Recently I came across Pennar Industries (NSE – PENIND).

The company deals in multiple products including Precision engineering products, Pre-Engineered Building Systems, Hydraulics and Warehousing solutions.

Over the last 5 years the company has performed well with improvement in sales, margins and profitability.

Below, we have shared notes from the Q4 FY 25 concall of the company to understand the company better.

 

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Pennar Industries – Q4 FY 25 concall notes

Source: Pennar Industries Q4 FY 25 presentation

 

Q4 FY25 & FY25 Performance Highlights:

Q4 FY25:

  • Revenue rose 10.1% YoY to ₹905.8 crore.
  • PBT grew 20.35% YoY to ₹47 crore.
  • PBT margin stood at 5.2%.

FY25 (Full Year):

  • Revenue increased 3.1% YoY to ₹3,226 crore.
  • PBT surged 20.5% YoY to a record ₹158.4 crore.

Working Capital:

  • Stands at 76 days (above ideal range).
  • Elevated due to raw material stocking for backlog
  • Expected to normalize to 72 days in the short term and 60 days in the long run

Growth Drivers & Business Outlook (FY26):

  • Pre-Engineered Buildings (PEB): Anticipates sustained double-digit growth. Driven by healthy order backlog and better Raebareli plant utilization.
  • Ascent (U.S. Subsidiary): Double-digit growth expected in revenue and PBT. Phase 3 expansion increased asset base. U.S. acquisition (Telco) to enhance structural steel fabrication capabilities.
  • Body-in-White (BIW): Onboarded OEMs: Hyundai, Maruti, Ashok Leyland, Ceer Automotive. Ongoing capacity expansions started contributing to revenue. Long-term revenue target of ₹1,000 crore, with investments in hot stamping, welding labs, and tools
  • Engineering Services: Focused on U.S. & Europe with structural engineering and BIM. Dubai acquisition to target Middle East market; expected to be immediately margin accretive

Key Discussion Highlights (Q&A):

  • Capital Efficiency: Target ROCE: 30% (currently 21.5%). Reduction in working capital to 60 days will support this. Gap between ROCE and ROE (~10%) will reduce, but 5–7% difference will remain due to capital structure
  • Capex Plans: Over ₹100 crore approved for FY26. No multi-year capex plan disclosed yet. Capex to be funded through long-term loans; no change in debt/equity ratio expected
  • Engineering Services Strategy: 100% third-party revenue. Strong focus on BIM, structural engineering. Cautiously scaling; not yet targeting aggressive market share. Dubai acquisition to expand footprint in Middle East.
  • Working Capital Insights: Target: 60 days WC cycle. PEB segment already improved from 100 to 70 days. Competitors with higher advances (40–50%) vs. Pennar (~15–20%). Non-cash LCs used to reduce cash strain; accounts payable: ~45 days.
  • PEB Business: Raebareli at 50% utilization; expected to ramp up in FY26. India PEB margins improving; U.S. margins stable. Strong order inflow in both geographies; selective on pricing.
  • Debt Profile: Debt-to-equity ↓ from 0.9 to 0.83. Targeting 0.7. Interest cost capped at 4% of net sales (currently 3.71%).
  • BIW Vertical: Target to reach ₹1,000 crore in a few years. Capex going into hot stamping, tool development. Serving Hyundai, Ceer, Ashok Leyland, Maruti; Kia expected.
  • JV with Zetwerk: Pennar: 49% stake. JV to begin revenue generation in H2 FY26. Will grow through internal accruals or debt (no further equity funding by Pennar).
  • Cadnum Subsidiary: Aerospace-focused, high margin (~50–60%). Revenue ~€1 million; being integrated into hydraulics segment.

Overall Strategic Outlook:

  • Double-digit revenue and profit growth guided for FY26.
  • Focus on scaling capacity utilization (target: 75%) before any large expansions.
  • Strategic approach favors steady growth, capital efficiency, and profitability—rather than market dominance.

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Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

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