Overview
I am pleased to communicate that in a slowing economy, your company
reported a record performance in FY 2024-25.
Your company reported a 21.07% growth in revenues from Rs. 624.24
Crores in FY 2023-24 to Rs. 755.78 Crores in FY 2024-25. EBITDA strengthened 33.93% from
Rs. 108.44 Crores in FY 2023-24 to Rs. 145.23 Crores in FY 2024-25. Net profit
strengthened 24.91% from Rs. 79.84 Crores in FY 2023-24 to Rs. 99.73 Crores in FY 2024-25.
Your company reported attractive capital efficiency. Return on Capital
Employed was around 22.12% of the previous year at 20.17%; EBITDA margin strengthened from
17.17% to 18.67%.
Your company's liquidity hygiene continued to be protected, the
volatility and high interest rate notwithstanding. The company's net cash position
strengthened from Rs. 66.11 Crores to Rs. 97.74 Crores from year-start to year-end. Even
as interest cover decreased from 28.75 to 17.71 through the year under review, the company
continued to remain cash rich.
Competencies
At Lloyds Engineering, we are the right company at the right time.
India is passing through a period of unprecedented infrastructure building across its
public and private sectors. While this infrastructure spending has been spread across
verticals like roads, bridges, railways and ports, among others, the company selected to
focus principally on the growth coming out of its steel, petrochemical, naval and defence
sectors. These sectors are integral to the sustainable growth of the Indian economy; these
sectors are supported by long-term government policies; these sectors are being driven by
increased private sector spending; the private sector spending is being catalysed by large
marquee companies; these marquee companies are well-funded and attract some of the most
specialised vendors; these vendors are provided attractive terms of engagement.
Sectorial prospects
At Lloyds Engineering, we have selected to focus on the growth coming
out of select sectors. These sectors are expected to grow faster than the national
economic average, validating our decision. A consistent feature of the spaces we have
selected t is that most are under-penetrated by ambitious corporate players.
Steel: The Indian steel sector is one of India's most
attractive capital spending proxies. The sector is marked by existing and projected scale,
the investable quantum being large. The industry is the second largest in the world,
catalysed by rising domestic demand, capacity expansion and green steel manufacture. In FY
2023-24, crude steel production stood at 143.6 MT and was projected at 158 MT in FY
2024-25 (consumption 155 MT). By 2030-31, India's steel production is expected to
exceed 300 MT, following Rs. 10 Lakhs Crores investments. This holds out attractive
prospects for engineering companies addressing the capital spending of steel companies.
(Sources: IBEF, ET EnergyWorld, Daily Excelsior, The Economic Times,
Fastmarkets, SteelRadar, Zee Business)
Naval: India's naval sector has touched an inflection point,
its proposed modernisation marked by indigenous shipbuilding and advanced maritime
capabilities. As of January 2025, 64 vessels were under construction. Over 133 ships and
submarines have already been built and commissioned; 63 of 64 planned warships were built
in India. A fleet expansion goal of 200 ships and 500 aircraft by 2050 places a priority
in India to focus on innovation and self-reliance. This priority is reflected in contracts
worth Rs. 19,600 Crores for NGOPVs and NGMVs, coupled with 262 indigenisation projects
(171 under iDEX). The big message is that India is asserting its position as a maritime
power by enhancing its naval strength to secure national interests and regional stability.
(Sources: PIB, Ministry of Defence, Naval Technology, Axios, The New
Indian Express)
Defence sector: India's defence sector is being recognised as
one of India's fastest growing sunrise sectors. This follows the Indian
government's directive under the Atmanirbhar Bharat initiative where it indigenised
2,972 items worth Rs. 3,400 Crores through five Positive Indigenisation Lists. Defence
production reached a record Rs. 1,26,887 Crores in FY 2023–24, growing 16.7%; exports
surged 32.5% to Rs. 21,083 Crores. A projected USD 138 Billion opportunity over FY
24–32 and the modernisation of Tejas LCA, Arjun Mk1A tanks and AMCA development
warrant serious players with an excellent growth runway leading to the possibility of
India emerging as a global defence manufacturing hub.
(Sources: PIB, NEXT IAS, Pratidin, The Times of India, The Economic
Times, ETManufacturing.in)
These realities put a company like Lloyds Engineering at an advantage
on account of its growth-driven management, accelerated recruitment of specialised
professionals, vertical-driven business focus, culture of accountability and
outperformance, willingness to bid for larger complex projects and adequate cash on the
books.