Any current/future new fundraising through debt or equity?

The company has recently done equity dilution to raise funds for expansion post-API approval and managing working capital. The promoter holding fell from 70.79% in March 2024 to 60.99% due to this dilution. The raised funds from equity dilution are being pumped back into the business for growth. Future fundraising through equity is possible if required, as the company is open to it. For the upcoming INR70-75 crore capex for capacity enhancement, funding will be through a mix of both equity and debt. The company expects more rounds of capex and corresponding fundraising in the next 6-7 years as

Any current/future capex/capital investment/strategic investment?

Atam Valves is planning a capital expenditure (capex) of around INR 70-75 crores for capacity enhancement over the next 2-3 years to support growth, especially for producing valves up to 72 inches. This capex is part of a broader roadmap targeting significant growth, including a long-term revenue target of INR 1000 crores by 2032. The company is already expanding machinery and infrastructure to support API-certified valve production, expecting growth from API products starting Q4 FY25. Future capex beyond this round will be required to continue scaling production towards the INR 1000 crores ta

Future growth expectations in sales/revenue/volumes?

Atam Valves Limited is confident of achieving a top line of INR 7,280 crores in the current financial year. The company expects growth to accelerate after receiving the API certification, anticipated by end of August 2024. Forecasted growth rate is 35% to 40% annually for the next 2 to 3 years. Expansion in product range up to 72 inches will drive higher margins and volumes. Export share is targeted to increase from current 10% to at least 40% post-API certification. Company plans ongoing capacity enhancement with capex around INR 70-75 crores for facility expansion over 2-3 years. Business mi

Future growth expectations in earnings/operating earnings/profits/EPS?

Atam Valves Limited is confident of achieving 35% to 40% growth over the next two to three years. The expected revenue for the current year is INR 7,280 crores, reflecting strong top-line growth. EBITDA margins are projected to average between 20% to 25% for the full year. API certification approval, expected by end of August 2024, is a key growth driver; post-API, revenue growth is expected to accelerate significantly. Margins for API-related products as OEM are estimated at 25% to 30%, improving over 2-3 years as direct client base grows. Expansion plans include increasing production capacit

Current/ Expected Orderbook/ Pending Orders?

The company mentioned receiving "very good project approval in Sun City," which will help expand their customer base in plumbing and fire fighting segments. Pending orders are influenced by project approvals and market conditions, with a note that quarter 1 was soft due to election-related delays. They expect to ramp up orders significantly in the last quarter of the financial year, which historically registers higher sales. The upcoming API certification is expected to drive new orders starting from quarter 4 of FY25. OEM orders with API peers will start contributing soon, with direct client

IN US

Atam ValvesQ2 FY25Industrial Manufacturing

Atam Valves Q2 FY25 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹64.6P/E: 30.5Market Cap: ₹74 CrSector: Industrial Manufacturing

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→Atam Valves Limited is confident of achieving a top line of INR 7,280 crores in the current financial year.
→The company expects growth to accelerate after receiving the API certification, anticipated by end of August 2024.
→Forecasted growth rate is 35% to 40% annually for the next 2 to 3 years.
→Expansion in product range up to 72 inches will drive higher margins and volumes.
→Export share is targeted to increase from current 10% to at least 40% post-API certification.
→Company plans ongoing capacity enhancement with capex around INR 70-75 crores for facility expansion over 2-3 years.
→Business mix will include OEM partnerships initially, with margins improving as direct client relationships develop over 2-3 years.
→Focus on higher-margin segments like API valves and plumbing/firefighting also contributes to growth.
→Promoter re-investment in business expected to support expansion and working capital needs.

Margin guidance

Category 3

→Atam Valves Limited is confident of achieving 35% to 40% growth over the next two to three years.
→The expected revenue for the current year is INR 7,280 crores, reflecting strong top-line growth.
→EBITDA margins are projected to average between 20% to 25% for the full year.
→API certification approval, expected by end of August 2024, is a key growth driver; post-API, revenue growth is expected to accelerate significantly.
→Margins for API-related products as OEM are estimated at 25% to 30%, improving over 2-3 years as direct client base grows.
→Expansion plans include increasing production capacity beyond the current 96,000 units, supported by ongoing capex (~INR 70-75 crores).
→Net profit after tax grew 10% in Q1 FY25 compared to last year, signaling steady profit growth.
→Management remains optimistic about reaching the long-term INR 1,000 crore revenue target by 2032.

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Fundraise plans

Yes

→The company has recently done equity dilution to raise funds for expansion post-API approval and managing working capital.
→The promoter holding fell from 70.79% in March 2024 to 60.99% due to this dilution.
→The raised funds from equity dilution are being pumped back into the business for growth.
→Future fundraising through equity is possible if required, as the company is open to it.
→For the upcoming INR70-75 crore capex for capacity enhancement, funding will be through a mix of both equity and debt.
→The company expects more rounds of capex and corresponding fundraising in the next 6-7 years as they scale towards INR1000 crore revenue goals.

Order book

Yes

→The company mentioned receiving "very good project approval in Sun City," which will help expand their customer base in plumbing and fire fighting segments.
→Pending orders are influenced by project approvals and market conditions, with a note that quarter 1 was soft due to election-related delays.
→They expect to ramp up orders significantly in the last quarter of the financial year, which historically registers higher sales.
→The upcoming API certification is expected to drive new orders starting from quarter 4 of FY25.
→OEM orders with API peers will start contributing soon, with direct client engagement and margin improvement expected over 2-3 years.
→Expanding capacity beyond the current 96,000 units as demand grows is planned to accommodate the expected increase in order volume.

Capex plans

Yes

→Atam Valves is planning a capital expenditure (capex) of around INR 70-75 crores for capacity enhancement over the next 2-3 years to support growth, especially for producing valves up to 72 inches.
→This capex is part of a broader roadmap targeting significant growth, including a long-term revenue target of INR 1000 crores by 2032.
→The company is already expanding machinery and infrastructure to support API-certified valve production, expecting growth from API products starting Q4 FY25.
→Future capex beyond this round will be required to continue scaling production towards the INR 1000 crores target, potentially occurring in 6-7 years.
→Funding for the initial capex round will come from a mix of equity and debt.
→The company is also investing in new molds and dyes as part of this expansion.

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