Skipper Limited (SKIPPER.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 FY '26 Earnings Conference Call of Skipper Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Sahadeo from ICICI Securities Limited. Thank you, and over to you, sir.

Thank you, Rudra. Good evening, everyone. On behalf of ICICI Securities, I welcome you all to the Q3 FY '26 Earnings Call of Skipper Limited. The company is represented by Mr. Sharan Bansal, Director; Mr. Devesh Bansal, Director; Mr. Shiv Shankar Gupta, company's CFO; and Mr. Aditya Dujari, AVP, Finance and IR. So without any further ado, I hand over the call to the management for their opening comments. Over to you, sir.

Thank you. Thank you, Navin. Good evening, everyone, and welcome to Skipper Limited Quarter 3 and 9 Months FY '26 Earnings Conference Call. Before we proceed, I would like to draw your attention to the fact that certain statements made during the call may be forward-looking in nature and should be considered in conjunction with the risks and uncertainties associated with our industry and business. We are pleased to share that the company has delivered a strong performance during the quarter and the 9 month period, supported by disciplined execution, improving profitability and sustained momentum in order inflows. Our performance continues to reflect the benefits of a manufacturing-led model with scalable capacity, improving operating leverage and a growing international footprint. During the quarter, we recorded our highest ever quarterly revenue of INR 1,370 crores, registering a growth of 21% year-on-year, driven by strong execution across engineering products and EPC business. We also achieved our highest ever quarterly EBITDA of INR 141 crores, up 28% year-on-year, with EBITDA margin improving to 10.3%, reflecting operating leverage, higher plant utilization and execution of better quality contracts. Profit after tax increased by 40% year-on-year to INR 50.2 crores, marking our strongest quarterly bottom line performance till date. Our improving profitability profile is also supported by a tighter cost discipline and a continued reduction in finance cost intensity, aided by better working capital management and cash flow generation. Now moving to the 9 month performance. For 9 months FY '26, we delivered our highest ever 9 month revenue of INR 3,886 crores, growing 17% year-on-year. Profitability improved meaningfully with standalone EBITDA margin expanding to 10.3% compared to 9.8% last year, driven by operating leverage and execution of higher quality T&D contracts. PBT before exceptional items grew 38% year-on-year to INR 187 crores with PBT margins improving to 4.8% from 4.1% last year, while operating PAT before exceptional items rose 38% year-on-year to INR 139.7 crores with PAT margins improving to 3.6% from 3%. These trends demonstrate that growth is increasingly translating into returns with improving predictability and resilience in earnings. On the order book and growth visibility, momentum remains exceptionally strong. As of December '25, our closing order book stood at an all-time high level of approximately USD 1 billion or INR 9,009 crores with a healthy mix of 90% domestic and 10% export orders, providing strong revenue visibility. During quarter 3 FY '26, we secured new orders worth INR 1,428 crores, primarily for engineering product supplies and EPC works, including significant domestic EPC contracts from PGCIL and international customers. We also secured 2 prestigious 765 kV transmission line projects in Uttar Pradesh and Karnataka, further strengthening our positioning in the high-voltage segment and reinforcing our credentials in the complex transmission projects. Cumulatively, 9 month FY '26 order inflows stood at INR 4,649 crores, reflecting a growth of 24% year-on-year. We continue to see strong traction across both domestic and international markets, supported by a robust bidding pipeline of approximately USD 3 billion or over INR 27,000 crores. Capacity expansion and other update. On the capacity and operational front, our new 75,000 tonnes capacity is now fully operational with commercial production commenced. In addition, an additional 75,000 tonnes expansion is already underway, which will take our total installed capacity to 450,000 tonnes by the end of FY '26. As utilization rises on this expanding asset base, incremental volumes are expected to translate into disproportionate gains in profitability, reinforcing the operating leverage inherent in our manufacturing platform. On the organization and system side, Skipper has received the Great Place to Work certification for the fifth consecutive year, reflecting the strength of our culture and execution capability. Further, the company has successfully gone live with SAP S/4HANA RISE across key business functions, marking a major milestone in our digital transformation journey and enabling stronger process control, data visibility and scalable growth. We believe Skipper is at a pivotal inflection point and poised for a multi-year growth trajectory. The company is backed by a strong pipeline of domestic and international T&D opportunities, strategic expansions into new business areas and a well-defined roadmap to accelerate exports under the global China Plus One framework. With the worldwide shift toward non-fossil and renewable energy driving sustained demand and a continued emphasis on operational excellence, Skipper is well positioned to deliver robust and profitable growth in the quarters and years ahead. Thank you, and I'm happy to take your questions now.

