Cosmic CRF — Q4 FY25 earnings call

Call held 27 May 2025

Management summary

Cosmic CRF delivered strong consolidated revenue and PAT growth in FY25, driven by significant volume expansion and the successful integration of NS Engineering. Despite missing its revenue guidance due to lower average selling prices and product mix shifts, the company maintained a robust order book and is aggressively pursuing strategic acquisitions like Amzen. Management addressed temporary cash flow and margin pressures, attributing them to growth investments and one-time costs, while reaffirming long-term expansion plans.

Highlights

  • Consolidated Revenue for FY25 grew by 58.9% to INR 401 crores from INR 253 crores in FY24.

  • Consolidated Profit After Tax (PAT) for FY25 surged by 141.6% to INR 30.8 crores from INR 12.75 crores in FY24.

  • Sales volume for FY25 increased by 131.3% to 55,941 metric tons from 24,000 metric tons in FY24.

  • The current order book stands at INR 550 crores, providing strong revenue visibility for the next 1-1.5 years.

  • NS Engineering, acquired in June 2024, achieved a top line of INR 101 crores and PAT of INR 11.5 crores in its first year of operation.

Concerns

  • FY25 consolidated revenue of INR 401 crores missed the previous guidance of INR 500 crores, primarily due to a 20-22% drop in average selling price (ASP) and a shift in product mix towards lower-priced mild steel.

  • Operating Cash Flow (OCF) was negative due to raw material purchases for new subsidiaries and stretched debtor days, with INR 70 crores in debtors compared to a target of INR 50 crores.

  • H2 FY25 PAT was impacted by one-time legal expenses of INR 3.25 crores for the Amzen acquisition and deferred tax of INR 1.6 crores, totaling INR 11.15 crores.

  • An industry-wide shortage of wagon wheelsets has severely reduced wagon turnaround from 3,400-3,600 to 950-970 wagons per month, affecting execution and working capital across the sector.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹401 Cr
    YoY +58.9%
  • Consolidated PAT
    ₹30.8 Cr
    YoY +141.6%
  • Consolidated Sales Volume
    55,941 metric tons
    YoY +131.3%
  • Standalone Revenue (Cosmic CRF)
    ₹301 Cr
  • Standalone PAT (Cosmic CRF)
    ₹18.7 Cr

FY25

  • Average Selling Price
    ₹78,850/mt

What they filed

₹ Cr · quarterly
Line itemQ2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue169 232 304 412
EBITDA22 22 38 41
Net profit18 11 24 26
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹109.5 Cr Total
  • NS Engineering ₹101 Cr 92.2%
  • Cosmic Springs & Engineers ₹8.5 Cr 7.8%

Order book

high confidence

Total value

₹550 Cr

as of 2025-03-31 quantified

Execution

execute INR 250 crores in the next two quarters

Composition

Mix 2 client types
  • Railways 52%
  • Infra 48%

Share of order book by client type

Pipeline

other

New orders from Railway Board expected

The order book of INR 550 crores is almost 1.8x of what the company has done this year, indicating strong visibility.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Spring plant investment ₹20 Cr
    • Forging plant investment ₹45 Cr
    Your ambitions are basically to take up a INR20 crore, to invest INR20 crores in your spring plant, around INR45 crores, which has been mentioned in this PPT, in your forging plant
  • Debt Net ₹70 Cr
    • Repayment Term loan reduced from INR 20 crores to INR 5 crores since 2022. ₹15 Cr
    we are at INR70 crores on its debt in Cosmic CRF and NS together. INR70 crores of debt includes INR65 crores of working capital and INR5 crores of term loan
  • M&A NS Engineering Acquisition · Integrated · Consideration ₹[object Object] (cash)

    Strategic acquisition for deleveraging and rapid capacity expansion, started plant in three months vs 2.5-3 years for greenfield.

    INR 155 crore debt settled for INR 30 crores. Funded through INR 84 crore preferential equity raise.

