Skipper Q1 FY27 earnings call

Skipper Limited reported a resilient Q1 FY27, achieving its highest-ever first-quarter revenue of ₹1,310 crores, marking a 4.5% year-on-year growth. This was accomplished despite challenging external factors like geopolitical developments impacting exports and subdued bidding in FY26. Profitability saw significant improvement, with EBITDA increasing 10% to ₹140 crores and margins expanding by 60 basis points to 10.7%. PAT grew 26% to ₹56.5 crores, driven by improved operational leverage and cost optimization.

The company closed the quarter with its highest-ever unexecuted order book exceeding ₹9,200 crores, providing strong multi-year revenue visibility. Fresh order inflows for the quarter stood at approximately ₹1,674 crores. The bidding pipeline has expanded to an all-time high of ₹35,000 crores, supported by robust domestic transmission investments and improving international opportunities. Management expects ₹5,000 crores from the current order book to be executed in FY27, with an overall order inflow target of ₹7,000 crores plus for the year.

Skipper Limited successfully completed a ₹433.5 crores preferential equity raise from marquee global and domestic institutional investors, significantly enhancing its financial flexibility. These funds were primarily utilized for debt repayment. This strategic move was followed by CRISIL upgrading the company's long-term credit rating to A+ stable in July, validating its stronger financial profile and prudent capital allocation. The company expects finance costs to reduce to 3.2-3.5% of revenue for the full year post-fundraise, down from 4.2% last year.

While geopolitical developments temporarily impacted export dispatches in Q1, management anticipates a strong bounce back, expecting over 50% jump in export order inflow for FY27, targeting ₹1,100 crores. The ongoing 75,000-ton capacity expansion is slated to become operational in the second half of FY27, increasing total manufacturing capacity to 450,000 tons per annum. This expansion, coupled with normalized shipping rates, is expected to drive a significant rebound in engineering revenue from next year.

The company's margin expansion, with EBITDA margins reaching 10.7%, is attributed to a better project mix, improved operational leverage, and continued cost optimization. Management emphasized that these improvements are structural, not temporary, and are supported by effective management of commodity price fluctuations through a combination of firm and variable price contracts, as well as hedging. The long-term aspirational margin for the company remains at 12%.

A key challenge identified by management is securing quality manpower, particularly on the technical side, for both manufacturing and project execution, given the rapid demand growth. The Polymer segment experienced muted revenue in Q1 due to cautious trade and destocking caused by sharp commodity price fluctuations, though management expects a 20% top-line growth for the full year. The Engineering segment's Q1 performance was softer due to lower order intake in the previous year, especially in exports.