GEE Q1 FY27 earnings call

GEE Limited delivered robust financial results in Q1 FY27, with turnover increasing 30% year-on-year to INR 103 crores. EBITDA saw a significant jump of 77% to INR 8 crores, leading to a 204 basis points expansion in EBITDA margin to 7.8%. Profit Before Tax (PBT) surged 318% to INR 5.5 crores, and adjusted PAT grew 223% to INR 3.2 crores, with adjusted PAT margin reaching 3.1%.

A key highlight for the quarter was securing a strategic approval from the Nuclear Power Corporation of India Limited (NPCIL), positioning GEE as one of only three certified players in this highly regulated sector. This is expected to unlock significant market growth, given the projected expansion of nuclear power capacity to 100 gigawatts by 2047. The company also contributed welding consumables to the commissioning of three naval warships (INS Dunagiri, INS Agray, INS Sanshodhak), marking its role in India's defence ramp-up journey.

GEE aims to achieve INR 1,000 crores in revenue by FY29-30 through organic growth, with a vision to become a comprehensive welding solutions provider. This involves expanding existing product verticals like stainless steel wires and adding new ones such as SAW wire, SAW flux, and flux cored wire. The company has already set up production capacity for flux cored wire (around 300 metric tons, with a plan to scale to 1000 tons, contributing over INR 150 crores turnover).

The company's current capacity is 59,000 metric tons, which will be increased by 20,000 metric tons to 70,000 metric tons, primarily for wire capacity. The total CapEx for this expansion, including new product lines and Thane plant shifting, is estimated at INR 30-40 crores over the next three to four years. For FY27, the planned CapEx is between INR 5 crores to INR 10 crores, focusing on setting up new product lines and expanding MIG wire production.

A significant event underway is the monetization of the company's land parcel in Wagle Industrial Estate, Thane. This is expected to generate approximately INR 400 crores in cash flow over the next five years. These funds will be utilized for inorganic growth opportunities, with the company looking to acquire tier 2 players to drive growth from INR 1,000 crores to INR 2,000 crores, primarily through brownfield expansion.

Management highlighted the immense infrastructure boom in India, which will drive demand for welding consumables across sectors like railways, defence, oil & gas, and energy. The company plans to leverage the shift from the unorganized to the organized sector, its strong R&D capabilities, and strategic approvals to increase its market share from the current 6% to 10-12% without being overly disruptive. Export markets, including Vietnam, Saudi Arabia, Russia, and the Middle East, are also being targeted, with efforts to secure international approvals like NAKS and TUV for European markets.

The company has successfully reduced its cost of debt, with interest costs coming down from 2.2% to 1.8% year-on-year. There are no existing term loans, only working capital limits of around INR 100 crores, with comfortable headroom. Management does not anticipate needing incremental working capital limits in the next year, as cash flows from the Thane land monetization will support internal accruals and brownfield expansion.