GOODLUCK - Goodluck India Limited Share Price

Management provided a cautiously optimistic outlook during the earnings call for Q2 & H1 FY 2026, noting that despite current challenges, they expect a long-term growth of 15% to 20% in revenue. For FY 2026, they anticipate revenue in the range of Rs. 4,500 crores, driven by their strategy to focus on high-value engineering and defense manufacturing. They emphasized a target of Rs. 500 crores to Rs. 600 crores in revenue from solar support structures and other segments within the next year.

On the defense front, the company has initiated production of 150,000 artillery shells annually, expecting this figure to expand to 400,000 shells within a year. The combined revenue from this artillery shell capacity is projected to reach Rs. 1,000 crores, with an EBITDA margin expected to improve to 30%-35%.

Despite challenges, including a decline in domestic steel prices"”reaching a five-year low"”and operational disruptions due to heavy monsoons, Goodluck India reported a volume growth of nearly 10% YoY and an EBITDA margin improvement of 2.2 points. Their efforts in the hydraulic tube segment are expected to support growth, with plans to augment production once capacity utilization reaches 80%.

Economic and geopolitical factors were noted as complicating the global landscape, yet management remains confident about stabilizing operations and working on meeting market demand. Their strategy hinges on adaptability, operational excellence, and seizing opportunities in emerging sectors like renewable energy and aerospace.

Here are the major questions and their respective answers from the Q&A section of the earnings transcript:

1. Question: "Can you please give us the expectations for revenue and margin for the year 2027?" Answer: "We aim for a long-term growth rate of 15%-20% annually. For this year and the next, our turnover should align with this target. Currently, we expect EBITDA margins to remain in the same space of 9.72% as achieved this quarter."

2. Question: "What is the potential for revenue from the artillery shell division?" Answer: "We established capacity for 1,50,000 shells and are augmenting to 4,00,000 shells per annum. We anticipate combined revenue in the range of Rs. 1,000 crores from this division."

3. Question: "Are we seeing improvement in volume growth this quarter, or is there more pain ahead?" Answer: "Demand in H1 was low, but H2 shows promise as it's a busy season. The government targets project completion by the last quarter, suggesting a better H2."

4. Question: "What is the expected revenue from Goodluck Defence for FY "˜26 and FY "˜27?" Answer: "In FY '26, we expect Rs. 100 crores in revenue, escalating to Rs. 300 crores in FY '27 as we utilize our full capacity."

5. Question: "What are the capacity utilization expectations for the hydraulic pipes and shell production?" Answer: "By March 2026, we project hydraulic capacity to reach 70% and shell capacity at around 30%-35% due to early production phase challenges."

6. Question: "What is the peak revenue projected from the artillery shells business?" Answer: "At peak capacity, we anticipate Rs. 800 crores in revenue from the shells, with additional revenue possible from aerospace and missile components."

7. Question: "Can you clarify about the defense shell business's EBITDA margin expectation?" Answer: "We expect 30%-35% EBITDA margins in the defense segment, driven by current demands and pricing adjustments in the market."

8. Question: "What financing plan do you have for the Rs. 500 crore CAPEX?" Answer: "The funding will be a mix of debt and equity, likely borrowing an additional Rs. 50 crores to Rs. 100 crores for this expansion."

9. Question: "Will Goodluck Defence remain a subsidiary or be spun off into a separate entity even after an IPO?" Answer: "Initially, it will be a separate entity following the IPO, but we will inform shareholders about any significant changes as they arise."

Each answer maintains a succinct focus on key financial indicators and operational strategies while providing essential insights into expectations and growth potential.