💰 Financial Performance

Revenue Growth by Segment

Total revenue grew by 30.26% YoY, reaching INR 26.82 Cr in Mar 2024 compared to INR 20.59 Cr in Mar 2023. While specific segment percentages are not disclosed, the company operates in engineered steel castings for railways, defence, and power generation.

Profitability Margins

Net profit margins improved significantly to 11.85% in Mar 2024 from 5.48% in Mar 2023. Operating Profit Margin (OPM) increased from 9.28% to 18.94% over the same period, driven by better cost management as expenses grew only 16.3% despite a 30% revenue jump.

EBITDA Margin

Operating Profit (EBITDA proxy) stood at INR 5.08 Cr in Mar 2024, representing an 18.94% margin, which is a 104% increase in margin percentage from the 9.28% recorded in Mar 2023.

Capital Expenditure

The company undertook significant capital expenditure in FY24, with cash from investing activities at a negative INR 9.12 Cr. This led to an increase in Net Fixed Assets from INR 5.29 Cr in Mar 2023 to INR 12.86 Cr in Mar 2024, a 143% expansion to support increased production of steel castings.

Credit Rating & Borrowing

Total borrowings increased by 87.67% to INR 17.66 Cr in Mar 2024 from INR 9.41 Cr in Mar 2023. Interest costs rose by 52.7% to INR 1.13 Cr, suggesting an average borrowing cost of approximately 6.4% based on year-end debt levels.

⚙️ Operational Drivers

Raw Materials

Mild steel, SGCI (Spheroidal Graphite Cast Iron), and low alloy castings are the primary raw materials used in the foundry process.

Capacity Expansion

Fixed assets increased by INR 7.57 Cr (143% growth) in FY24, and Capital Work-in-Progress (CWIP) stands at INR 4.85 Cr, indicating ongoing expansion of the foundry and machining facilities.

Raw Material Costs

Raw material and manufacturing expenses totaled INR 21.74 Cr in Mar 2024, representing 81.05% of revenue, down from 90.72% in Mar 2023, indicating improved procurement efficiency or higher value-add product mix.

Manufacturing Efficiency

Operating profit per unit of sales doubled YoY, indicating higher manufacturing efficiency and better utilization of the newly added fixed assets (INR 12.86 Cr).

📈 Strategic Growth

Expected Growth Rate

30%

Growth Strategy

The company is targeting growth through the expansion of its manufacturing base, evidenced by the 143% increase in fixed assets to INR 12.86 Cr. It is focusing on high-value sub-assemblies for the railway (traction motors) and power sectors (hydro turbines) where technical barriers are higher than standard castings.

Products & Services

Engineered steel castings, traction motor components, bogie components, thermal turbine sub-assemblies, hydro turbine sub-assemblies, and industrial machinery components.

Brand Portfolio

Gallard Steel.

Market Expansion

The company is expanding its footprint in the defence and power generation sectors to diversify away from pure industrial machinery.

🌍 External Factors

Industry Trends

The industry is shifting toward integrated machining and assembly rather than just raw castings. Gallard is positioning itself as a component and sub-assembly manufacturer to capture higher margins in the growing railway and defence supply chains.

Competitive Landscape

Operates in the fragmented steel casting and auto component sector, competing with other SME foundries and specialized engineering firms.

Competitive Moat

The company possesses a technical moat in manufacturing SGCI and low alloy castings for specialized applications like traction motors. This is sustainable due to the rigorous qualification processes required by railway and defence departments.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending, particularly in the Indian Railways and power sectors, which drive demand for traction motors and turbine components.

Consumer Behavior

Not applicable as the company is a B2B industrial manufacturer.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to industrial safety and pollution control norms for foundries, as well as stringent quality standards for railway and defence component manufacturing.

Taxation Policy Impact

The effective tax rate for FY24 was 13.35%, significantly lower than the 25.49% in FY23, contributing to the 181% jump in net profit.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the sharp rise in debtor days to 123.84, which could indicate credit risks or disputes with major customers, potentially impacting cash flow by over 50% of annual profit.

Third Party Dependencies

Dependency on the railway and power sectors for the majority of sub-assembly orders makes the company vulnerable to changes in government procurement cycles.

Technology Obsolescence Risk

The shift toward electric propulsion in various industrial machineries requires constant R&D in traction motor component design to avoid obsolescence.

Credit & Counterparty Risk

Receivables quality is a concern as debtor days rose from 80.30 to 123.84, suggesting a potential strain on the liquidity of its industrial and utility customers.