Ice Make Refrigeration Limited — Q3 FY25 earnings call

Call held 12 Feb 2025

Management summary

Ice Make Refrigeration reported a strong Q3 FY25 with 34% YoY revenue growth and 39% YoY PAT growth, driven by robust demand and new product verticals. However, net profit growth was moderated by increased operational and finance costs associated with new CAPEX. The company maintains an ambitious target of ₹500 crores topline for FY25 and ₹1,000 crores by 2028, with a focus on achieving 9.5-10.5% EBITDA margins.

Highlights

  • Q3 FY25 revenue from operations grew 34% YoY to ₹110.56 crores due to strong demand and sales.

  • EBITDA for Q3 FY25 increased 56% YoY to ₹6.89 crores.

  • PAT for Q3 FY25 grew 39% YoY to ₹2.81 crores.

  • The company's market valuation has grown nearly 1,000% over the past five years.

  • Current pending order book is robust at ₹167 crores, providing strong revenue visibility.

Concerns

  • Net profit growth was low in Q3 FY25 due to higher employee, finance, and operational costs.

  • 9-month EBITDA margin for FY25 stood at 7.21%, down from 8.57% in 9M FY24.

  • 9-month PAT for FY25 was ₹11.24 crores, a 5% YoY decline from ₹11.86 crores in 9M FY24.

  • New CAPEX fixed costs (recruitment, pre-marketing, material procurement) impacted margins in the current quarter.

Key financials

2 periods

Q3 FY25

  • Revenue from Operations
    ₹110.56 Cr
    YoY +34%
  • EBITDA
    ₹6.89 Cr
    YoY +56%
  • PAT
    ₹2.81 Cr
    YoY +39%
  • EPS
    ₹1.82

9M FY25

  • Total Income
    ₹299.6 Cr
    YoY +25%
  • EBITDA
    ₹21.59 Cr
    YoY +5%
  • EBITDA Margin
    7.2%
  • PAT
    ₹11.24 Cr
    YoY -5%

What they filed

Q1 FY27: revenue up 60.4%, net profit down 12.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue103 111 180 112 147 +43%153 +39%256 +42%179 +60%
EBITDA8 7 21 4 10 +14%10 +48%21 +0%3 −32%
Net profit5 3 12 -1 2 −58%1 −48%10 −13%-2 −13%
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

  • Cold Room
    62% Contribution to Sales
  • Commercial
    12% Contribution to Sales
  • Industrial Refrigeration
    4% Contribution to Sales
  • Dairy and Project Business
    9% Contribution to Sales

Order book

high confidence

Total value

₹167 Cr

as of 2024-12-31 quantified

Inflow this quarter

₹8.8 Cr

Execution

deliverable period is 6 months to 12 months

Composition

Mix 8 products
  • Cold Room 23.4%
  • Commercial 18%
  • Industrial Refrigeration 2.7%
  • Transport Refrigeration 3.1%
  • Ammonia Refrigeration 17.6%
  • Commercial Freezer 0.9%
  • Continuous Panel 5.7%
  • Project Business 30.5%

Share of order book by product

The company has a strong pending order book of ₹167 crores, with execution timelines ranging from 6 to 12 months, supporting revenue visibility.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹150 Cr Not yet finalized, considering cash flow generation and other sources.
    • Continuous PUF panel factory ₹100 Cr
    • South plant expansion (land, building, machinery) ₹10 Cr
    So far we have invested Rs. 100 crore as you rightly said, in the CAPEX plan. And going forward we are having a CAPEX plan of about Rs. 150 crore plus. But as of now, our first target is to stabilize these two product business. And then we will review in the next financial year, let's say April or May, and we decide further to expand the other plan.
  • Debt Gross ₹81 Cr Cost 8.1%
    • New borrowing Term loan from HDFC Bank at 8.09-8.10% interest. ₹48 Cr
    I mean, we have taken many loans. First of all, we have two types of borrowing. One is long term borrowing. Our CAPEX has started. So, the total long term borrowing has reached the peak. Majority, I mean more than 95% of the disbursement of the term loan has been done. And its interest has also started coming into our books. So, the interest cost has increased because of that.
  • Liquidity Liquidity disclosed Working capital utilization is around ₹35 crores, with previous short-term range of ₹20-25 crores.
    Right now, our working capital utilization is around Rs. 35 crore.

Guidance & targets

Revenue

  • Topline Revenue · FY25 · High confidence ₹500 crore
    I am confident that we will achieve the topline of Rs. 500 crore this year.

    — Chandrakant P. Patel

  • Topline Revenue · by 2028 · High confidence ₹1,000 crore
    And we will achieve our target of Rs. 1,000 crore by 2028.

    — Chandrakant P. Patel

  • Continuous PUF panel topline Revenue · FY25 · High confidence ₹25-30 crore
    PUF panel will be Rs. 25 crore-Rs. 30 crore topline this time.

    — Ankit Patel

  • Commercial new products topline Revenue · FY25 · High confidence ₹12 crore
    For now we have taken the target to be Rs. 12 crore, it started from February.

