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Skipper Limited — Q3 FY25 earnings call

Call held 6 Feb 2025

Management summary

Skipper Limited delivered a strong Q3 FY25 performance, achieving its highest-ever quarterly revenue and significant profit growth, primarily driven by its engineering business. The company's order book remains robust, supported by strong demand in the domestic power T&D segment and strategic capacity expansions. Management expressed confidence in continued growth, margin improvement, and new market entries like substation EPC, while also addressing working capital efficiency and the outlook for the polymer segment.

Highlights

Highest ever Q3 revenue of ₹1,135 crores, up 42% YoY.
Consolidated EBITDA increased by 44% YoY to ₹110 crores.
Operating EBITDA margins improved to 9.8% from 9.6% last year.
Consolidated PAT surged by 76% to ₹36.1 crore, with a PAT margin of 3.2%.
Secured ₹1,318 crores of new orders in Q3, taking YTD order inflow to ₹3,743 crores (up 19% YoY).
Order book stands at ₹6,354 crores, a near all-time high.
9-month revenue reached ₹3,336 crores, a 57% YoY growth.
9-month consolidated PAT grew 80% to ₹101.4 crores, with PAT margins improving to 3%.
Net working capital days improved to 88 days as of December.

Key financials

3 periods

Headline

Order Book
₹6,354 Cr
Working Capital Days
88 days

Q3 FY25

Revenue
₹1,135 Cr
YoY +42%
EBITDA
₹110 Cr
YoY +44%
EBITDA Margin
9.8%
YoY +2.1%
PAT
₹36.1 Cr
YoY +76%
PAT Margin
3.2%
Order Inflow
₹1,318 Cr

9M FY25

Revenue
₹3,336 Cr
YoY +57%
PAT
₹101.4 Cr
YoY +80%
PAT Margin
3%

What they filed

Q1 FY27: revenue up 4.5%, net profit up 26.7% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,110	1,135	1,288	1,254	1,262 +14%	1,371 +21%	1,667 +29%	1,310 +4%
Expenses	998	1,024	1,164	1,127	1,131	1,229	1,493	1,170
EBITDA	111	111	124	127	131 +18%	141 +27%	173 +40%	140 +10%
Margin	10%	10%	10%	10%	10%	10%	10%	11%
Other income	3	4	13	4	-6	4	4	5
Interest	55	50	56	53	54	56	54	47
Depreciation	15	17	17	18	19	22	22	22
Profit before tax	44	48	63	60	52 +18%	68 +42%	101 +60%	76 +27%
Tax rate	26%	25%	24%	25%	28%	22%	23%	25%
Net profit	33	36	48	45	37 +12%	53 +47%	78 +63%	57 +27%
EPS	2.92	3.21	4.25	4.01	3.28	4.68	6.91	5.03

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

Engineering Segment
23% Export Revenue Contribution (9M FY25)
Polymer Segment
22,300 tons Volume (9M FY25)24,600 tons Volume (9M Last Year)

Guidance & targets

Capacity

New capacity commissioning Capacity · Q4 FY25 / Q1 FY26 · High confidence major part in quarter 4 and some amount... spill over to quarter 1 next year

No, part we are looking to commission part of the facility within quarter 4 and some amount of the commissioning will spill over to quarter 1 next year. So but we are expecting to commission a major part in quarter 4 itself.

— Sharan Bansal

Revenue

Revenue potential from new 75,000 ton capacity Revenue · Medium confidence about INR700 crores

But I don't have any firm -- the overall revenue potential of this capacity expansion is about INR700 crores.

— Sharan Bansal
Significant revenues from Substation EPC Revenue · FY27 onwards · Medium confidence significant revenues

But I would say that maybe from FY '27 onwards, we can expect significant revenues in this business.

— Sharan Bansal

Capex

Capex for next fiscal year Capex · FY26 · High confidence INR200 crores to INR250 crores

No, I think the capex will be consistent. As of now, we are expecting another INR200 crores to INR250 crores of capex in the coming financial year FY '26 as well.

— Sharan Bansal
Total capex over 4 years Capex · over 4 years · Medium confidence INR800 crores

And sir, are we planning for the INR200 crores of capex for the next fiscal year since we were targeting INR800 crores over 4 years?

— Dhvij Patel

Margin

Overall margins Margin · coming quarters · High confidence improve margins from -- currently, we are at just about under 10%. We certainly target to improve this margin incrementally

No, we definitely expect to improve margins from -- currently, we are at just about under 10%. We certainly target to improve this margin incrementally in the coming quarters.

— Sharan Bansal

Order Inflow

Order book expansion Order Inflow · Medium confidence minimum that much (INR700 crores revenue potential)

So as the new capacity has a revenue potential of INR700 crores, so I think at least along with the services revenue that come with it, so I think we can target at least the order book also to expand by minimum that much to get the -- based on the new capacity.

— Sharan Bansal

Capacity Utilization

Utilization of new capacity Capacity Utilization · by the end of quarter 2 (next year) · High confidence 80%, 85% utilization

I think we should be able to achieve it by the end of quarter 2, we should be able to achieve 80%, 85% utilization.

— Sharan Bansal
Utilization of existing capacity Capacity Utilization · By quarter 4 · High confidence 85% utilization

By quarter 4, we are well on way to achieve 85% utilization for our existing capacity.

— Sharan Bansal

Volume

Polymer business growth Volume · next year · Medium confidence much healthier numbers

I would say that, now with the commodity prices stable and with the fresh allocation of government into the Jal Jeevan Mission project, we will see much healthier numbers in this division in the next year.

