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ICICI Securities Report
ISGEC Heavy Engineering Ltd.'s standalone revenues grew 3.2% YoY to Rs 13.6 billion in Q4 FY22, supported by 18% YoY growth in the manufacturing business.
Standalone Ebitda margin contracted 240 basis points YoY to 5% due to higher commodity costs and overheads. Management guided for margins remaining subdued as 61% of the orderbook comprises fixed-priced contracts and the balance are public sector undertaking orders some of which are slow moving.
Due to volatile commodity costs, ISGEC has been selective towards order bidding. Current consolidated orderbook is stable at Rs 73 billion (1.65 times trailing twelve months sales).
Factoring-in the near-term weak execution outlook and margin stress, we cut standalone earnings by 24% and 22% for FY23E and FY24E respectively.
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