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Trishakti Industries Limited — Q3 FY25 earnings call

Call held 29 Jan 2025

Company page: Trishakti Industries share price, financials & guidance record

Management summary

Trishakti Industries Limited reported strong Q3 FY25 results, driven by its strategic pivot to heavy equipment hiring services. The company achieved significant revenue and operating profit growth in this segment, supported by 100% fleet utilization. Management outlined an ambitious CapEx plan for the coming years, focusing on high-tonnage machines and expansion into new segments like port equipment, while maintaining a conservative debt profile and targeting high returns.

Highlights

  • Q3 FY25 standalone revenue from equipment hiring stood at INR 1.75 crores, demonstrating a QoQ growth of 214%.

  • Standalone operating profit for Q3 FY25 was INR 1.20 crores, achieving a robust margin of 69%.

  • Consolidated revenue for Q3 FY25 was INR 1.57 crores, with an operating profit of INR 0.99 crores and a margin of 63%.

  • The company has committed to a CapEx plan of INR 400 crores over the next three financial years (FY25-FY27), with INR 50 crores for FY25, INR 100 crores for FY26, and INR 250 crores for FY27.

  • Expected Return on Capital Employed (ROCE) is in the range of 22-25%, with an average blended yield of 2.2% per month and an operating profit margin of 60-65%.

  • Power fleet utilization reached 100% during Q3 FY25.

  • Current debt-to-equity ratio is less than 1, with an average interest rate of 8.8-9% and an average tenure of 4 years.

Key financials

  1. Standalone Revenue ₹1.75 Cr +214%QoQ
  2. Standalone Operating Profit ₹1.2 Cr
  3. Standalone Operating Profit Margin 69%
  4. Consolidated Revenue ₹1.57 Cr
  5. Consolidated Operating Profit ₹0.99 Cr
  6. Consolidated Operating Profit Margin 63%

What they filed

Q1 FY27: revenue up 252.5%, net profit up 372.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2 2 2 4 7 +214%8 +357%9 +314%14 +252%
EBITDA1 1 1 3 4 +367%6 +368%3 +190%8 +213%
Net profit0 0 2 1 2 +335%2 +1785%3 +50%4 +373%
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

SegmentMonthly Rental Yield (Gross Block)EBITDA MarginRevenue (Gross Block)
Heavy Equipment - Cranes2.2%2.2%2.7%
Heavy Equipment - Man-lifters2.6%2.6%3.7%

Capital allocation

high confidence
  • Capex ₹50 Cr 50-50 debt and equity for FY25, 30-70 debt and equity for FY26
    First year, we'll be doing INR 50 crores which is FY25, then INR 100 crores in FY26 and then INR 250 crores in FY27. Through a combination of internal accruals and debt, this approach ensures disciplined growth while maintaining financial stability. (Page 3) No. 50-50 is this year. It is more than 50-50 this year. Next financial year, we will take it up to around 30-70 or something like that. (Page 18)
  • Debt Debt disclosed Cost 8.8% · Maturity: Avg 4 years
    So, see the average tenure of the debt is 4 years as of now and the average interest cost, we have seen is around 8.8-9%. (Page 5) We are currently at a debt equity of less than 1. (Page 10)
  • Liquidity Liquidity disclosed Company has a lot of cash in the bank and recently completed a preferential round, aiding in funding CapEx.
    Right now, we already have a lot of cash in the bank as well. We recently had a preferential round. (Page 22)

Guidance & targets

Capex

  • CapEx for FY25 Capex · FY25 · High confidence INR 50 crores
    First year, we'll be doing INR 50 crores which is FY25

    — Dhruv Jhanwar

  • CapEx for FY26 Capex · FY26 · High confidence INR 100 crores
    then INR 100 crores in FY26

    — Dhruv Jhanwar

  • CapEx for FY27 Capex · FY27 · High confidence INR 250 crores
    and then INR 250 crores in FY27.

    — Dhruv Jhanwar

Profitability

  • Return on Capital Employed (ROCE) Profitability · Long term · High confidence 22-25%
    On this CapEx, we expect to generate an ROCE in the range of 22-25%

    — Dhruv Jhanwar

  • Average Blended Yield Profitability · Long term · High confidence 2.2% per month
    with an average blended yield of 2.2% per month

    — Dhruv Jhanwar

  • Operating Profit Margin Profitability · Long term · High confidence 60-65%
    and an operating profit margin of 60-65%.