[Operator Instructions] The first question is from the line of [ Keval Barot ] from Axis Securities.

Am I audible?

Yes, please.

Compliments on a good set of numbers. So sir, I have a couple of questions. My first question is that in the last Q2 con call, you gave a revenue guidance of 20% to 25% growth year-on-year for next 3 years, CapEx guidance of INR 800 crores for next 4 years and EBITDA margins in the range of 10% to 10.5% gradually increasing year-on-year for the next 2 to 3 years. So do you still hold this guidance as in the T&D sector is facing some challenges regarding right of the way land acquisition and power demand issues?

Regarding T&D sector, see, as such, there are no challenges. There are a good amount of business opportunities, both at the interstate level and at the intrastate level also. You might be aware that recently, the states -- various states have also started TBCB bidding. So business opportunities are robust. The government of India has that INR 9 lakh crores transmission CapEx plan up till 2032. And even beyond 2032, there are going to be further opportunities with projects like Arunachal Hydro project, et cetera, which itself is expected to be INR 6.5 lakh crores in transmission investment. So all in all, we don't see any kind of challenge in the long run. Yes, this year, if you ask me probably last year because it was much higher than expectations, the order -- overall industry ordering, probably in this year last -- this year is slightly muted compared to last year. But overall, it is still robust. If you see from our own order inflows, we have got order inflows of INR 4,800 crores in the 9 months, which is a 24% increase over the previous 9 month period. And plus, apart from this, exports are also quite robust. We are seeing increasing export opportunities in a number of geographies. So long run, honestly, again, in a certain year, there may be peaks and troughs, but long run, transmission opportunity is very, very robust.

Okay, sir. And regarding the guidance of revenue, CapEx and EBITDA margin that will be intact, which you have said it in last Q2 con call, right?

Yes. So again, our aspiration is obviously to grow between 20% to 25%. We maintain that, yes, the opportunity in transmission does present itself for us to be taking that target. So between 20% to 25% is our aspiration for year-on-year growth.

Okay. And CapEx for the next 4 years will be INR 800 crores, right?

See, you can expect -- we have already done quite a bit of CapEx in last year and this year by increasing our capacity to 450,000 tonnes. For next year, we have not yet firmed up our annual -- our actual CapEx numbers, which were expected to be firmed up in the month of March. But you can expect a similar CapEx number in the next coming years as well.

Okay, sir. Got it. And my second question is regarding capacity expansion. So as again, in the last Q2 con call, you have also said that the additional 75 KTPA plant is expected to go online by the end of FY '26. As I've seen it in your presentation, I just wanted to know what will be the approx. timeline regarding the status of going to be online? And what kind of capacity utilization we can expect from that once it comes online and how will the ramp up -- and what will be the ramp-up profile?

The -- as like any CapEx project, we, of course, there are minor delays even in this one, again, partially, it will be commissioned before March and partially, it will spill over to the first quarter. But largely, this is the time range of the CapEx, and we expect the utilization to come in by fully by quarter 2.

Okay, sir. And just wanted to ask a last question regarding the sector outlook. As I've read articles in the consensus talking regarding expectation of lifting restrictions on Chinese products in power sector. Is there any update regarding it? And how will it impact the company?

In our products, see, there is -- we don't expect any threat from Chinese companies. But I am -- I cannot really speak much about, let's say, other substation products, et cetera. But for transmission line products, we don't expect any competition from Chinese.

Our next question is from the line of CA Garvit Goyal from [ Serene Alpha. ]

Am I audible?

Yes, please.

Sir, I just want to understand the impact of the recent increase in the copper price on our EPC segment. Could you please throw some light on this?

The impact of what, sorry?

Impact of recent increase in copper prices. So...

Copper is not our raw material, so we are not affected. Our major raw materials are steel and zinc and to some extent, aluminum.

Steel and zinc.

Our next question is from the line of Mehul Panjwani from [ 40 Cents. ]

Congratulations on good set of numbers. Sir, my first question is regarding the order book. We have USD 1 billion order book. So can you just throw some light on how long will it take to execute these orders, in how many -- in what period?

