Goodluck India Limited (530655) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, good morning, and welcome to the Q3 and Nine Months FY 2025 Earnings Conference Call for GoodLuck India Limited. We have with us today Mr. M.C. Garg, Chairman and Managing Director; Mr. Ram Agarwal, Chief Executive Officer; and Mr. Sanjay Bansal, Chief Financial Officer. [Operator Instructions] I would now like to hand the conference over to Mr. M.C. Garg, Chairman and Managing Director of GoodLuck India Limited for his opening remarks. Thank you, and over to you, sir.

Hello, everyone. I'm pleased to welcome you all on this earnings conference call of GoodLuck India Limited. Thank you for your time and presence in our Q3 FY '25 earnings call. I hope you would have an opportunity to go through our financial performance, our investor presentation. While in-depth numbers is covered by Mr. Agarwal, let me set a more macro perspective to what we at GoodLuck India have achieved and more importantly, have set our sight on our future. Globally, the economy is perhaps undergoing a slowdown owing to multiple factors ranging from political to economic, an impact of which has been felt in India, too. Inflation continued to be cause of concern, not in India only, but almost all developed world and other countries as well. And so the monetary and all central banks in every country are struggling to keep their economy strong. The weakening economy led to a spread of announcement in the budget followed by 25 basis point reduction in monetary rates announced by RBI. The macro fundamentals of Indian economy continue to be in place, and we expect resurgence of moderate growth in the next few quarters, driving on government spend and private consumption. The steel industry witnessed initial slowdown in terms of demand and oversupply in China, but in the end of the quarter under review is back to growth and staged with post monsoon demand. In India, owing to the manufacturing push across key sectors, especially defense, automotive and ancillary industries as well as rising demand from real estate and water management sectors. Going to our trenchant for value-added steel, we continue to explain demand from emerging sectors such as defense, aerospace, while preserving our brand in a sector like auto industry. In Q3 FY '25, our hydraulic tube manufacturing plant in Bulandshahr completed its trial runs and has commenced operation last month. We expect the new plant to generate additional revenue for the company while our foray into value-added steel will drive our margins. We foresee potential of INR 500 crores revenue boost from this hydraulic plant. In the coming year, besides our effort in emerging sectors such as defense and aerospace, we continue to focus on transforming sectors such as automobile and bullet trains. Our partnership with some of the most important global leaders has enabled us to accelerate innovation and GoodLuck while our price association with India's first bullet train project have put us into a new orbit and respect to quality and efficiency. We please to continue, at this platform and challenging the norms [indiscernible]. Our results reflect our commitment to create stakeholder value. Our PAT increased by 26% for the quarter, while our sales increased 7%. This has happened because of our emphasis on quality and value-added products, reflecting our strategy of producing high-margin products, we believe our efforts backed by numbers make a strong case. We remain committed to create value and build a world-class organization. I look forward for your questions. Before that, I will hand over to Mr. Ram Agarwal to explain in detail what we are doing. Thank you.

