Have Bid For Projects Worth ₹30,000 Cr, Typical Order Win Strike Rate Around 10%: Transrail Lighting

Summary

In this interview with Mr. Randip Narang, MD and CEO of Transrail Lighting, the company discusses its strong Q2 revenue growth, increasing margins, and impressive 19-20% profit rise. Narang provides insights into the company’s IPO funds, the plan for a 326 crore capex, and how they are funding this with debt. The conversation also covers the current order book of 10,300 crores, upcoming project bids, and expectations for revenue inflow in FY25. Transrail aims for continued growth, maintaining its margin trajectory, with projections of 30% revenue growth and a stable debt-equity ratio.

Takeaways

• 😀 Transrail Lighting reported a strong 11-12% revenue growth for Q2, with steady margins approaching 13% and profits up 19-20%.
• 😀 The company raised 400 crores through an IPO but plans to take on more debt (326 crores) for a planned capital expenditure (capex) of 9200 crores over three years.
• 😀 The capex plan is divided into two phases, with Phase 1 already underway and Phase 2 expected in 2026-27, emphasizing long-term execution.
• 😀 Current debt-equity ratio is maintained at low levels, with no significant increase in debt anticipated for the near future.
• 😀 As of H1, Transrail Lighting has secured orders worth 2200 crores, with additional 3400 crores expected from the L1 pipeline in the next three months.
• 😀 The company has bid for projects worth 30,000 crores in the past four months, targeting a strike rate of 8-10%, which would add approximately 3,000 crores in inflows.
• 😀 The company is on track to achieve 5,000-6,000 crores in total order inflows for FY25, based on historical trends.
• 😀 Margins have improved, with Q2 EBITDA at 12.9%, surpassing the previous year’s guidance of 11.77%. The international business, though slower due to seasonal weather effects, is expected to recover in H2.
• 😀 The company continues to target a 30% year-on-year revenue growth, consistent with their IPO projections, and aims to maintain a margin of around 12%.
• 😀 Transrail Lighting’s debt-equity ratio is currently at 0.53%, and the company plans to maintain this level for the financial year.

Q & A

What was Transrail Lighting's revenue growth for the second quarter?

The company achieved a revenue growth of 11-12% for the second quarter.

What is the current margin for Transrail Lighting, and what is the target for the full year?

Transrail Lighting's margin is currently around 13.3%. For the full year, the company is targeting a margin of 12% EBITDA, up from 11.77% in the previous year.

What was the company's profit growth for the second quarter?

The company's profit grew by 19-20% in the second quarter.

How is Transrail Lighting funding its capital expenditure (capex) plans, and how much debt is involved?

Transrail Lighting plans to invest 326 crores in capex, part of which is funded through debt. The company had raised 400 crores in its IPO, and the capex involves an additional debt portion, but the company is not in a hurry to use it immediately.

What is the current debt-equity ratio of Transrail Lighting, and what are the company's future plans regarding debt?

Transrail Lighting's current debt-equity ratio is 0.53. The company plans to maintain this ratio and increase debt gradually in a phased manner without any dramatic changes.

What is the current status of Transrail Lighting's order book, and how much has the company bid for recently?

As of the second quarter, Transrail Lighting's order book is valued at 10,300 crores. The company has recently bid for 30,000 crores worth of projects in the last 4 months.

What is the expected order inflow for Transrail Lighting in FY25?

Transrail Lighting expects an order inflow of 5,000 to 6,000 crores for FY25, based on their historical performance and bidding success rate.

Why has there been a slowdown in the international business for Transrail Lighting, and what is the company's outlook?

The slowdown in the international business is due to seasonal factors, particularly the rains, which impact execution. However, the company expects to catch up in the second half of the year and maintain its margin trajectory.

What guidance did Transrail Lighting provide for its revenue growth and margins for FY25?

Transrail Lighting is guiding for a 30% revenue growth YoY in FY25 and is aiming for a full-year EBITDA margin of 12%, with the possibility of bettering this figure.

What is Transrail Lighting's stock performance in the pre-open market, and how has the company performed since its listing?

Transrail Lighting's stock is up by 6% in the pre-open market. The company is performing well since its listing, reflecting strong investor confidence.