Crown Lifters Limited — Q3 FY25 earnings call

Call held 11 Feb 2025

Management summary

Crown Lifters reported a strong Q3 FY25, driven by high project demand and strategic fleet expansion, including INR55 crores in capex. The company achieved a sustainable EBITDA margin of 64% and expects over 90% fleet occupancy in Q4. Management anticipates continued growth, targeting a 30% top-line increase for FY25, supported by a robust order book and ongoing infrastructure development in India.

Highlights

  • Strong Q3 FY25 performance driven by increased project demand and strategic fleet investments.

  • EBITDA margin expanded to 64% and is expected to be sustainable, with efforts to improve it further.

  • Secured a wind project from Serentica Renewables India Private Limited (INR4 crores) and re-established partnership with Shree Cement Ltd.

  • Achieved INR55 crores in capex for FY25, with all new cranes deployed, and plans for additional INR8-10 crores by year-end.

  • Anticipates over 90% fleet occupancy in Q4 FY25, supported by a robust order book.

Key financials

  1. EBITDA Margin 64%
  2. Average Rental Yield 33%

What they filed

Q1 FY27: revenue up 29.3%, net profit up 4.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue8 9 11 10 10 +26%9 −2%12 +4%13 +29%
EBITDA5 5 7 6 5 +6%4 −31%6 −4%7 +20%
Net profit2 3 3 3 2 +3%2 −37%2 −32%3 +5%
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.

Order book

medium confidence

Inflow this quarter

₹4 Cr

Execution

over 90% occupancy in Q4

Composition

  • Wind Project (Serentica Renewables) (client type) ₹4 Cr

Pipeline

qualified rfp

Inquiries for next 3 months, including a potential order from KP Energy Group for next 6 months.

Management reports a robust order book, leading to high fleet occupancy, but notes a shortage of cranes to meet all incoming orders.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹63 Cr Raised — additional smaller cranes · Partially funded by warrants, 75% of INR268 crores yet to be received.
    • Acquisition of two new 2 cc ton crawler cranes
    • Acquisition of additional smaller cranes ₹8 Cr

    Previously planned ₹55 Cr

    Our capital expenditures of the current financial year stand at approximately INR55 crores with plans to acquire additional smaller cranes before year-end... warrants we have done already in November which was done at INR268 at that time and that fund is 75% is yet to be received.

Guidance & targets

Revenue

  • Top Line Growth (YoY) Revenue · FY25 · High confidence 30%
    And the top line, yes, is somewhere around that 30% line which we are expecting to close the year around.

    — Karim Jaria

Profitability

  • PAT Growth (YoY) Profitability · FY25 · Medium confidence much more than 30%
    What I would like to suggest is to look on the growth of PAT, which we are getting. And that is going to be much more than 30% that we anticipate.

    — Karim Jaria

  • EBITDA Margin Profitability · going forward · High confidence 64%
    The current margins, which we are having around 64%, is sustainable. And going forward, we are looking at maintaining the same, as well as trying to improve it further from here.

    — Karim Jaria

Capex

  • Additional Capex Capex · FY25 · High confidence INR8 to INR10 crores
    Once we receive those orders, the capex will be between INR8 to INR10 crores for closing this fiscal year.

    — Karim Jaria

  • Capex Investments Capex · 2025-26 · Medium confidence significant
    Looking ahead to 2025-26, we anticipate another promising year with significant capex investments to enhance our market presence and attract clients across multiple sectors and cover more states.

    — Karim Jaria

Utilization

  • Occupancy Rate Utilization · Q4 FY25 · High confidence over 90%
    With a robust order book, we expect over 90% occupancy in Q4 and are confident to maintain and grow the current EBITDA margins.

    — Karim Jaria

What to watch in Q4 FY25

FY25 Total Capex

next quarter (end of FY25)
Current INR55 crores already spent, additional INR8-10 crores planned
Target INR63-65 crores

Why it matters

To verify the final capital expenditure for the fiscal year against the revised plan.

this year, we have already done an INR55 crores capex... the capex will be between INR8 to INR10 crores for closing this fiscal year.