Yes. Normal -- on an average, our orders are to be executed over a 2 year time frame. So of course, certain orders are shorter-term in nature where 1, 1.5 years and certain orders are longer term. But on an average, you can assume them to be executable over 2 years.

Okay, sir. And sir, one follow-up question on the previous participant. You mentioned that majority part of the metals which we use is steel and zinc. So there is a lot of rise in overall commodity prices across the board. So how would it impact if we were to see some high appreciation in prices of zinc and steel the way we have seen in some precious metals and copper, would it impact our margins substantially or how would it be?

See, in terms of steel and zinc prices, they have largely been range bound. If you would know -- if you remember that prices had dropped quite a bit in the quarter 1, quarter 2. And we have seen some firming up of prices in quarter 3 this time. So I would say that prices are pretty much -- if you look at an average for the full year, they are range bound. And secondly, as we have mentioned before, there is a fair amount of value addition in our end products. So raw materials only make up about 60% of our selling price. So again, and we have a healthy mix of firm price and variable price contracts also. So I would say that we are not very much concerned about the commodity price increase, at least for our raw materials are concerned. We are not really dealing with the precious raw materials like silver or et cetera, or even copper like the previous participant asked, where those are not our raw materials, where the real increase has been seen.

Right. And sir, can you elaborate a little bit on the Arunachal project, which is already there announced by the government because I'm not aware about it.

It is right now in planning stage, but the Government of India foresees a huge hydro potential in the Arunachal belt, and it is expected that a total of about INR 6.5 lakh crore transmission opportunity will open up in that belt because of those hydro projects. But those are going to be extending up to 2035 and beyond. So it's a very long-term project.

Right. And sir, can you see some kind of announcement in the budget on the transmission sector?

The transmission sector doesn't really get any support from the budget as such because as I've mentioned earlier, that there is a large amount of private participation in the transmission sector. Most of the major projects are conducted on TBCB, tariff-based competitive bidding, where the Power Grid also participates and various private developers are participating. So from the budget, the transmission sector doesn't really receive any budgetary support, and we do not expect any budgetary support in this budget also.

And any negative developments?

None as such. We don't -- I mean, for the transmission sector, again, because it's identified requirement to integrate 500 gigawatts of renewable capacity and overall, now with the government talking about nuclear power also, I would believe that, that would also open up more transmission opportunities.

[Operator Instructions] Our next question is from the line of Navin Sahadeo from ICICI Securities Limited.

Yes. Am I audible?

Yes, you are.

So a couple of questions. My first one observation basically in your presentation that you have given a guidance of 20% growth. Until previous quarter, we were always maintaining 25%. So if you could just give some color here why the change and then like are we -- because even from that point of view, simple arithmetic, I mean, to meet that 20% guidance also, we -- arithmetically, we need almost 30% jump in Q4, whereas so far into the first 9 months, the revenue run rate has not been that much. So I just wanted to get your understanding about the change in the guidance and conviction for Q4.

So in the sense, the revenue, if you look at this quarter, we have had a 21% growth. For the last quarter, definitely, we do expect anywhere between 25% to 30% growth in the last quarter also. So I'd say certainly an overall growth of anything between 21%, 22% is on the cards for the full year. Again, the 25% is -- was our aspirational growth for the full year. But again, as we have shared in the previous calls, there was a delay in our capacity enhancement that took place in -- that came about in quarter 1. And there was some amount of slower execution due to the heavy monsoon in the months of extended monsoon period. So overall, but look, in the beginning of the year, 25% is an aspiration. I believe we are not very far off from that.

Helpful. My second question then was on the order intake. So if we were to continue with this because I believe 20% to 25% range is what I think you had alluded to last time. So to continue this revenue run rate, ideally, our order book should also -- I'm saying our order inflow trend should also grow by a similar run rate over a period. Now last year, our order inflow was more like INR 5,335 crores. And this year, I think the guidance was INR 6,000 crores-odd order inflow point of view, which is roughly anywhere between 10% to 15%. I'm just throwing a number here because we have 9 month number, but we don't know the Q4 number. But broadly, it looks like our order inflow will grow at 10% to 15%, whereas the revenue then that we are saying is likely to grow at 20% or going ahead also, that is what I would like to recollect that last -- the previous quarter, you were saying we can continue to grow at 20%, 25%.

Correct.

So I'm just trying to understand the pipeline for the order inflow and can that also grow at 20% plus? And how would we look at it between domestic and exports?