Good morning, everybody. As our results are before you, I would like to elaborate on the business model of GoodLuck. We are a company with diverse product portfolio, starting from ERW pipes to railway bridges. Our business is mainly catering to automobile sector, construction sector, oil and gas, infrastructure, solar and renewable energy. Our capacity right now is 4,50,000 MTPA, which will be upgraded to 5 lakhs in Q4. In automobiles, we are catering to car body tubes. Tesla is the latest example, 2-wheelers mainly motorcycle shopper tubes in cars, in light commercial vehicles. So this sector is progressing as Indian population is more, but density of vehicle is very less. Recent past, we inaugurated, as Mr. Garg has told, hydraulic tube plant with a size range of 219 mm, 15 mm thickness, which is unique in this size range. In world, India is likely to become at [Break] place in terms of its production. Product has wide ways, wide acceptability from FY '26, production is likely to accelerate and as soon as it reaches 70%, 80% of its capacity, we would like to put up another capacity. Oil and gas, another sector, as some say drill will be drill, this sector is likely to ramp up and production from our forging plant is likely to catch up with this oil economy. And latest dialing of the market is defense, it's a promising sector. Geopolitics is on the boil and wars are looming over many parts of the world. In this scenario, when U.S. wants to change terms of NATO, many Nordic countries and other countries from cold war blocks have started accumulating ammunition and wire ancillary. India is exporting BrahMos, INR 21,000 crores was a turnover last year, what government has given. Your company's foray into 155 mm medium caliber is at the right time at the right place. Demand is more than the supplies. Our ancillary GoodLuck Defense and Aerospace medium-caliber project is ahead of completion schedule. Cold run has now started and in March, hot run will be done. April '25, trial run will start. Company hopes to go to commercial production in Q2 FY '26. Orders are enough. And if everything goes well as per the plan, we will think for the further expansion. Infrastructure, yes, it is a sector, no stoppage to this sector. Reason, India has to progress by leaps and bounds to catch up with the work. New rail lines, new highways, creating demand for this sector of your company, new bullet train project likely to come for execution in this financial year, your company is ready as we have supplied 60%, 70% of the first orders we got for Ahmedabad-Mumbai route, and we are among the first to clear this hurdle. Transmission lines, this is another area where our infrastructure is working. As about 210 gigawatts of renewable energy has been commissioned and likely to achieve 500 gigawatts by 2030, green power evacuation corridors are coming along Gujarat, Rajasthan and Southern countries, southern states. Your company is ready to take this increasing demand from NCR and Gujarat facility. Solar support structure is another area where we are supplying already 100-megawatt plus every month. Road safety sector, where your company has got latest fresh tested license technology from European countries, is expanding, our company is expanding its reach in all the GoodLuck products. To sum up, your company is all in sunlight sectors where demand is outpacing supply, where they are entry barriers, we have modest capacity, which have further scope of scaling with current infra. We will touch INR 4,500 crores in FY '26, and we plan to scale up our value-added products in coming years to reach $1 billion company. Now I would like to hand over the mic to Mr. Sanjay Bansal for the financials.

Thank you, sir. Good morning, everyone. At the outset, I Sanjay Bansal, CFO. On behalf of GoodLuck India, welcome you all for joining us for the conference on performance of the company in Q3 of financial year 2025. Regarding Q3 performance stand alone, the sales was increased to INR 941.98 crores as against INR 878.27 crores during Q3 of previous year, registering a growth of 7.25%. However, EBITDA for the quarter stood at the rate of 8.76% of sales, INR 82.48 crores as against INR 75.66 crores during Q3 of previous year. The profit after tax, including other comprehensive income was at INR 40.08 crores in Q3 of current year as compared to INR 31.75 crores in Q3 of previous year. The EPS has been at INR 11.85 per share in Q3 of 2025 as against INR 11.38 per share during Q3 of previous fiscal. The performance during 9 months of current financial year was in line with the expectations. Sales increased by 7.97% at INR 2,831.27 crores as compared to 9 months sales during previous year. EBITDA during first 9 months ending on December '24 was at INR 247.54 crores as against INR 220.22 crores, registering an increase of 12.41%. PAT during 9 months of current year was at INR 119.61 crores as against INR 95.04 crores during 9 months of previous year. Earnings per share stood at INR 36.45 per share during current year 9 months period ended on 31st December '24, registering a growth of 5.35%. On financial front, our interest cost and other expenses has marginally gone up due to increase in level of activity during current year as compared to previous year. Thank you very much. Now please go ahead for Q and A section.

[Operator Instructions] The first question is from the line of Parin Gala from SageOne. Please go ahead.

Sir, I wanted to understand your accounting treatment that you're doing in the P&L for Gujarat Defense. I believe that revenues are not getting consolidated, right? You put it just in the other income. Can you just explain a little bit.

You see GoodLuck Defense is not yet achieved the commercial production. So whatever income is there, other income, interest income and other income, that is being consolidated in the P&L.

Once the revenue starts, the normal consolidation will happen, right?

Yes. Once production will start, then normal consolidation will start.

[Operator Instructions] The next question is from the line of Deepak Pandey from Sagun Capital.

Congrats on good set of numbers. Sir, I have a question on LDP division. How is the ramp-up going on currently? And what sort of demand is coming through from the exports front?

Demand is good. The ramping of capacity is continuing but this product needs approvals. Samples have gone all over demand approved in export as well as the domestic market. So, we are very much satisfied and happy that demand is more than our expectation. But full ramping of capacity may take 6 months more samples have gone and sample approval takes time.

Are we still facing the rejections or ramp-up is going smoothly? Or will it take time?

Everything is not going as rejection. There are alternative use other than auto, it will go to the common use. And this is going. Whatever we are producing is going. Nothing is left with us.