    The entire amount of NS that has been transferred in terms of INR360 odd crores, INR370 odd crores is completely from the books of Cosmic CRF because we had raised, we had done a raise through preferential equity in February and March 2024, primarily for the takeover of NS and for the operations of NS.
  • M&A Amzen Transportation Industries Private Limited Acquisition · Pending regulatory · Consideration ₹[object Object] (undisclosed)

    To become an integrated wagon builder and acquire the last available wagon building unit through NCLT process.

    Total bid cost including refurbishment and DFCC is INR 330 crores. No numbers expected from Amzen this year due to 6-8 month integration timeline.

    So, totality, you are looking at INR330 crores. Now, with INR330 crores, if you look at the full scale of the output, then we are looking at around INR1,200 crores from here, the existing plants that you have and around INR1,500 crore to INR1,600 crores from what Amzen can do at its best.
  • Liquidity Liquidity disclosed Raised INR 84 crores from preferential equity in Feb/Mar 2024. Total funds raised (pref raise + warrant) are INR 222.5 crores (INR 172.5 cr from pref raise, INR 50 cr from warrant with INR 12.5 cr paid). Expects to have INR 250 crores in funds by September.
    we've picked up INR84 crores from our Pref raise in 2024 Feb and March. That was basically done for the takeover of NS Engineering.

Guidance & targets

Revenue

  • Consolidated Revenue FY25 Revenue · FY25 · Low confidence INR 500 crores
    The forward-looking statements and the guidance that had given last year and also in the half yearly was that we will touch INR500 crores.

    — Aditya Vikram Birla

  • Total Turnover (with Amzen) Revenue · long term · Medium confidence INR 2,800-3,000 crores
    So, we are looking at INR2,800 crore to INR3,000 crores with price improvement

    — Aditya Vikram Birla

Order Book

  • Order Book Execution Order Book · next two quarters · Medium confidence INR 250 crores
    if we stand at INR550 crore and we execute even 50% of this in the next two quarters, we understand very clearly that we will be able to have the similar order book carrying forward in half yearly also. ... Till such time, INR250 crores will fulfil us in totality.

    — Aditya Vikram Birla

Order Inflow

  • New Railway Orders Order Inflow · September-October · Medium confidence New orders
    by September, October, when the orders will start coming in for the new, maybe it comes in a one big tranche, or it comes in two or three, four tranches.

    — Aditya Vikram Birla

  • Railway Board New Orders Order Inflow · September to December · Medium confidence New orders
    the Railway Board and the Railway Ministry, obviously, anywhere between September to December that is the quarter.

    — Aditya Vikram Birla

Profitability

  • Forging Plant PAT Margin Profitability · FY26 and FY27 · High confidence 15-20%
    with the FY26 and '27 will give you a bottom line of roughly 15% to 20% odd and anywhere between that.

    — Aditya Vikram Birla

Promoter Ownership

  • Promoter Dilution Promoter Ownership · till March 2028 · High confidence No further dilutions
    I will commit today only to you that by 2028, so till March 2028, Cosmic CRF will not make any further dilutions from where the promoter stands today.

    — Aditya Vikram Birla

Volume

  • Total Volume (at 75% utilization) Volume · next year · High confidence 82,000 metric tons
    we're looking at 82,000 metric tons. 82,000 metric tons are roughly stands at a capacity, a pricing of, say, INR80,000.

    — Aditya Vikram Birla

Utilization

  • Cosmic Springs & Engineers Utilization Utilization · next year · High confidence 85%

    Previously 35% → 85%

    Cosmic Springs and Engineers, which should not operate more than 35% this year, but will operate at 85% next year.

    — Aditya Vikram Birla

What to watch in Q1 FY26

Amzen Acquisition Closure

within next 1-2 quarters
Current Final resolution plan being filed, pending NCLT approval
Target LOI received, acquisition closed

Why it matters

Key strategic acquisition for becoming an integrated wagon builder and achieving long-term revenue targets.

We are filing our final resolution plan today. As we speak, our team is already at it in the room beside this and we will be filing it right after this call ends and hoping to get the LOI ASAP faster than I and you can imagine.

