GOODLUCK - Goodluck India Limited Share Price

Goodluck India Limited's management provided a positive outlook during the Q1 FY '26 earnings call. The company reported a 7.7% increase in income from operations, reaching INR 983.29 crores compared to INR 913.08 crores in the same quarter last year. The increase was primarily attributed to a 12% growth in overall sales volume, driven by strong domestic demand.

Key forward-looking points included:

1. Defence Sector Development: The company is in the process of obtaining a license for defence production through its new vertical, Goodluck Defence, expected to generate long-term value. They plan to produce 150,000 artillery shells (155 mm) annually, pending government clearance.

2. Market Conditions: Despite ongoing geopolitical tensions and a challenging global trade environment, Goodluck has maintained resilience. The management expects the export volume to recover as tariff situations stabilize, particularly with prospective Indo-US and UK free trade agreements.

3. Sales Volume Targets: Management is targeting a 20% increase in sales volume for the infrastructure sector in the current fiscal year, while solar energy initiatives are anticipated to achieve almost 100% growth, driven by new installations.

4. Financial Projections: Management reaffirmed the guidance of 15%-20% top-line growth for FY '26, excluding any contributions from the defence segment. Additionally, they aim to sustain an EBITDA margin in the range of 9.5% to 9.7% for the current year.

5. Long-term Vision: Goodluck aims to become a $1 billion company in the next 3-4 years and plans to keep their return on capital employed (ROCE) above 22%-25%.

Overall, the management remains confident in their growth strategy despite external pressures, focusing on developing niche segments and expanding product offerings to meet market demands.

Q&A Summary of the Earnings Call - Goodluck India Limited (July 23, 2025)

1. Question from Riddhesh Gandhi:
"What are the implications of the recent implementation of the BIS on domestic demand and sourcing international steel?"

Answer:
As we are not reliant on imported materials that require BIS certification, we face no implications. The BIS affects only those importing steel, creating less competition, and pushing demand towards certified domestic products.

2. Question from Riddhesh Gandhi:
"Can you provide an update on the progress of the defence business?"

Answer:
We have set up Goodluck Defence and Aerospace and are awaiting government clearances to begin producing 150,000 shells annually. While we expect delays, we anticipate approval soon, and nothing is pending from our side.

3. Question from Vedant Sarda:
"Do you have any capex plans considering we are operating at 90% capacity?"

Answer:
We consistently implement debottlenecking, which enables us to increase capacity without significant capital expenses. We expect to raise our current capacity from 100,000 to 150,000 tonnes through this process.

4. Question from Vedant Sarda:
"Is the improved EBITDA margin sustainable?"

Answer:
We believe our margins are sustainable, having worked towards this level for several quarters. However, market headwinds could impact future projections.

5. Question from Neel Mehta:
"What details can you share about the 155 mm shells and international tie-ups?"

Answer:
The shells are medium caliber (M107) used domestically and internationally. While we have letters of intent for future partnerships, we will confirm these once production begins.

6. Question from H. C. Daga:
"What is our revenue outlook given the Q1 growth compared to previous years?"

Answer:
We observed a decline due to reduced domestic demand and export issues linked to tariffs. The export market has stagnated, impacting overall growth. However, we are optimistic about stabilization in the tariff situation.

7. Question from Hitesh Randhawa:
"Do you maintain the previous guidance of 15% to 20% top-line growth for FY '26?"

Answer:
Yes, we reaffirm this guidance, excluding defence contributions, as we anticipate strong growth across our sectors.

8. Question from Rakesh Roy:
"What is the expected revenue contribution from the hydraulic tube business?"

Answer:
With our hydraulic tube business, we expect an annual contribution of around INR1,250 to INR1,300 crores once we reach 70-90% capacity.

9. Question from Abhishek Dixit:
"What is the expected interest cost and plans to manage it?"

Answer:
We estimate our interest cost to be approximately INR90 crores this year. We also anticipate a loan repayment of INR70 crores that should help manage these costs effectively.

10. Question from Yashasvi:
"What caused the slowdown in domestic demand, and how does it impact our expectations for the year?"

Answer:
The slowdown stemmed from a lack of government orders and monetary supply issues leading to project delays. However, given our niche products and customer profile, we remain confident in meeting our targets despite these challenges.