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• Revenue: 805 crores for Q2 FY25 on a consolidated basis.

• EBITDA Margin: 11.6% for Q2 FY25.

• Order Intake: 762 crores for the quarter.

• Order Backlog: 1,773 crores as of September 30th.

• Standalone Revenue: 208 crores with a margin of 10.8%.

• Unbilled Revenue Increase: Up by 28 crores compared to March 31st.

• Inventory Increase: Up by 32 crores compared to March 31st.

• Customer Advance Receipts: Increased by 30 crores.

• Receivables: Decreased by 21 crores.

• Free Cash Flow (FCF) Generation: 50% for H1 FY25.

• Warning! GuruFocus has detected 4 Warning Signs with BOM:505255.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GMM Pfaudler Ltd (BOM:505255) recorded a revenue of 805 crores with an EBITDA margin of 11.6% for Q2 FY25, indicating stable financial performance.

• The company's order intake improved by about 18% to 20% on a half-yearly basis, suggesting strong future revenue potential.

• The backlog stands at 1,773 crores, which is higher than the previous period, indicating a healthy pipeline of future work.

• The company has been steadily improving its free cash flow (FCF) generation over the past three years, demonstrating effective cash management.

• GMM Pfaudler Ltd is diversifying its industry focus beyond chemical and pharma, which has reduced dependency on these sectors and opened new growth opportunities in industries like petrochemical, oil and gas, and food and beverage.

Negative Points

• The glass line business, particularly in the agrochemical sector, is experiencing a slowdown due to dried-up investments, impacting overall growth.

• There is pricing pressure in the market, which has led to increased discount levels by about 10% to 15%, affecting profit margins.

• The chemical cycle is currently at a low point, and a turnaround is not expected in the immediate future, which could continue to impact order intake and revenue.

• The company's H1 performance has generally been lower on the FCF generation perspective, indicating challenges in cash flow management during the first half of the fiscal year.

• International business revenues have seen a decline, and there is a bit of a decline in the backlog on a quarterly basis, suggesting challenges in major geographies.

Q & A Highlights

Q: Can we expect better growth in the second half of the year given the current order backlog and market conditions? A: Yes, the order intake has improved by about 18% to 20%, indicating a strong few quarters ahead. We expect the second half of the year to be stronger in terms of both revenue and margins, particularly in businesses with strong backlogs like the HHI business in India. However, the glass line business, especially in the agrochemical sector, remains stressed due to dried-up investments.