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Jay Bee Laminations Ltd: Management Meet Highlights & Growth Outlook
1. Capacity Expansion & Utilization Trends
- The company’s Unit 3 expansion is progressing with incremental capacity additions planned over the next 1-2 months.
- Current capacity of 18,000 MT operates at an efficient 80-85% utilization rate.
- By FY26, the company aims to expand to 24,000 MT, ensuring optimized production across all units.
2. Strong Revenue Growth Despite Capacity Constraints
- Despite no major expansion before the IPO, sequential revenue growth of 30-35% was achieved due to better order execution.
- Capacity expansion began in October post-IPO, aligning with an aggressive growth strategy.
- A focus on higher-range transformers (400kV class) and export market expansion contributed significantly to sales growth.
3. Market Position & Competitive Landscape
- No major sourcing issues in the last 10 months, despite BIS license renewal challenges faced by some Chinese mills.
- The company mitigates supply chain risks through diversified procurement strategies and strong supplier relationships.
- Competition is increasing from companies exploring backward integration into CRGO steel, though execution risks remain high.
- Industry-wide implications of a major transformer manufacturer acquiring CRGO production capabilities are being monitored.
4. Demand Trends & Geographic Expansion
- While dominant in the 220kV segment, the company is aggressively expanding in 400kV and 765kV markets.
- South India contributes ~21% of revenue, but West & North India remain the dominant regions.
- Plans to establish a greenfield facility in South/West India for optimized logistics and lower freight costs.
5. Financial & Operational Highlights
- Q2FY25 utilization peaked at 94%, stabilizing at 80-85% recently.
- Import-to-sales ratio is now 10-20%, and export sales (~15% of total revenue) provide a natural forex hedge.
- Forex impact is minimal, with import dependency reduced from 30% to 20% in six months.
- Debt remains controlled at ~INR 25 Cr, with no major CapEx post-October, except ₹15-16 Cr investment in Unit 3.
6. Advancements in High kV Class & Export Markets
- Successfully executed initial 400kV orders without PGCL approvals, using customer performance certifications instead.
- PGCL approval expected in 1-3 months, solidifying the company’s high-voltage transformer market position.
- Export expansion remains a strategic focus, with continuous efforts to grow international sales & order book.
7. Raw Material Pricing & Margins
- CRGO steel price fluctuations managed through optimized inventory strategies.
- EBITDA model based on ₹35,000-40,000 per ton, rather than EBITDA percentage alone.
- Entry into 400kV & 765kV segments expected to boost margins, depending on approvals & steady orders.
8. Future Outlook & Growth Plans
- Monthly production target: 1,200-1,300 MT; Quarterly target: 4,000 MT.
- Future expansion aims at ~30,000 MT capacity by FY27, driven by demand and efficiency.
- Revenue per ton projected in the ₹280,000-310,000 range, influenced by raw material prices & customer mix.
- The company prioritizes order book diversification, high-margin product expansion, and scaling exports.
- Management remains cautiously optimistic, with a focus on balanced growth, cost control, and margin improvements.
- Company Overview
- Industry Trends
Disclaimer: The projections of potential returns are based on current market conditions and company performance. Actual results may vary due to various factors, including market dynamics, economic conditions, and changes in the competitive landscape. Investors should conduct their own research and consult with financial advisors before making investment decisions.
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