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    Cosmic CRF

    543928
    Capital Goods·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

    5
    • 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

    4
    • 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.

    What Changed2

    vs Q2 FY26

    Guidance items10 → 9 (-1)Risks discussed4 → 6 (+2)
    Key financials

    Metrics

    6

    Periods

    2

    Headline

    5
    • 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

    1
    • Average Selling Price
      78,850 Rs/MT

    Segment breakdown

    • NS Engineering₹101 Cr92.2%
    • Cosmic Springs & Engineers₹8.5 Cr7.8%
    Donut· Share of Revenue

    Order Book

    high confidence

    Total Value

    ₹ 550 crores

    as of 2025-03-31

    quantified

    Execution

    execute INR 250 crores in the next two quarters

    Composition

    Mix2 client types
    • Railways52.0%
    • Infra48.0%

    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

    5
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Net ₹70 crores

    M&A

    NS Engineering

    acquisition · integrated · Consideration ₹NaN (cash)

    M&A

    Amzen Transportation Industries Private Limited

    acquisition · pending regulatory · Consideration ₹NaN (undisclosed)

    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.

    Guidance & targets

    9
    CategoryTargetPriority
    Revenue
    Consolidated Revenue FY25
    INR 500 crores
    Low
    Revenue
    Total Turnover (with Amzen)
    INR 2,800-3,000 crores
    Medium
    Order Book
    Order Book Execution
    INR 250 crores
    Medium
    Order Inflow
    New Railway Orders
    New orders
    Medium
    Order Inflow
    Railway Board New Orders
    New orders
    Medium
    Profitability
    Forging Plant PAT Margin
    15-20%
    High
    Promoter Ownership
    Promoter Dilution
    No further dilutions
    High
    Volume
    Total Volume (at 75% utilization)
    82,000 metric tons
    High
    Utilization
    Cosmic Springs & Engineers Utilization
    85%
    High

    Amzen Acquisition Closure

    within next 1-2 quarters
    CurrentFinal resolution plan being filed, pending NCLT approval
    TargetLOI 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.

    How to verify

    capital_allocation.m_and_a[target='Amzen Transportation Industries Private Limited'].status

    Risks & concerns

    6
    RiskSeverity

    Raw Material Price Volatility

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

    medium

    Product Mix Shift

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

    medium

    Wagon Wheelset Shortage

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

    high

    Negative Operating Cash Flow

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

    medium

    Amzen Acquisition Legal Challenges

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

    medium

    Aggressive Growth Strategy and Debt

    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

    low

    Q&A highlights

    7

    “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

    3 min read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.