Salasar Techno Engineering Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Salasar Techno Engineering Ltd (SALASAR) Q4 FY22 Earnings Concall

Q&A Highlights:

• Viral Shah of YES Securities asked about the bid pipeline. Shashank Agarwal MD replied that the company has become selective in bidding the tenders as of now as it has a good order book in hand. In any case, SALASAR is bidding tenders in the range of INR400-500 crores.

• Viral Shah of YES Securities also asked about order book and outlook. Shashank Agarwal MD said the overall order book is almost INR1,182 crores. Out of this unexecuted EPC orders in hand are about INR808 crores. And L1 is INR130 crores and expects LY to be signed. Poised for 30-35% growth in FY23.

• Viral Shah of YES Securities enquired about margins, how much will be fixed price contracts and variable.  Shashank Agarwal MD answered that only one or two contracts are fixed price with a value of INR50-60 crores. All other orders are of price variable clause where the ups and downs would be covered by the customer.

• Nandish Shah with Moneycontrol asked about the order inflow for the March quarter and the target for FY23. Shashank Agarwal MD replied that as on 31^st Dec, the order book was close to INR980 crores. In 4Q22, order received was of [INR200] crores. In FY23, received orders of almost INR80 crores.

• Nandish Shah with Moneycontrol enquired about the sustainable operating margin in the total business. Shashank Agarwal MD said that on a sustainable level, any EBITDA in the range of 10-11%, with a PAT in the range of about 5% is something which is sustainable in the long term.

• Nandish Shah with Moneycontrol also asked about the outlook for the solar segment. Shashank Agarwal MD said the solar segment is growing in bits and pieces.

• Mihir Desai from Desai Investments asked about current capacity utilization with a comparable between FY22 and FY21. Shashank Agarwal MD clarified that utilization during FY22 was less compared to FY21. In FY22 capacity utilization was 60% compared to 75% in FY21. This was due to abnormal movement in commodity prices.

• Priyam Poddar of Value Equity Capital asked about the breakup of order book between 3G and 4G connectivity. Shashank Agarwal MD clarified that when SALASAR is supplying towers there is no difference between 3G, 4G or 5G. The same towers will be mounted with 5G antennas. The focus right now is to increase 4G connectivity in the rural areas.

• Priyam Poddar of Value Equity Capital also asked when can the company see some traction for 5G technology. Shashank Agarwal MD said that on enhancing 5G capacity, there are lot of small cell size that will be put up in urban areas that’s already started.

• Priyam Poddar with Value Equity Capital asked about the outstanding debtor number, including the retention amount and the cost of capital. Pramod Kala CFO said the debtors are in the range of INR250 crores and retention is INR25 crores and another INR25 retention shown as security deposits. Capital cost is down 7% annually.