    — Dhruv Jhanwar

  • EBITDA Margin Profitability · Longer term · High confidence 60-65%
    we have already given the guidance that we will be able to achieve 60-65% of EBITDA margins. So that is something which we are very confident on that we will be able to achieve 60-65% in the longer term.

    — Dhruv Jhanwar

  • EBITDA Margin Profitability · Short term · Medium confidence 70-75%
    See, right now, we are able to clock 69-70% maybe we will be able to clock 75% also. But in the longer time frame, I will tell you, in a year or 2, it is possible for us to achieve 70-75% as well

    — Dhruv Jhanwar

Debt

  • Average Debt Tenure Debt · Future · High confidence 5-6 years

    Previously 4 years → 5-6 years

    we will be increasing our debt tenure from 4 our years to 5 to 6 years, so that we are way more cash flow positive.

    — Dhruv Jhanwar

Segment Yield

  • Port Equipment EBITDA Yield Segment Yield · Future · High confidence 2.4% on gross block
    This sector has a similar rental yield of 2.4% EBITDAs on the gross block.

    — Dhruv Jhanwar

Asset Management

  • Resale Value of Machines Asset Management · After 8 years · High confidence 35-40% after 8 years
    you can get easily around 35-40% after 8 years as well.

    — Dhruv Jhanwar

What to watch in Q4 FY25

Completion of FY25 CapEx

next quarter
Current INR 36 crores achieved (72-75% of INR 50 crores plan)
Target Full INR 50 crores CapEx completed

Why it matters

Completion of CapEx is crucial for expanding the fleet and generating future revenue, validating management's execution capabilities.

we have achieved INR 36 crores of assets by Q3 only. So, we are 72%, 75% done with our CapEx for this financial year.

Risks & concerns

  • Risk of not securing contracts or machine downtime

    low

    Management mitigates this by conducting site surveys to ensure long-term contracts (2-4 years) with blue-chip companies, leading to 100% fleet utilization.

    So, whenever we see, first of all, we send a team of 4 to 5 people to any site before we give the machines. We see that if the site, how mature the site is. So, if we feel that if the worksite, the cranes will be there for 2 to 3 years minimum, then we tend to give them the cranes or the man-lifters or anything else. So that is why because if we are having a contract of 2 to 4 years, then it is very much easier for us to have the average fleet utilization next to 100%.

    Analyst acknowledged

  • Competition in new segments like port equipment

    low

    Management views port equipment as an unorganized market with few players and plans to enter the electric segment, which is not yet established in India, giving them a first-mover advantage.

    Port ones, there are not many players, there is a very unorganized market. ... So, we are planning to enter the electric ones, which is still not established in India. So potentially, we will be the first people to get it in India.

    Analyst acknowledged

Q&A highlights

8 direct
Equipment types, rental yields, and EBITDA margins Direct
So basically, our heavy equipment fleet comprises of cranes, man-lifters and heavy earthmoving equipment. ... the cranes generally give us a base rental yield of 2.2% per month on the gross block and the man-lifters generally give us a rental yield of around 2.65-2.7% EBITDA margins on the gross block.

Clarifies the company's core offerings and their profitability metrics, which are central to the new business model.

Asked by Abhishek Rao

Average interest rate and debt tenure Direct
So, see the average tenure of the debt is 4 years as of now and the average interest cost, we have seen is around 8.8-9%. ... we will be increasing our debt tenure from 4 our years to 5 to 6 years, so that we are way more cash flow positive.

Provides insight into the company's cost of capital and strategy to optimize cash flow through longer debt tenures.

Asked by Abhishek Rao

Confidence in entering equipment rental market despite slowdown signs Direct
But the demand is so much that is the reason why we have particularly selected this very industry. And honestly, this very industry, this might be a very big industry and a very normal thing for most of the people but if you are entering cranes above 100 tonnes, 300 tonnes, 400 tonne cranes, then obviously one crane is damn expensive. So not many people in India can purchase newer equipments which average cost is more than INR 5 crores. So, this brings our industry a very niche industry.

Addresses a key market concern and explains the company's strategic focus on a niche, high-value segment within the industry.

Asked by Rohan Mehta

Crane fleet capacity focus Direct
our business model is that we only concentrate on the machines which are above 100 tonnes. So, because 100 tonnes machines are generally 150 tonnes, 250 tonnes machines, it's very expensive also. So, the demand for that machine is a lot, but the supply is not there in the market.

Highlights the company's strategy to avoid commoditized lower-tonnage segments and focus on high-demand, less supplied, higher-value machines.

