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.