IGI Logo

Est. Vs. Actual for Q4FY25: Revenue – INLINE ; EBITDA – MISS ; PAT – BEAT

Change in Estimates post Q4FY25

FY26E/FY27E: Revenue : 8%/13%; EBITDA: 8%/13%; PAT: 14%/10%

Recommendation Rationale

Strong Order Book: Skipper received new orders totalling Rs 1,592 Cr in Q4FY25, including orders from PGCIL and various SEBs. As of Mar’25, the order book stood at its highest ever at Rs 7,458 Cr. The order book comprises 71% domestic T&D orders, 17% non-T&D orders (Telecom, Railways, Solar, Water EPC and other Steel Structural items) and 12% export orders. All export orders pertain to T&D. The company currently has a strong orderbook pipeline of more than Rs 20,000 Cr (25% historical order conversion success rate)

Capacity expansion to capitalise on the strong tailwinds in the T&D sector: Capacity expansion remains critical as currently its Engineering capacity at 300 kt is already operating at 85% utilisation. The 1st plan of 75kt capacity addition is expected to be operational from May’25, in line with the guidance. This plant is expected to reach optimum capacity utilisation of 80-85% by Q2FY26 and would also start contributing to revenue. The 2nd 75kt capacity, which would be a mix of greenfield and brownfield expansion, is also expected to go online by the end of FY26. Once the new capacity is fully commissioned, the company will target a bigger pipeline with better margins.

Export Opportunities: Exports stood at 12% of the company’s order book as of Mar’25. The company achieved a landmark breakthrough in the US market by securing a $15 Mn pole supply order. The management believes that Indian manufacturers can benefit from the current trade tensions between the US with Mexico and China, which are currently the major tower suppliers to the US. The management expects ~$10 Bn worth of projects to come up for bidding in the next 2-3 years from the North American markets.

Sector Outlook: Positive

Company Outlook & Guidance: The management expects a 20-25% revenue growth YoY on the elevated FY25 revenue base for the next 3 years. The next 4 years' capex guidance of Rs 800 Cr is unchanged. The capacity addition is expected to drive revenue growth. Furthermore, the management expects the current EBITDA margins of ~10% to gradually increase YoY, led by higher T&D contribution and better-quality T&D contracts.

Current Valuation: 20x on our FY27 EPS estimate (from 22x)

Current TP: Rs 570/share (Unchanged)

Recommendation: We maintain our BUY recommendation on the stock.

For More Axis Securities Disclaimer https://simplehai.axisdirect.in/disclaimer-home

SEBI Registration number is INZ000161633