Asked by Rohan Mehta

OEM procurement strategy and credit terms Direct
we prefer only Sany India. Sany's machines are generally 20-25% more expensive than a normal Zoomlion machine. But the problem with Zoomlion... the downtime of the machine is negligible. And Sany also gives us 3 years of warranty with our machine.

Reveals the company's commitment to quality and reliability over lower upfront cost, which is critical for minimizing downtime and securing blue-chip clients.

Asked by Rohan Mehta

Funding for FY26 CapEx and cash flow Direct
for the next financial year, the INR 100 crores CapEx, we are planning it as a combination of debt and internal accrual. ... Right now, we already have a lot of cash in the bank as well. We recently had a preferential round.

Clarifies the funding strategy for future CapEx and reassures about the company's liquidity position to support growth.

Asked by Karan Sharma

Shift in segmental revenues and focus Direct
we are shifting our focus on only the heavy equipment business. ... the other business segments, if you can see in this quarter also had negligible contribution to our overall standalone revenue. So, this will be like this only from quarters to come.

Confirms the complete strategic pivot and explains the reason for fluctuating segmental contributions in previous quarters.

Asked by Abhishek Rao

Demand outlook for the next 3 years Direct
I personally feel as a business owner and seeing the on-ground stuff, which is happening in India, the next 10-15 years there is going to be a massive boom in this industry, not only for us, but also for other players.

Provides management's strong conviction in the long-term growth prospects of the infrastructure sector and their business.

Asked by Rahul

3 min read 7 chapters

Detailed narrative

Strategic Pivot to Heavy Equipment Hiring

Trishakti Industries Limited has strategically shifted its entire focus to heavy equipment hiring services, moving away from its legacy oil and gas business. This decision, made in Q1 FY25, is driven by the massive demand in India's infrastructure sector. The company believes this sector offers sustainable high-margin and high-growth opportunities, aiming for an operating profit margin of 60-65% and an ROCE of 22-25%.

Q3 FY25 Financial Performance Highlights

For Q3 FY25, the company reported a standalone revenue of INR 1.75 crores from equipment hiring, marking a significant QoQ growth of 214%. The standalone operating profit reached INR 1.20 crores, resulting in a robust operating profit margin of 69%. Consolidated revenue stood at INR 1.57 crores, with a consolidated operating profit of INR 0.99 crores and a margin of 63%. The power fleet utilization was 100% during the quarter, indicating efficient asset deployment.

Ambitious Capital Expenditure Plan

Trishakti Industries has committed to a substantial CapEx plan of INR 400 crores over the next three financial years. This includes INR 50 crores for FY25, INR 100 crores for FY26, and INR 250 crores for FY27. By Q3 FY25, the company had already achieved INR 36 crores in assets, representing 72-75% of its FY25 target. The CapEx is funded through a combination of internal accruals and debt, with a projected 30-70 debt-to-equity mix for FY26.

Equipment Fleet and Operational Strategy

The company's heavy equipment fleet comprises cranes and man-lifters, procured from top manufacturers like Sany India. Management emphasizes acquiring high-quality machines, even if 20-25% more expensive, due to their superior build, minimal downtime, and 3-year warranty. The focus is on high-tonnage machines (above 100 tonnes) to avoid saturated lower-tonnage markets, ensuring high demand and better resale value (35-40% after 8 years).

Clientele and Market Demand

Trishakti Industries serves over 100 clients across 20+ industries, including blue-chip companies like Tata Steel, L&T, RVNL, and Jindal. The company leverages its existing vendor relationships to secure long-term contracts (2-4 years) after thorough site surveys, which contributes to its 100% fleet utilization. Management expresses strong confidence in the demand for infrastructure equipment for the next 10-15 years, driven by India's infrastructure boom and expansion plans of large corporates.

Debt Management and Financial Health

The company currently maintains a healthy debt-to-equity ratio of less than 1. The average interest rate on its debt is 8.8-9%, with an average tenure of 4 years. To enhance cash flow and improve PBT/PAT, the company plans to increase its average debt tenure to 5-6 years. This disciplined approach to debt management supports its aggressive CapEx plans while maintaining financial stability.

Future Growth Avenues and Diversification

Beyond its current offerings, Trishakti Industries plans to expand into new segments, including port equipment and wind energy. The company has already ordered 2-3 restackers for the port equipment segment, expecting revenue generation from April, with an anticipated EBITDA yield of 2.4% on gross block. They aim to enter the electric port equipment market, which is currently unestablished in India, providing a potential first-mover advantage. Expansion into wind energy is slated for the next financial year.

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