    — Ankit Patel

  • Quick commerce revenue Revenue · current financial year · High confidence ₹50 crore
    We will generate revenue of 50 crore from our quick commerce. So, 15% revenue is our market share.

    — Chandrakant P. Patel

Margin

  • EBITDA Margin Margin · FY25 · High confidence 9.5% to 10.5%
    Our focus will be to keep EBITDA margin behind 9.5% to 10.5%.

    — Chandrakant P. Patel

  • EBITDA Margin Margin · next financial year (FY26) · High confidence 9% to 9.5%
    So sir, from next year, our EBITDA will be between 9 and 9.5? Yes.

    — Ankit Patel

Profitability

  • PAT Profitability · FY25 · High confidence ₹20 crore plus
    I mean, if I talk about this financial year, we are expecting a PAT of around Rs. 20 crore plus this year also

    — Chandrakant P. Patel

  • New verticals (PUF panel & commercial) profitability Profitability · next financial year (FY26) · High confidence profitable
    In the next financial year, both these verticals will be profitable.

    — Ankit Patel

What to watch in Q4 FY25

Stabilization of new plants

next quarter (Q4 FY25)
Current Continuous PUF panel production established since Nov/Dec, commercial freezer since Feb. Billing started.
Target Good performance in Q4 FY25, full stabilization.

Why it matters

Successful stabilization and ramp-up of new plants are crucial for realizing revenue and margin benefits from CAPEX.

So it seems that in this fourth quarter, we will do good in continuous panel. And the commercial freezer, the new product, the second CAPEX, that too, you can say that it has been established since February.

Risks & concerns

  • Increased operational costs impacting net profit

    medium

    Net profit growth was low due to higher employee cost, finance cost, and operational costs, particularly from new continuous panel and commercial freezer plants.

    Management acknowledged

  • Initial fixed costs of new CAPEX impacting margins

    medium

    The initial expenses for new CAPEX, including recruitment, pre-marketing activities, and material procurement, are impacting current EBITDA margins, but are expected to normalize as sales increase.

    Management acknowledged

  • PAT margin pressure due to depreciation and interest costs

    medium

    PAT margins are expected to remain under pressure until the impact of new loan interest and depreciation costs stabilizes, with a return to earlier levels projected after a year or two with sales growth.

    Management acknowledged

Q&A highlights

7 direct
CAPEX plan update and funding Direct
So far we have invested Rs. 100 crore as you rightly said, in the CAPEX plan. And going forward we are having a CAPEX plan of about Rs. 150 crore plus. But as of now, our first target is to stabilize these two product business. And then we will review in the next financial year, let's say April or May, and we decide further to expand the other plan.

Analyst sought clarity on the status of the continuous PUF panel factory CAPEX and future expansion plans, which management confirmed are under review for funding.

Asked by Arnav Sakhuja

New plant stabilization and capacity utilization Direct
The production of continuous PUF panels has been established since November and December. We have also done billing for 1.6 crore. Order for 8.8 CR has also been done for continuous PUF panes. Senior sales team recruitment also has been done. And in 4-5 organization, our product approval, product sampling, all this is happening. So it seems that in this fourth quarter, we will do good in continuous panel. And the commercial freezer, the new product, the second CAPEX, that too, you can say that it has been established since February. We have 200 piece per shift production capacity designed. We are manufacturing 120 machines per day. By the end of February, we will be at 200.

Analyst inquired about the operational status and ramp-up of new plants, receiving specific details on production and capacity targets for continuous PUF panels and commercial freezers.

Asked by Zaki Nasir

Sustainability of EBITDA margin guidance Direct
Most of our expenses, like salaries, labor, those expenses are fixed in nature. Whatever our exponential growth is, if we want to generate Rs. 500 crore, we have to generate a topline of 200 crore. So, the majority of our fixed expenses will remain in Rs. 200 crore. So, according to that, the majority of the contribution, the gross profit, it will be converted into profit. So, in the last quarter also if you see, our EBITDA was quite high. So, if we neutralize that with increasing expense, the EBITDA of 9.5% is not high. We can achieve that much in Q4,s sure shot. I am talking about overall.

Analyst questioned how the company plans to achieve 9.5-10.5% EBITDA margin for FY25 given current performance, and management explained it through fixed cost leverage and Q4 performance.

Asked by Shane D'Silva

Impact of new CAPEX on EBITDA and PAT margins Direct
Regarding margin profile, the main reason for the EBITDA compromise is that the new vertical is coming, in that the recruitment, labor, travelling, all the expenditures have started. There a lot of premarketing activities. So the cost has started incurring in our books, but its contribution or sales has not started. Now in Q4 major contribution will come and the majority expenditure has been in the books. Maybe only a portion can be added. The rest is the majority of the expenses. As soon as sales increase or business starts according to our expectations, the margin will be back to normal.

Analyst probed the impact of new CAPEX fixed costs on current and future margins, with management clarifying that initial costs are impacting current margins but will normalize with increased sales and utilization.