Got it. And sir, for the defense vertical, we have estimated a CapEx of INR 216 crores. So, what has been spent yet? And what is to be spent in this quarter?

Can you explain the question again? I'm not able to get you.

Sir, the CapEx completion for the defense vertical, how much CapEx have we done yet?

INR 150 crores, almost INR 150 crores has been done and INR 216 crores or INR 220 crores to INR 225 crores, it is the approximate CapEx which we'll be doing till the execution of the project.

And sir, can you also explain what was the major portion of this CapEx? Was it the machinery? Or what sort of machines have you ordered?

Definitely, it is..

The machinery has been ordered, not only ordered but has been received in the plant. Their election work is going on. And we might be doing a cold trial by end of this month and a hot trial next month.

Got it. And sir, on the product side, can you also explain the specific products that we will be making the more specifically towards the channel dimensions and all?

It does not appear to be any challenge. Demand is pretty good today. Everybody is demanding the material; the product we are manufacturing. There are very few manufacturers of this product in India as such. So, demand doesn't seem to be a concern to us as of date. So, far as defense is concerned. In other sectors also, since our all verticals have a moderate capacity, so we are not finding the demand concern. In spite of slowdown, you must have noted, all over the manufacturing sector, we have grown by almost 20%.

Right. So, for LDP division, sir, it seems that the major revenue ramp-up will happen in the Q1 only?

Definitely.

Got it. And we expect INR 500 crores from that plant for FY '26?

Yes. That is the minimum you should expect.

Got it. And can you also give the number for the defense plant also, sir, revenue and margin.

Defense basically in the full capacity, it will give a turnover of INR 250 crores to INR 300 crores. And margins, we have not yet commissioned but it seems margin should be 25 plus. EBITDA margin should be 25 plus.

Got it. Got it. Sir, for the defense also, what is the price of Shell currently that we'll be manufacturing?

Right now, it will not be proper to tell. Once we put the commercial production, then what price will come, we will inform you. It is [indiscernible] .

Can you just give me a range that has been through for the last 1 year?

Right now, I may not be able to tell you. Just wait for a few months and we will let you the actual price.

And sir, in Q2, there was other income worth INR 18 crores that we could not understand what was it for. Can you just let me know what was the specific INR 18 crores worth of other income that we put in, in Q2?

You see this other income includes the income received against interest deposits, we kept export benefits, and income from sale of a few investments made by the company.

The next question is from the line of Bhavesh Chauhan as an individual investor.

Sir, in terms of economy slowing down, are we seeing a pickup in Q4 as we stand currently?

Sir, I can tell you, world may be slow down. Our company will not go under slowdown. Company has been slowed down in the last 2 quarters, but we have improved our growth, and we hope to continue to maintain that growth. Exports are one thing, which are going to take to give any specific number and guidance due to so much uncertainty with American President; it's very difficult to give the numbers, but we are confident that March forward will continue; because we have very moderate volumes in all our materials.

Okay. And sir, in terms of defense, any sort of approval that is pending or that might be challenging for us because we are guiding that it will start from Q2. So, anything before that we need to complete apart from the trial production?

It is only a trial production, which has to take place because it has many steps. One is the cold run and the hot run and then the trial production. So, it is our estimate that from Q2, revenue will start. It may come early as well. That is not the issue.

Right. And I think in your opening remarks, you said that we might look forward to more CapEx on the defense side once this plant is up and running maybe in FY '26. Is that what I understand?

Definitely. We have a definite plan of action but we want to work very carefully in the sense once our product goes into the market, it will find acceptability, immediately, we'll go for the next month.

Yes, yes. Okay. And sir, lastly, in terms of volume growth, as we say that we will not see any slowdown, so we maintain our 15%, 20% volume growth guidance, right?

This is what we are maintaining quarter-on-quarter, you see. But remember my volume have grown, raw material prices have come down. If I take my first quarter price of steel, then my growth will be almost 30%.

So, in 9 months FY '25, what is our volume growth, if I may ask?

It is almost in the 9 months; our growth is 13% year-over-year. If you see last year 9 months and this year 9 months, the growth in volume terms, it is 13%.

The next question is from the line of Mahek Talati from Agility Advisors.

I wanted to understand more from the other income perspective. In Q2, as you mentioned that there was interest deposit income, export benefits and sale of investments. But export benefit is something which we would be getting regularly, correct? So how was there a sudden jump in Q2 and it has falled on Q3? And how should we look this going forward?