Risks & concerns

  • Wagon Wheelset Shortage

    high

    Industry-wide shortage of wheelsets from RFW has reduced wagon turnaround significantly, impacting execution and working capital.

    Management acknowledged

  • Raw Material Price Volatility

    medium

    Average selling price dropped by 20-22% in FY25 due to steel price fluctuations and product mix shift.

    Management acknowledged

  • Product Mix Shift

    medium

    Shift from 80% stainless steel to 70% mild steel in product mix impacted ASP and revenue realization.

    Management acknowledged

  • Negative Operating Cash Flow

    medium

    OCF is negative due to raw material purchases for new subsidiaries and stretched debtor days from wagon builders.

    Management acknowledged

  • Amzen Acquisition Legal Challenges

    medium

    Ongoing legal challenges from other bidders in the NCLT process for the Amzen acquisition.

    Management acknowledged

  • Aggressive Growth Strategy and Debt

    low

    Analyst raised concerns about the company's 'obsession' with 100% growth and potential debt risks, which management justified as necessary for exponential growth.

    Analyst downplayed

Q&A highlights

5 direct
Lack of BSE Announcements for Acquisitions Partial
over the last four, five, six months, I think we have given whatever we felt was material in nature to the BSE. But however, we were being told that every small information to the BSE is just unnecessary and it's not material worthy. ... The BTA that happened hasn't been registered yet, due to which we did not send it to the BSE.

Highlights a potential communication gap with investors regarding strategic acquisitions and the company's interpretation of materiality for disclosures.

Asked by Hanu Rao

Operating Margin Fall and One-time Costs Direct
its reported PAT for you is at 6.3. ... The deferred tax that we had to deal with this year... to the tune of INR1.6 crores this year. ... the legal expenses and the other expenses that we were having to bear for Amzen specifically. ... cost came up to INR3.25 crores. So now if you see INR3.25 crores, INR1.6 crores plus INR6.3 crores, you are at INR11.15 crores, Arnab.

Clarifies the reasons behind the lower H2 PAT, attributing it to specific one-time legal and deferred tax expenses related to the Amzen acquisition, rather than core operational issues.

Asked by Arnab Bhattacharjee

100% Growth Obsession and Debt Risks Partial
I don't understand the obsession of 100% growth, Adityaji. Why can't we just set milestones? Why are we so bound on growing at 100% and why don't we just grow organically at what happens? Why does that number mean so much to you? I understand that it is an aspiration, but you are trying to grow in a geometric way. That's very risky. I worry about debt.

Challenges management's aggressive growth strategy and its potential implications for financial health, prompting management to defend their long-term vision and debt management.

Asked by Arnab Bhattacharjee

Amzen Acquisition Chances and Integration Timeline Direct
I used to say 99.9% when I filled the Form G. So, I have nowhere close to going below that. We are filing our final resolution plan today. ... for it to start off, it will take six to eight months at best, even if we are at God speed. So, I don't see Amzen, getting any numbers for this year. This will be a takeover year for Amzen with all refurbishments and the setup.

Provides a clear update on the status and expected timeline for the critical Amzen acquisition, including its near-term financial impact.

Asked by Hardik Gandhi

Industry-wide Wagon Wheelset Shortage Direct
The RFW was supposed to supply wheelsets. There's a shortage of wheelsets today. Over the last three, three and a half months from the last quarter till now, there have been always a shortage of wheelsets. The turnaround of wagon sets would have was roughly 3,400 to 3,600 wagons per month compared to last month, which was 950 to 970 wagons to be precise.

Identifies a significant external factor impacting the entire wagon building industry, explaining execution delays and working capital issues.

Asked by Aditya Vikram Birla (self-initiated explanation)

Promoter Commitment to Ownership Stake Direct
I will commit today only to you that by 2028, so till March 2028, Cosmic CRF will not make any further dilutions from where the promoter stands today.

Provides a strong signal of promoter confidence and long-term commitment to the company, addressing concerns about potential future equity dilution.