— Sharan Bansal

Tax

Effective tax rate Tax · Going forward · High confidence 25.17%, including surcharge

So we have moved into new tax regime. And currently, we are taxed at 25.17%, including surcharge.

— Management

Export

Exports as a percentage of revenue Export · long run · Medium confidence bounce back

So I'd say that, yes, as a percentage basis, we certainly do expect exports to bounce back.

— Sharan Bansal

Market Opportunity

Addressable market for Railway Kavach Market Opportunity · next 2 to 3 years · Medium confidence at least INR50,000 crores

Now I would imagine our addressable market in that to be at least INR50,000 crores. So that would be over the next 2 to 3 years.

— Sharan Bansal

Risks & concerns

Capacity Constraints
medium

Current capacity constraints limit aggressive order intake and growth, with the company being fully booked for 1.5-2 years.

Management acknowledged
Volatile Commodity Prices (Polymer Segment)
medium

Volatile commodity prices have led to uncertainty and destocking in the polymer segment, impacting growth.

Management acknowledged
Government Budget Allocation (Jal Jeevan Mission)
low

Previous lack of budget allocation for Jal Jeevan Mission impacted the polymer segment, but fresh allocations are expected to improve performance.

Management acknowledged, but improving
Execution Challenges for New Substation EPC
low

As a new player in substation EPC, the company will need to build execution skills and partner with experienced players, but expects to take good projects.

Management acknowledged, but confident

Areas of evasion (2)

Specific percentage growth targets for next fiscal year
Precise export contribution targets as a percentage

Q&A highlights

3 direct

Capacity Expansion and Revenue Potential Direct

No. Within Q4, we are not expecting any additional revenue from the new capacity expansion. It will start coming from quarter 1. ... the overall revenue potential of this capacity expansion is about INR700 crores.

Clarifies the timeline for new capacity revenue contribution and quantifies its potential impact, which is crucial for future growth projections.

Asked by Dhvij Patel

Entry into Substation EPC and Margins Direct

In substation, we'll be looking at turnkey EPC. ... And certainly, in the substation business, even though we are a new player, we will expect to do at least the industry average margins.

Details the company's strategy for a new, high-potential market segment, including the scope of work and margin expectations, indicating a strategic diversification.

Asked by Abhijeet Singh

Order Book Growth vs. Capacity Constraints Direct

It's just that because we have capacity constraints also, so we have not gone out and aggressively taking in a lot of orders and rather maybe it is difficult to get orders also beyond the execution time of 2 years. ... once the capacity we are able to have more capacity starting in the next financial year, then we will probably be able to target higher order growth as well.

Explains why order book growth has been muted despite strong demand, directly linking future order intake to capacity expansion, which is a key driver for capital goods companies.

Asked by Manish Ostwal

2 min read 6 chapters

Detailed narrative

Strong Q3 FY25 Performance and 9M Growth

Skipper Limited reported its highest-ever third-quarter revenue of ₹1,135 crores, marking a 42% year-on-year growth. Consolidated EBITDA increased by 44% to ₹110 crores, with operating EBITDA margins improving to 9.8% from 9.6% in the prior year. For the nine-month period, revenue reached ₹3,336 crores, a 57% YoY growth, and PAT surged by 80% to ₹101.4 crores, with a PAT margin of 3%.

Robust Order Book and Strategic Capacity Expansion

The company secured ₹1,318 crores in new orders during Q3 FY25, bringing the year-to-date order inflow to ₹3,743 crores, a 19% increase year-on-year. The total order book now stands at ₹6,354 crores, reflecting a near all-time high. To support future growth, Skipper is expanding its capacity by 75,000 tons, with a major part expected to be commissioned in Q4 FY25 and the remainder in Q1 FY26, with a revenue potential of approximately ₹700 crores from this new capacity.

Entry into High-Potential Substation EPC Segment

Skipper is strategically expanding its EPC capabilities beyond transmission lines to include substation EPC, an area offering significant margin potential and strong demand prospects. The company is favorably positioned to secure its first major substation EPC project, which could contribute significant revenues from FY27 onwards. Management expects to achieve at least industry-average margins in this new segment, leveraging its engineering and execution strengths.

Financial Efficiency and Margin Improvement Outlook

The company demonstrated improved financial efficiency, with finance costs as a percentage of sales declining to 4.4% in Q3 FY25 from 4.9% last year, and to 4.7% for the nine-month period from 5.1%. Management anticipates further margin improvements in the coming quarters, driven by a lower share of non-T&D business, better quality contracts in T&D, and enhanced working capital management, aiming to incrementally improve margins from just under 10%.

Polymer Segment Recovery and Export Market Dynamics

The polymer business experienced a 9.3% decline in 9-month volumes to 22,300 tons compared to the previous year, primarily due to volatile commodity prices and reduced government allocation to the Jal Jeevan Mission. However, with commodity prices stabilizing and fresh government allocations, management expects 'much healthier numbers' for this division next year. Export revenues grew 36% to ₹594.6 crores for 9M FY25, contributing 23% of the engineering segment revenue, and are expected to 'bounce back' as a percentage of overall revenue in the long run.

Digital Transformation and Capital Allocation

As part of its operational excellence drive, Skipper is implementing SAP S/4HANA RISE, a next-generation ERP platform, to enhance efficiency and decision-making. The company plans a consistent capex of ₹200-250 crores for FY26, primarily in the engineering segment, and has received ₹148 crores from its rights issue, strengthening its working capital base and funding future growth initiatives. The company has also moved to a new tax regime, with an effective tax rate of 25.17% including surcharge.

This is an AI-generated summary of a publicly available earnings call transcript.

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