• 2 months ago
Transcript
00:00Let me bring on board Mr. Adepalli Krishnasai Kumar, who is the director at Apollo Microsystems
00:07to talk to us about the Q2 numbers.
00:09A steady set sir, you're on your way to a 50% top-line growth, is that how one should
00:15view it?
00:16Yeah, I think we already gave a guidance that we will be up by 40-45% in this financial
00:24year and we are on track.
00:27Mr. Kumar, you've guided for a 50% growth, but if we had to consider the first half,
00:33your performance has almost seen about a 70% growth.
00:35So, can we expect a revision for the guidelines that you've mentioned for, be it your top-line
00:40and your margins?
00:42Yeah, generally the Q3 and Q4 are the anchoring quarters, but we could somehow achieve Q2
00:51where this is one of the finest Q2 we have ever recorded till date.
00:57So I think like Q3 and Q4 continue to be an anchoring quarters, I think we should be outperforming
01:02over and above the guidance that we have given, both on the top-line as well as on the bottom-line
01:07as well.
01:08So, sir, as you continue to ramp up and growth has been extremely strong for you, how much
01:16of your revenue is recurring versus how much is based on order flows?
01:21Just give us that perspective.
01:25So obviously they are based on order flow, but you will have to understand that the sector
01:29in which we are and specifically the projects in which we are working, these are all the
01:35recurring projects only, which are mostly either repeat orders or in the programs where
01:40we already have a participation actually.
01:42So there is a clear guidance available to us from our customers, how the inflow of the
01:48orders would be for the subsequent financial years.
01:51So that's how broadly I have to say.
01:54So Mr. Kumar, if you had to look at your queue, the second quarter you had secured orders
02:01about Rs. 131 crore, which are yet to be executed.
02:04Firstly, if you can give us an execution timeline for these orders and for FY25, what is the
02:09whole scenario that we should be looking at for overall order inflows that can be expected
02:15for Apollo Microsystems?
02:17As the day stands, we have more than Rs. 450 crores worth order book, just orders on hand
02:24other than the orders which got finalized and yet to be recognized where we have to
02:29get official orders on hand.
02:32These fresh orders which we have received in Q2, typically you have to understand that
02:368 to 9 months are the delivery periods which would be there for these orders.
02:40And in some of the quarters, we get orders where the delivery schedules will be shorter
02:47schedules of 4-5 months.
02:49So broadly, I think we would be meeting the guidance and these specific to this Rs. 131
02:55crores, we will be executing in the next financial year.
03:00Mr. Kumar, but if you had to look at a margin picture for these, would these orders also
03:04have a 24% to 25% of margins?
03:06Because if you look at Q1, you had a comparatively higher margins which have come down in Q2
03:12if you had to compare just quarter on quarter basis.
03:14So for the whole year picture, what should be the average blended margins that one should
03:19be looking at?
03:20At beta level, there was a little pressure in the Q2 for execution of the projects right
03:26from Q1 onwards.
03:27So we had to procure some of the raw material at a higher cost and that's why there was
03:33a small dip in the EBITDA compared to the previous quarter and compared to previous
03:38H1.
03:40But we could leverage on the overall capacity that we already have and we could still maintain
03:46the PAT levels at much better place.
03:49What's the risk of that spilling over into H2 as well, as well as beyond that?
03:58That's a good question.
04:00Sometimes it so happens some of the projects would be flowing generally Q1 and Q2 are not
04:06a very brighter quarters, but Q3, Q4 will definitely be there.
04:11We have a proper scheduled orders that will be executed in Q3 and Q4.
04:16You will see that the EBITDAs will bounce back in Q3 and Q4 with the existing orders
04:22that we are having on hand, which the work is in progress actually.
04:26And how much in terms of what's the size of your book currently in terms of execution
04:32and how quickly can you execute that?
04:34How many years?
04:36Over 450 crores is the current order book presently on hand.