Risks & concerns

  • Political Instability in Operating States

    medium

    Company takes a 'second call' on states without a majority government, preferring states with stable majority governments for investment.

    Management acknowledged

  • Shortage of Cranes to Meet Demand

    medium

    Company is unable to take all orders due to a shortage of cranes, indicating unmet demand.

    Management acknowledged

  • Local Problems/Issues in Project Areas

    low

    Company prefers to enter projects after initial dust settles (6 months post-kickoff) to avoid local issues.

    Management acknowledged

  • Delayed Payments from Clients

    low

    While 90 days is a cut-off, company has know-how of client payment patterns and works with A-group clients to manage payment delays.

    Management acknowledged

Q&A highlights

8 direct
Sustainability of EBITDA Margin Direct
The current margins, which we are having around 64%, is sustainable. And going forward, we are looking at maintaining the same, as well as trying to improve it further from here.

Directly addresses a key profitability metric and management's confidence in its sustainability.

Asked by Mahek Talati

Fleet Utilization Rate Direct
The fleet utilization is 90% plus. 90 plus... So, we have given plus 90% there, the capacity utilization.

Provides specific current and expected fleet utilization numbers, a critical operational metric for capital goods.

Asked by Aayush

Strategy for Subcontracting Cranes Direct
So, if you see in our last presentation, the subcontract cranes were around 8-9 numbers. Now, we reached 11... We are also sometimes wanting to now contract. Sometime soon, we want to start subcontracting cranes in the higher capacity, where we have very few cranes.

Details the company's strategy for managing fleet capacity, focusing on subcontracting for smaller cranes and potentially for higher capacity where their own fleet is limited, impacting margins.

Asked by Rahil Dasani

Factors for Sector and Project Selection Direct
Cyclical play, placing cranes at sites strategically after analyzing projects and cycles of the user industry respectively... State budget... political stability in each state... weather.

Explains the strategic considerations for project selection, including economic cycles, government budgets, political stability, and weather, which are crucial for risk management and growth.

Asked by Harsh

Levers for EBITDA Margin Improvement Direct
it is helping us get the occupancy again and again above 90%... The second is the young fleet that we have. So, we do not have very, very heavy maintenance coming on this fleet for another 5 years... And of course, our expenses, they do not expand with every crane we buy, right.

Identifies key drivers for margin expansion: high fleet utilization, young fleet reducing maintenance costs, and operating leverage from fixed costs.

Asked by Harsh

Delayed Payments and Client Management Direct
So, 90 days is something that is a cut-off line for every client to pay in time. We don't generally have an approach of shutting down our services and spoiling with the clients because they are all A-group clients which we work with.

Provides insight into the company's working capital management and client selection strategy to mitigate payment risks, crucial in a capital-intensive business.

Asked by Harsh

Revenue Growth and Capex Timing Direct
So, it again depends on the billing closing, you know... So, for that crane, the rental bill would only be made when this contract is over because it is a lump sum order. So, that order will fall, the bill will fall in first week or second week of April. So, that may transform to the next quarter.

Explains how project billing cycles and lump-sum contracts can cause revenue recognition to shift between quarters, impacting short-term growth figures despite underlying activity.

Asked by Mahek Talati

Political Stability and Operating States Direct
if there is not a majority of government in any state, this is the kind of state we would take a second call... So, when there is a majority government, we believe there is a good investment and there is a good momentum that you may have seen also that is coming.

Highlights political stability as a key factor in state selection for operations, indicating a cautious approach to mitigate operational risks.

Asked by Rohan Mehta

2 min read 7 chapters

Detailed narrative

Q3 FY25 Performance and Outlook

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.

Capex and Fleet Expansion

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.

Project Strategy and Client Selection

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.

Subcontracting and Margin Dynamics

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.

Operational Efficiency and EBITDA Margins

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%.

Infrastructure Sector Tailwinds

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.

Skilled Labor and Training

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.

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