See, the export benefits, interest income, that is continued to be received by the company since we have to place the FDs for issuing the bank guarantees, letter of credit, et cetera. In addition to that, we made certain investments, we sold certain investment during Q2. So that income is also reflecting in other income.

Okay. And any time line on by when we can achieve full capacity utilization for our new auto plant, the LDP1?

Our new plant capacity, we have put up a 50,000 tonne capacity. And in the coming year, say, FY '26, we will likely to achieve 70% to 80% in this new financial year.

So we are expecting close to INR 400 crores of revenue next year, correct?

Definitely. But it all depends on the market.

Okay. And in terms of defense plant also, are we expecting to achieve full utilization by next 2 years, by FY '27 because it will commercialize in FY '26?

In FY '27, there should be a full capacity utilization will be there.

Okay. If you could guide us on the time line for the auto tube plant, how long is the approval process, like 3 months, 6 months or how much time it takes before we start supplying the production?

Actually, it is a continuous process. Our customers are seeing what we were doing for the last 4, 5 years, but it is a regulatory requirement that whenever a new model is introduced, then it again goes for the sampling. But it is not hampering our production and our dispatches. It's a continuous process as we have told in the coming financial year, FY '26, we will be achieving almost 70% to 80% of the capacity.

Okay. Okay. And similar for the defense plant as well. So, what will be the approval time line once the plant goes live?

Defense, I have already told that in Q2, it is likely to be commercial production should come in Q2. And in the next year, at least 50% we should achieve the capacity for which we have put up this plant. So almost if you say INR 300 crores, so almost INR 150 crores, we should achieve in FY '26 as we expect.

Okay. And sir, last one bookkeeping question. So, if we see the CFO in FY '24 annual report, we have mentioned other receivables increased by INR 200 crores. And if we go -- if we study more, it seems that you have considered QIP monitoring accounts as a part of the other receivables. So, can you please explain the rationale behind the same?

Sorry, can you repeat your query?

So, if we see the FY '24, there was an increase in the other receivables by close to INR 200 crores. And if you see the balance sheet, it seems that you have considered QIP monitoring account, which is close to INR 90 crores as a part of the other receivables portion, which I think should be a part of the cash flow from financing. So just wanted to understand the rationale why it is considered a part of CFO.

Yes, you kindly do one thing. You send us your query. We will reply in detail. You see right now, not possible for explain the same in detail.

The next question is from the line of Prateek Bhandari from Aart Ventures.

You mentioned that at the peak capacity for the Defense segment, we would be clocking revenue of around about INR 300 crores. So that would be...

INR 250 crores to INR 300 crores.

Sorry?

It is approximate -- it is approximate INR 250 crores to INR 300 crores. It all depends on the market price at the time when we commission.

That is by FY '27, right?

No. FY '26, it will be commissioned in Q2 and FY '27 will be the year when we will be having maximum capacity utilization.

Got it. Got it. So at peak capacity, you mentioned the revenue would be around about INR 250 crores to INR 300 crores, right?

Yes.

And for the FY '26, we are expecting it to get commissioned in the second quarter, right?

Yes.

So for FY '26, you mentioned that we would be operating around about 50% and clocking a revenue of INR 150-odd crores.

It seems. It seems that we should do. All right.

So this is over and above the guidance you gave earlier of INR 4,500 crores for the full year, right?

It should be -- it is extra than the 40 - 45 we are targeting for the coming financial year, say, FY '26 and the defense revenue should be addition to it.

Over and above, right?

Yes.

Also, you mentioned in your opening remarks that from the existing capacity of 4,50,000 metric tonnes, you would be expanding it and making it to 5 lakh metric tonnes per annum. So, can you just let me know as to from where this 50,000 metric ton of addition would come, from which segment?

Actually, we have commissioned this LDP plan and this commissioning has been done on 1st of January 2025. So, that capacity of 50,000 has been added up in the 4th quarter. So, that is why I said that it will be upgraded from 4,50,000 to 5,00,000.

So, considering that hydraulic plant capacity, right? Yes, yes, yes.

That has been considered for 5,00,000 which will come from this. In Q4 results, it will be shown.

From Q4, okay. So, that means the current capacity for that segment is how much?

Its capacity is 1,10,000 ton right now.

Okay. Post the commissioning of this plant.

Post commissioning, it will be 1,50,000 to 1,60,000 tonnes.