04:42It's a confirmed orders where already the production of it has already started.
04:47So as far as the top line, the guidance is already given.
04:51But at the same time, by end of this financial year, we will be expecting a very large order
04:59book in a couple of projects where approvals are being accorded by Ministry of Defense.
05:05The size of the ticket would be over and above 1000 crores, a single order.
05:10So we're just waiting for those projects to fit in probably by end of this financial year
05:14as a single ticket projects.
05:17Okay, very good.
05:18As a single ticket projects.
05:20Okay, Mr. Kumar, so for these projects that you'll be focusing on and the additional facilities
05:26that we have in development.
05:28So when are we expecting the commissioning of these facilities?
05:32And for the same, what are the CAPEX plans that you have envisioned for the next one
05:36to two years?
05:38So as we have already told in the market that 3.5 lakh square feet facility is getting ready.
05:45The phase one will be 2.5 lakh square feet facility and the phase two will be a little
05:50over a lakh square feet facility.
05:52This will be cumulatively, we will be having close to around 4.5 lakh square feet facility
05:59of design cum production in Hyderabad, which is one of the largest facilities for any mid-sized
06:07companies like us, specifically in the A&D sector.
06:11As you know, there's A&D sector in India, particularly is in a very, very transformative
06:17phase with a lot of, I meant to say modernization and a lot of push towards internet indigenization.
06:26At the same time, there's a huge amount of projects, which are actually getting into
06:32a production phase in next six months to next couple of years for which this facility, we
06:36have started a couple of years back.
06:40The overall investment that will go in this facility will be close to around 250 plus
06:44crores in next 18 months.
06:48And phase one of the project, 2.5 lakh square feet, we will start occupying from February
06:53onwards over a period of four months where the complete facility will be occupied there.
06:59Right.
07:00I want to try and understand more from a longer term perspective, how the trajectory goes.
07:06You're aiming for a thousand crore revenue.
07:08You're currently at 370 crore, aiming for a thousand crore revenue by FY 27.
07:14How comfortable are you with that?
07:15And can you maintain the kind of margins you're doing even at that revenue level or will it
07:20at all get better?
07:23So I would like to position like this.
07:26So primarily, the existing projects that we are doing are design come production and some
07:32of them are production orders and integration orders.
07:35And the percentage of the production orders, you know, year on year will be increasing
07:39for the next three, four years constantly.
07:41So every five to 10, 15% of jump in the production percentage that goes, the profitability also,
07:47you know, will be much better on an annuity basis as a balance sheet point of view.
07:54Coming to the top line, we already gave a guidance that, you know, we will be growing
07:58at a CAGR of, you know, 40 to 45% and maybe 50% and over and above that.
08:05For which, you know, large ticket orders are expected.
08:08We are expecting an AOM from Ministry of Defense for one of the NAVAL program, where the ticket
08:14size would be more than thousand crores a single project like that.
08:18We are expecting a couple of projects from the NAVAL defense itself.
08:21So similarly in the, you know, missile defense segment also, we are expecting six, seven
08:27programs, you know, very large cap programs, which are going to hit production.
08:32Overall 15 projects are there, which will hit production in the next, you know, 12 months
08:36out of the six and projects will be a very anchoring projects for us.
08:41Based on all these, you know, backup that we have in the funnel that we have and proven
08:45products that have already gone in trials and proven in trials.
08:48We are very confident that, you know, the growth trajectory, which we are, you know,
08:52giving as a guidance, we'll be able to maintain.
08:54And that's why too much of CapEx, you know, we are investing because the facility has
08:58to be ready.
08:59As you understand that, you know, we can't build the facility overnight.
09:02So we'll also be increasing our headcount.
09:04Currently, we are close to around 400 plus and in next couple of years, we are going
09:08to double the headcount as a group companies.
09:13Okay.
09:14Thank you so much.
09:15It's great getting perspective from you, sir, and wishing you all the very best for H2.

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