Asked by Akshit Anjana

Negative Operating Cash Flow and Debtors Direct
The OCF that we have, the operating cash flow has been negative. ... we are basically buying raw material for NS, for springs also, because they do not have the money other than what Cosmic CRF has to lend them or probably give them advances for. ... debtors... at INR69 to INR70 odd crores... what should have been at INR50 crores, but got stretched to INR70 crores for the simple reason being that INR20 crores is the leverage that we have to use.

Explains the reasons for negative operating cash flow and stretched debtors, linking them to investments in new subsidiaries and industry payment cycles.

Asked by Aditya Vikram Birla (self-initiated explanation)

3 min read 7 chapters

Detailed narrative

FY25 Financial Performance and Volume Growth

Cosmic CRF reported a consolidated revenue of INR 401 crores for FY25, marking a significant 58.9% year-on-year growth from INR 253 crores in FY24. Consolidated Profit After Tax (PAT) surged by 141.6% to INR 30.8 crores from INR 12.75 crores. This robust performance was primarily driven by a substantial 131.3% increase in sales volume, reaching 55,941 metric tons in FY25 compared to 24,000 metric tons in the previous year.

Revenue Guidance Miss and ASP Impact

Despite strong volume expansion, the company's FY25 consolidated revenue of INR 401 crores fell short of its earlier guidance of INR 500 crores. This miss was largely attributed to a significant 20-22% drop in the average selling price (ASP), from INR 102,880 per metric ton in FY24 to INR 78,850 per metric ton in FY25. The decline was exacerbated by a strategic shift in raw material mix, with mild steel now accounting for approximately 70% of the blend, up from 20% previously.

Strategic Acquisitions and Capacity Expansion Initiatives

The company successfully integrated NS Engineering, which contributed INR 101 crores to the top line and INR 11.5 crores to PAT in its first year of operation, achieving 15,500 metric tons of volume. The Singur plant's production capacity increased from 32,000 to 45,000 metric tons. Additionally, Cosmic Springs & Engineers, a new subsidiary, commenced operations with a capacity of 14,400 sets of springs, and a new forging unit with a 7,200 metric tons per annum capacity is under development, projected to generate INR 150 crores turnover with 15-20% PAT by FY26/FY27.

Amzen Transportation Acquisition Update

Cosmic CRF is in the final stages of acquiring Amzen Transportation Industries Private Limited, a target estimated to be twice the size of the current company. The final resolution plan is being filed, and management expressed high confidence in securing the asset. The total cost for the Amzen bid, including refurbishment and Dedicated Freight Corridor (DFCC) costs, is estimated at INR 330 crores. Integration is expected to take 6-8 months, with no financial contribution from Amzen anticipated in the current fiscal year.

Working Capital and Cash Flow Dynamics

The company experienced negative operating cash flow (OCF) in FY25, primarily due to significant raw material purchases for the newly acquired NS Engineering and Cosmic Springs, which are currently funded by Cosmic CRF. Debtor days were stretched to INR 69-70 crores, exceeding the target of INR 50 crores, as some wagon builders delayed payments for 4-5 months. Management views these as temporary challenges associated with aggressive growth and strategic investments.

Industry Headwinds: Wagon Wheelset Shortage

The wagon building industry is currently facing a severe shortage of wheelsets from RFW, which has drastically reduced wagon turnaround from a normal 3,400-3,600 wagons per month to just 950-970 wagons per month. This issue, which began in November-December, has impacted execution and working capital across the sector. Management expects this temporary problem to be resolved within the next 1-1.5 months.

Future Outlook and Promoter Commitment

Cosmic CRF maintains an ambitious long-term vision, targeting a total turnover of INR 2,800-3,000 crores with the full integration of Amzen. The company plans to execute INR 250 crores from its current INR 550 crore order book in the next two quarters, with new railway orders expected between September and December. The promoter reaffirmed a strong commitment by pledging no further equity dilutions until March 2028, aiming to fund future expansion through internal accruals and manageable debt.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls