Krishca Strapp. — Q4 FY25 earnings call

Call held 5 Jun 2025

Management summary

Krishca Strapping Solutions reported robust FY25 revenue growth of 43% to ₹151.08 crores and EBITDA growth of 20% to ₹24.29 crores, driven by strategic contracts and diversification. While margins faced pressure from export market dynamics and increased working capital, the company is investing in a Cold Rolling Complex and expanding its product portfolio to sustain future growth and market share.

Highlights

  • Revenue for FY25 reached ₹151.08 crores, marking a 43% year-on-year growth.

  • EBITDA for FY25 stood at ₹24.29 crores, a 20% year-on-year growth despite steel price pressures.

  • Packaging contract order book for FY26 is ₹50.79 crores, with a total of ₹120.89 crores for the next three years, ensuring strong revenue visibility.

  • Diversification into other packaging materials like desiccants, tarpaulins, and VCI-based products is enhancing comprehensive solutions.

  • New Cold Rolling Complex (CRC) project is on track, with production expected to commence by Q4 FY26, aiming for backward integration and higher margins.

Concerns

  • Operating margins dropped to 15% in FY25, primarily due to lower margins from exports impacted by Chinese steel dumping.

  • Increased inventory levels at year-end due to stocking up for ongoing orders and lower steel prices in Q4 FY24, and higher debtor days.

  • Uncertainty in the US market due to trade war and duty structure changes has affected growth plans for exports to that region.

Key financials

  1. Revenue ₹151.08 Cr +43%YoY
  2. EBITDA ₹24.29 Cr +20%YoY
  3. EBITDA Margin 16.1%
  4. Operating Margin 15%

What they filed

Q4 FY26: revenue up 147.4%, net profit down 37.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue48 57 64 86 93 +94%141 +147%
EBITDA8 12 9 13 15 +88%14 +17%
Net profit6 8 5 6 6 +0%5 −37%
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

high confidence

Total value

₹120.89 Cr

as of 2025-06-05 quantified

Inflow this quarter

₹60 Cr

Execution

next three years

Composition

Mix 2 contract types
  • Packaging Contracts (FY26) 42%
  • Packaging Contracts (Next 3 Years) 100%

Share of order book by contract type· categories overlap, and sum to 142%

Pipeline

other

Orders currently being attempted

The company has a strong order book for packaging contracts, with ₹50.79 crores for FY26 and ₹120.89 crores for the next three years, and is actively pursuing a pipeline of ₹700 crores.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹80 Cr
    • Cold Rolling Complex (CRC) project ₹80 Cr
    • Primary packaging investments (staggered, per product) ₹3 Cr
    See, close to Rs. 40 CR already spent on the CAPEX. Another Rs. 40 CR is expected to be done on the CRM plant.
  • Debt Debt disclosed
    • New borrowing Long-term loans and advances for land purchase for new factory ₹25 Cr
    Long-term loans and advances for this half was at Rs. 27.7 crores.
  • Liquidity Liquidity disclosed Channel financing limits with Tata Capital and YES Bank for raw material purchase, amounting to almost ₹10 crores, are part of other current liabilities.
    See, most of it are, we have some channel financing limits with Tata Capital and YES Bank for the purchase of raw material. So, this is mostly almost Rs. Rs 10 crore for that.

Guidance & targets

Revenue

  • Revenue growth Revenue · FY26 · High confidence 25%
    Looking ahead, our goal is to sustain our growth trajectory with revenue expected to grow by 25% in Financial Year '26.

    — Diya Venkatesen

  • Export revenue share Revenue · High confidence 20%
    Even in this year, we are expecting similar revenue, at least 20% of our revenue will be from exports.

    — Bala Manikandan

Margin

  • Operating margins Margin · High confidence minimum 15%
    Margin front definitely, we believe, definitely minimum 15 we can maintain without compromising the current margin.

    — Bala Manikandan

  • CRC savings per ton Margin · High confidence Rs. 4,000
    Based on the current steel market price, At least Rs. 4,000, we are expecting savings per ton, which is about 4% to 5% on the purchase.

    — Bala Manikandan

  • CRC outside sales margin Margin · High confidence 15%
    So, at least, you know, we are expecting a 15% overall margin in this outside sales.

    — Bala Manikandan

Capacity

  • Cold Rolling Complex (CRC) production start Capacity · Q4 FY26 · High confidence Q4 FY26
    production expected to commence by Q4 of Financial Year '26.

    — Diya Venkatesen

  • CRC utilization by end of first year Capacity · end of first year · High confidence 35-40%
    I think by end of first year, it definitely will cross 35% to 40% utilization.

    — Bala Manikandan

  • Overall capacity utilization Capacity · FY26 · High confidence 75%
    And this year, in FY '26, we are expecting it to reach 75% average.

    — Bala Manikandan

Order Book

  • PSU tender eligibility Order Book · High confidence Rs. 250 CR per annum
    Once that is done, we will be eligible to participate in tenders worth at least Rs. 250 CR per annum basis in PSUs.

    — Bala Manikandan

Working Capital

  • Working capital days Working Capital · long run · High confidence 90 days
    See, I would say 90 days would be ideal in the long run.

    — Bala Manikandan

  • Inventory days (after cold mill) Working Capital · High confidence 45 days
    Expecting it to be about 45 days.

    — Bala Manikandan

What to watch in Q1 FY26

Order book conversion from pipeline

June/July
Current ₹700 crores pipeline, with large audits pending
Target Significant conversion of pipeline into confirmed orders

Why it matters

Conversion of the large order pipeline is crucial for future revenue growth and validates management's execution capabilities.

So, in June, July, we are expecting a closure of some large audits, which we are dealing for the past seven, eight months. So, we are still sticking on to the same guidance. We are expecting our order book to increase significantly in this quarter.

Risks & concerns

  • Margin pressure from Chinese steel dumping in exports

    medium

    Chinese steel dumping in the Middle East market has led to a $100 margin contraction in exports, forcing the company to compromise margins to maintain volume.

    Management acknowledged

  • Uncertainty and reluctance in US export market

    medium

    Trade war and frequent changes in duty structures in the US market are causing customers to be reluctant to place large orders, affecting growth plans for exports to the US.

    Management acknowledged

  • Elevated working capital (inventory and debtor days)

    medium

    Increased inventory levels due to stocking for new contracts and lower steel prices in Q4 FY24, along with higher debtor days from trial orders, are impacting working capital efficiency.

    Analyst acknowledged

  • Asset-heavy nature of Cold Rolling Complex (CRC) project

    low

    The CRC project is capital intensive and could potentially impact Return on Equity (ROE), but management views it as a strategic opportunity to capitalize on market gaps for special steel.

    Analyst downplayed

Q&A highlights

6 direct, 1 evasive
Margin drop and impact of Chinese dumping on exports Direct
The major reason for this margin drop would be margin from exports almost dropped by 50% compared to last year because the Chinese steel price is very low and they are dumping in our major market in UAE.

Explains the primary reason for the margin compression in FY25 and highlights competitive pressure in export markets.

Asked by Rahil Dasani

Conversion of order pipeline Partial
We haven't lost any big orders yet. It's just that the finalization is taking some time. So, in June, July, we are expecting a closure of some large audits, which we are dealing for the past seven, eight months.

Addresses the delay in converting a previously guided ₹200-300 crore pipeline, indicating ongoing negotiations and audits rather than lost orders.

Asked by Rahil Dasani

Rationale for Cold Rolling Complex (CRC) investment Direct
So, see, since the availability is very low, there is a huge demand. The margins in this product are significantly higher than the normal commodity grade of steel coils. So, keeping this market also in mind, we thought of doing a Cold Rolling Complex.

Clarifies the strategic justification for a capital-intensive project, focusing on backward integration, captive consumption, and high-margin special steel products due to market demand and limited suppliers.

Asked by Astha Agrawal

Market share and target in packaging contracts Direct
Regarding the market share, see, our focus is to increase our packing contract market share at the moment. If you look at last year, it's out of, let's say, Rs. 2,000 CR, we are hardly having 1%. But by this year-end, at least 5% to 6% of the packing contract, we wanted to gain market share.

Provides insight into the company's current market position and aggressive growth targets in the packaging contract segment.

Asked by Vijay

Impact of China plus One policy and steel price volatility Direct
Regarding the trade war, you are absolutely right. There is some huge uncertainty among the customers in the U.S. ... people are a little bit reluctant to order a huge volume in this scenario. So, that is definitely affecting our growth plans, especially in the U.S.

Highlights the specific challenges and uncertainties faced in the US export market due to geopolitical factors and their impact on order volumes.

Asked by Vijay

Increased inventory and debtor days (working capital) Direct
One is, after we do the CRM, our steel strapping raw material inventory expected to go down significantly. ... And especially by end of March, what happened? We were starting from four big contracts and we have to stock the inventory at site level before we start the contract.

Explains the reasons behind the elevated working capital metrics and outlines the expected improvements with the CRC and new contract execution.

Asked by Yogansh Jeswani

Asset-heavy nature of steel plant and ROE impact Evasive
See, we always look for opportunities in the market. And since we are in the steel business and we are a big consumer of this special steel for our strapping, we understand there is a big gap in the market and when we know there is a good opportunity in the market, we want to capitalize on the opportunity.

Management's perspective on the strategic importance of the CRC despite its capital intensity, emphasizing market opportunity over short-term ROE concerns.

Asked by Deep Gandhi

Long-term loans and advances for land purchase Direct
See, that is, most of it, we were buying a large land parcel for the factory close to 12 acres. Whatever the advance given in the March, that was captured there? It's close to Rs. 25 CR.

Clarifies the nature of a significant portion of the long-term loans and advances, linking it to strategic land acquisition for future expansion.

Asked by Rahil Dasani

2 min read 6 chapters

Detailed narrative

Financial Performance Overview

Krishca Strapping Solutions delivered a strong financial performance in FY25, with revenue growing 43% year-on-year to ₹151.08 crores. EBITDA also saw a significant increase of 20% year-on-year, reaching ₹24.29 crores, reflecting the stability of the business model. However, operating margins for the year were around 15%, experiencing pressure primarily from export market dynamics.

Strategic Investments and Diversification

The company is actively pursuing strategic investments, with its new Cold Rolling Complex (CRC) project on track. ₹40 crores has already been spent on CAPEX for the CRC, with another ₹40 crores expected, and production is anticipated to commence by Q4 FY26. Krishca is also diversifying its product portfolio into other packaging materials like desiccants, tarpaulins, HDPE, airbags, and VCI-based corrosion protection products, with a desiccant plant already operational and two more small investments expected by H1.

Order Book and Growth Outlook

Krishca has secured a robust packaging contract order book, totaling ₹50.79 crores for FY26 and ₹120.89 crores for the next three years, providing strong revenue visibility. The company expects revenue to grow by 25% in FY26 and aims to maintain operating margins at a minimum of 15%. A significant pipeline of ₹700 crores in potential orders is currently being pursued, with management expecting closure of large audits in June/July.

Margin Dynamics and Export Challenges

Operating margins faced pressure in FY25, dropping to 15%, largely due to lower margins from exports. This was attributed to Chinese steel dumping in key markets like the Middle East, leading to a $100 margin contraction. While the company is focusing on increasing its share of primary packaging in exports to mitigate this, it remains confident in India's domestic market protection against similar dumping.

Working Capital Management

The company experienced increased inventory and debtor days at the end of FY25. This was explained by strategic stocking for new contracts, taking advantage of lower steel prices in Q4 FY24, and receivables from trial orders. Management anticipates an improvement in working capital efficiency with the operationalization of the CRC and normalization of operations, targeting an ideal of 90 working capital days and 45 inventory days post-cold mill.

Capacity Expansion and Utilization

Overall capacity utilization for FY25 stood at 60%, with Unit-1 operating at 80% and Unit-2 at an implied 45-50%. The company projects overall utilization to increase to 75% in FY26. The new CRC will have a capacity of 5,000 tons per month, with 20% allocated for captive consumption and an expected 35-40% utilization by the end of its first year of operation.

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