COCKERILL - JOHN COCKERILL INDIA LIMITED Share Price

In the earnings conference call for the quarter and year ended December 31, 2025, management provided a strong positive outlook for John Cockerill India Limited (JCIL). Key highlights include:

1. Strong Order Book: For fiscal year 2025, the company achieved order entries of INR 862 crores, significantly up from INR 300 crores the previous year. The order backlog now stands at approximately INR 11.9 billion, reflecting a 74% increase and the highest level of revenue visibility in years.

2. Revenue Growth: The company reported revenue of INR 357 crores and a profit after tax of INR 10 crores, marking a return to profitability after a loss of INR 5 crores in 2024.

3. Operational Improvements: EBIT improved to about 6% in 2025 from around -3% the previous year, driven by enhanced operational discipline and growth in value services. The company also maintained tight cost control, ensuring lean operations while growing its cash position from INR 62 crores to INR 226 crores.

4. Dividend Announcement: Management recommended a dividend for 2025, signaling restored confidence in financial stability and a commitment to shareholder returns.

5. Growth Roadmap: Management outlined five growth engines:

   • India's Steel Boom: Surging demand driven by infrastructure investment and automotive growth.
   • Record Order Book: High revenue visibility with major projects secured from leading steel producers.
   • Value Services Expansion: Focus on high-margin services contributing around 30% to total revenue, with expectations for continued growth.
   • Global Consolidation: Proposed acquisition of a US entity by December 31, 2026, enhancing global competitiveness.
   • Green Steel Technology: Focusing on innovations in steel manufacturing to meet decarbonization mandates.

Management's insights conclude that JCIL is no longer in a turnaround phase but is positioned for sustained growth, backed by financial strength and a proactive approach to market dynamics.

Question 1: What is the current market share of the company in the downstream steel capex in India, and how do you see it in the future? What about the market share globally?

Answer: I estimate our market share in India's downstream steel capex to be between 15% to 20%. We are seen as a leading value-for-money provider, evidenced by partnerships with major firms like Tata and JSW. Looking ahead, I anticipate the Indian market will continue to grow. Globally, while China focuses on differentiation through investment, Europe is getting ready for reinvestment, particularly after regulatory changes in 2026. The USA is also ramping up investments, signaling positive conditions ahead.

Question 2: After the consolidation, how do you see the upstream and downstream mix in the consolidated entity beyond 2026?

Answer: The consolidation allows us direct access to vital technologies previously external. We now access upstream technologies, like electrical arc furnaces through our partnership with SARRALLE. For downstream, technologies such as jet vapor deposition, which will contribute significantly to our order book and financials moving forward, will also be fully integrated into our offerings.

Question 3: What is the current service and spare part business as a percentage of total revenue, and what do you forecast for the future? Also, what about the debt profile?

Answer: Value services currently contribute about 30% of our metals' revenue, a record high. I expect this to grow in absolute value but fall to around 28% of total revenue in percentage terms next year, contributing significantly to profitability. Regarding debt, we are currently debt-free in India; however, some debt may arise from consolidating international entities, though specific details are not yet clear.

Question 4: Can you estimate consolidated revenues and EBITDA for 2025 on a pro forma basis?

Answer: If we had consolidated the business in 2025, revenue would be close to INR 2,000 crores. The EBITDA would be akin to what the Indian entity reports; however, I cannot disclose exact EBITDA figures at this time.

Question 5: Can you provide clarity on the current order book, and what order inflow do you expect this year?

Answer: Our current order backlog stands at INR 11.9 billion, representing our largest order book ever. We secured over INR 860 crores in orders for 2025 and project further increases in the backlog throughout this year, anticipating higher orders by the end of 2026.

Question 6: What is the typical order execution time for these contracts?

Answer: The typical execution time for our projects ranges from two to three years. Revenue recognition for each project occurs over an average span of three years, depending on the customer's specifics.

Question 7: What is the possible operating margin target for the consolidated entity in the next few years?

Answer: We are targeting double-digit profit margins within the next five years, enjoying increased absolute values as the consolidated entity matures and benefits from our recent restructuring and technology integration.