Crown Lifters Limited

Crown Lifters reported a strong Q3 FY25, driven by increased project demand and strategic fleet investments. The company achieved a sustainable EBITDA margin of 64% and expects over 90% fleet occupancy in Q4 FY25. Management anticipates continued growth, targeting a 30% top-line increase and 'much more than 30%' PAT growth for FY25, supported by a robust order book and ongoing infrastructure development in India.

For FY25, Crown Lifters has already deployed approximately INR55 crores in capital expenditures, including two new crawler cranes in December 2024 and January 2025. An additional INR8-10 crores in capex is planned for smaller cranes before the fiscal year-end, bringing the total FY25 capex to INR63-65 crores. The company also anticipates significant capex investments for FY26 to enhance market presence and attract clients across multiple sectors, with potential funding of INR50 crores from banks.

The company focuses on a mix of long-term and short-term projects, aiming for high margins in the latter. Project selection considers factors like state budgets, political stability, and weather conditions, with a preference for states with majority governments. Crown Lifters targets principal clients and manages payment risks by understanding client patterns, with a 90-day cut-off for payments, and avoids projects with early local issues.

Crown Lifters utilizes subcontracting for smaller cranes (below 100 tons) and is considering it for higher capacity cranes (above 400 tons) where its own fleet is limited. Subcontracting margins are around 10% for smaller cranes and potentially 5-6% for larger ones. This strategy helps manage capacity and capture orders, serving as a buffer when new cranes are in the pipeline, while optimizing capital deployment and maintaining overall profitability.

The company's EBITDA margin reached 64% and is deemed sustainable, with efforts to improve it further. Key drivers include high fleet utilization (currently above 90%), a young fleet reducing heavy maintenance costs for the next 5 years, and operating leverage from fixed administrative costs not expanding proportionally with each new crane. The average rental yield for cranes is between 30% to 36%.

India's infrastructure sector continues to grow, with significant investments from both government and private entities. Examples include INR50,000 crores planned by Aditya Birla Group in Rajasthan, INR1.43 lakh crores for urban infrastructure by 2030, and a new JSW steel plant worth INR1 lakh crore. These projects create substantial opportunities for Crown Lifters across various sectors like wind, solar, steel, cement, and railways, reaffirming India's commitment to infrastructure growth.

The company acknowledges the increased demand and pay scales for skilled and semi-skilled labor in India, noting that pay has doubled over the past five years. Crown Lifters promotes training for new operators, including small trainings at Chinese company factories, to ensure safety parameters and operational proficiency. They maintain extra operators and crews to manage demand and ensure professional service.