Emkay: Engineering, Capital Goods & Infrastructure Kolkata Day - Road to Success

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Engineering, Capital Goods & Infrastructure

Kolkata Day - Road to Success

We did a road-trip to Kolkata with investors to meet companies in the Capital Goods space – namely McNally Bharat Engineering, TRF and TIL. Key takeaways from the investors’ and managements interaction are outlined below:

McNally Bharat Engineering (MBE)

MBE indicated strong growth momentum across business verticals over the next 5 years à medium term growth driven by healthy order backlog, satisfactory progress in key orders and a healthy order-bid pipeline, while longer term growth driven by larger projects in Power and Steel, expansion in international space and diversification into Civil engineering. MBE maintained its Ebidta margin outlook – defying industry-wide concerns. The management also detailed the growth plan for its subsidiaries McNally Sayaji Engineering and MBE Mineral Technologies Pte, Singapore and McNally Bharat Infrastructure.

TIL

TIL shared robust growth outlook across business verticals (similar to FY03-08 period) – and indicated upsides would emerge on large uptick in government infrastructure spending and investments in mining industry. It also outlined an aggressive expansion plan in the Material Handling Solutions division (4X Capital Employed in the division) to drive growth in the business division.

TRF

TRF satisfactorily addressed investor queries on one-offs and write-offs on Port Yard division as well as gave positive outlook for Ebidta margins in MHE business. Company hinted at spillover of new orders to H1FY12E – primarily due to retendering of orders by NTPC. For automotive application business, company gave strong growth outlook and detailed its expansion plans – but refrained from pegging Ebidta margins in the business.