1,50,000 to 1,60,000. Got it. And you mentioned that we would be, you know, getting a revenue of around about 500 crores at 70 to 80 percent capacity utilizations.

500 is the full capacity. Whatever 70 percent or 80 percent, that it will be in proportion. If you say 80 percent, it will be 400.

So, for FY '26, we are assuming it to be operating at 70 to 80 percent, right?

We hope so.

We will achieve that percentage without any doubt. We are privileged to have a plant which is unique in the size range. And we have got very, very encouraging inquiries from all over the world. The exception is, the exception is all the American president's behavior. Suppose he imposes some restrictions, some duties and all. Okay. Given that, we are confident we will achieve this.

So, considering the fact that this plant is unique and the demand is robust, so do we anticipate to do a further expansion for this 50,000 metric ton of capacity as well?

I can honestly tell you, we are always in expansion mode. It is not decided today, but we are continuously thinking about it. Okay. Got it.

And what would be the estimated amount of CapEx that we would be doing for FY26?

It is only on the, it is only on the drawing board. We will let you know once the things are finalized.

Okay. So, we haven't yet finalized the quantum?

No. It is under consideration only.

Okay. Thanks. Thanks for answering my questions. Thank you.

The next question is from the line of Priyanshi Kankane from Brighter Mind Equity Advisors. Please go ahead.

Thank you, sir, for giving me this opportunity. Sir, I have 2 questions to ask. The first one is, where do you see the growth of steel pipe and for that, which sector are you targeting the most?

Your question is not clear. Can you again repeat it? Yes, sir.

Sir, where did you see the growth of steel pipe and for that, which sector are you targeting the most?

I am sorry. Your voice is too loud that we are not able to understand the second line of your question.

May I request Priyanshi to please switch on the handset mode? Yes, sure.

Hello. Yes, now I am audible.

Yes, yes, yes. Now you are clearly audible.

Sir, I want to ask, so where do you see the growth of steel pipes and for that, which sector are you targeting the most?

Whatever growth we are seeing, that growth is from the value-added sector and we have already quantified our, we have already described our value-added sector, which is our infra, which is our auto tubes and the oil and gas and defense sector. Basically, it is a forging sector. So, whatever demand, whatever upgrade of 15% we are seeing, we are seeing from these 3 sectors. It is not from the ERW tubes that we are looking for the 15% growth.

Okay. Sir, and second question I want to ask that are you participating in Bharat Jal Jeevan Mission and if yes, then how much revenue do you expect to generate from this business, from this mission?

Bharat Jal Jeevan Mission, for last 6 months nothing has happened. We are not very active participant in this because the system is very different. Supplies are through contractors. And cash flow is a big problem there.

Okay.

Thank you, sir. Thank you. Participants who wish to ask a question, may press star and one. The next question is from the line of Vaibhav Jain, an individual investor. Please go ahead.

Hello, am I audible?

Yes, yes.

Yes, sir. Please go ahead. Thanks for the opportunity. I just want to understand the details on what is this investment and loan Cypress Venture that we have there in our annual report?

Investment in solar sector.

Sorry?

Sir, loan Cypress, this is an investment in solar sector. Actually, we are taking electricity to our solar power. So, for that purpose, we have to invest in that company.

So, basically for capital consumption of solar.

Yes, like that. This is our UP-government policy. Any solar plant comes into Cypress to supply solar power. We are supposed to be equity holder in that.

Okay, okay. Got it.

This is the UP-government policy.

Yes, sir. Sir, also in your statement in the annual report, the company has a loan to supply electricity to Cypress. Can we just get the details on that? [Technical Difficulty]

We can send the details to you.

For participants, this is the last question. This is from [Technical Difficulty]

Thank you, sir.

Please go ahead.

I am from the US.

The voice is breaking, sir.

Please... I am sorry. How much percentage of GoodLuck India and GoodLuck defense?

79% - 81%.

81%. Okay.

Participants who wish to ask a question, press star and 1. Anyone who wishes to ask a question may press star and 1 now. As there are no further questions from the participants, I now hand the conference over to Mr. Ram Agarwal, Chief Executive Officer from GoodLuck India Limited, for closing comments.

Thank you. On behalf of GoodLuck Management, I thank all the stakeholders and our listeners. We are committed to add value to your company continuously and consistently. Thank you.

Thank you, sir. Ladies and gentlemen, on behalf of GoodLuck India Limited, that concludes today's session. Thank you for your participation. You may disconnect the call now. Thank you.