 7500 to 7800 units per year. The first phase for the capacity of 2500 is under construction. Here we wanted to add additional capacity for manufacturing of containers.”
The company has a current order book of INR 80 crores to be executed by October 2024, with a full-year target of INR 140-150 crores, indicating a steady pipeline. (3 steady, 1 accelerating across 4 signals, 1 leading indicator)
“As far as order book for '25-26 is concerned, up till now we have got orders for this financial year worth INR140 crores and we are in negotiations for the further orders.”
See the full cited Future Growth analysis of Kalyani Cast-Tec
What could break the thesis?
The risk is STABLE; while in-principle approval is received, the company still requires final government approval for the wagon factory and terminal operations, which are 'mandatory requirements'. (2 stable, 1 intensifying, 1 high-severity)
“Machinery, plants, sheds and all, there are almost 70-80 machinery and plants we have to set up before we put up our application to them.”
The risk is INTENSIFYING as management confirmed receivables will continue to increase alongside turnover, with average receivables currently at INR 20 crores. (1 intensifying, 1 emerging, 2 easing, 1 stable, 1 high-severity)
“So, that means your existing order book is INR 48 crores -- your existing order in hand is INR 48 crores. I am asking your existing order book is INR 48 crores that means?”
See the full cited Risk analysis of Kalyani Cast-Tec
Read the full thesis on Kalyani Cast-Tec
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