Asked by Resha Mehta

Debt repayment strategy and PAT margin pressure Direct
To repay debt is not in our priority. The loan we have taken from HDFC Bank of Rs. 48 crore, as of now, its interest is 8.09% or 8.10%. So, we have got a term loan at a very good rate. So, we don't have any mindset to repay the debt quickly. In fact, from next year, our new vertical, continuous PUF panel, it will start to repay the debt. Existing business verticals will grow with the same pace and cash flow. So, debt repayment is not a challenge for us. We are doing aggressive growth. So, it may be a profit that we will redeploy in the business. So, cash flow is not a challenge for us. And the growth that is coming, we are not going to do it by keeping the operating cash flow on stake.

Analyst questioned the debt repayment schedule and its impact on PAT margins, to which management stated that aggressive growth and reinvestment of profits are priorities over quick debt repayment, and cash flow is not a concern.

Asked by Resha Mehta

US certification and export potential Direct
Actually, US certification is at the final stage. This process will be done somewhere in the unit. And it is likely that we may receive the certification shortly, I think by end of this current financial year. So it will help to export our product to the US market.

Analyst inquired about the status of US export certification, which management confirmed is in its final stages and expected by the end of the current financial year, opening up new market opportunities.

Asked by Tej Patel

Quick commerce business potential and market share Direct
In quick commerce, all the people we worked with, they all say we will make 2,000 dark stores in India. If we add all the revenue, then the market potential of Rs. 900 crore-Rs. 1000 crore is in the next 2-3 years. Every year, they will be generating revenue of Rs. 300 crore - 800 crore. We will generate revenue of 50 crore from our quick commerce. So, 15% revenue is our market share.

Analyst asked about the quick commerce segment's potential, and management provided market size estimates and the company's target revenue and market share in this growing vertical.

Asked by Tej Patel

3 min read 6 chapters

Detailed narrative

Q3 FY25 Performance Overview

Ice Make Refrigeration reported a strong Q3 FY25, with revenue from operations growing 34% year-on-year to ₹110.56 crores from ₹82.43 crores in Q3 FY24. EBITDA saw a significant increase of 56% year-on-year, reaching ₹6.89 crores compared to ₹4.41 crores in the prior year. Net profit (PAT) also demonstrated robust growth of 39% year-on-year, rising to ₹2.81 crores from ₹2 crores. Earnings per share (EPS) stood at ₹1.82 for the quarter.

9M FY25 Performance and Margin Trends

For the nine-month period of FY25, total income grew 25% year-on-year to ₹299.60 crores from ₹238.85 crores in 9M FY24. EBITDA for 9M FY25 increased 5% year-on-year to ₹21.59 crores from ₹20.45 crores. However, the 9-month EBITDA margin saw a compression, standing at 7.21% compared to 8.57% in the previous year. Net profit (PAT) for 9M FY25 was ₹11.24 crores, a 5% decline from ₹11.86 crores in 9M FY24, primarily attributed to higher operational, employee, and finance costs.

Order Book and Revenue Visibility

The company's current pending order book stands at ₹167 crores. This includes ₹39 crores in cold room, ₹30 crores in commercial, ₹4.5 crores in industrial refrigeration, ₹5.25 crores in transport refrigeration, ₹29.4 crores in ammonia refrigeration, ₹1.5 crores in commercial freezer, ₹9.5 crores in continuous panel, and ₹51 crores in project business. Management indicated that the deliverable period for orders typically ranges from 6 to 12 months, providing good revenue visibility for the upcoming periods.

CAPEX and New Plant Operations

Ice Make has already invested ₹100 crores in its continuous PUF panel factory and has a further CAPEX plan of approximately ₹150 crores. The continuous PUF panel production commenced in November-December, with billing of ₹1.6 crores and orders worth ₹8.8 crores already secured. The commercial freezer plant became operational in February, with a designed capacity of 200 units per shift, currently producing 120 units per day and aiming for 200 by end of February. The company also plans to invest around ₹10 crores for land, building, and machinery for its south plant expansion, expected to be ready by Q1 of the next financial year.

Strategic Growth Initiatives and Market Opportunities

The company is focusing on innovation, product diversification, and sales channel expansion. It has generated ₹45 crores in business from quick commerce in the current financial year, up from ₹11.5 crores last year, aiming for a 15% market share in this segment. US certification for exporting products is in its final stage and is expected by the end of the current financial year, which will open up new export markets. New product development, including water coolers, is underway, with commercial operations anticipated by Q1 FY26.

Financial Targets and Outlook

Ice Make aims to achieve a topline of ₹500 crores for FY25 and a long-term target of ₹1,000 crores by 2028. The company is committed to maintaining an EBITDA margin between 9.5% and 10.5% for FY25, and expects 9-9.5% for the next financial year. PAT for FY25 is projected to be above ₹20 crores. The new continuous PUF panel and commercial product verticals are targeted to generate ₹25-30 crores and ₹12 crores in topline respectively for FY25, and are expected to become profitable in the next financial year.

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