ISGEC Heavy Engineering
Stock Snapshot
Price Performance
Vista Outlook
Basis of our Recommendation
Isgec Heavy Engineering's management has articulated a cautious yet optimistic growth outlook, projecting a 10-12% increase in top-line revenue for FY27, supported by a robust order book of INR 7,000 crores and a strategic pivot towards high-growth sectors such as defense and green energy. The company's significant capital expenditure of INR 502 crores aims to enhance manufacturing capacity, unlocking an additional INR 1,200 crores in revenue potential by FY28-29. However, margins are expected to remain under pressure due to inflationary costs and operational challenges in its Philippines ethanol plant, which is transitioning to profitability. Despite these headwinds, Isgec's diversification strategy and focus on operational excellence position it well to navigate the current macroeconomic landscape, characterized by rising government capex and a stable liquidity environment. Over the next 12-24 months, key opportunities include capturing higher-margin recurring revenue streams through its new Global Industrial Services division, while watchpoints include geopolitical risks and the execution complexities of large-scale projects. Overall, Vista's forecast reflects a fair valuation with an expected upside of approximately 54.7%, aligning with Isgec's strategic initiatives and market positioning
Why We Like This Stock
- Management's focus on high-growth sectors like defense and green hydrogen enhances long-term revenue potential
- Significant capital investments are expected to unlock substantial incremental revenue by FY28-29
- A robust order book and strategic pivot towards operational efficiency position Isgec favorably in a recovering infrastructure market
Things To Watch Out For
- Margins are under pressure due to inflationary costs and operational challenges in the Philippines ethanol plant
- Geopolitical risks and supply chain volatility could impact execution timelines and profitability
- The competitive landscape remains challenging, with pricing pressures affecting overall margins
Key Parameters
Financial Snapshot
View Technicals Analysis →| Actuals | Forecast | ||||
|---|---|---|---|---|---|
| FY24 | FY25 | FY26 | FY27 | FY28 | |
| Revenue (Cr.) | 6,218 | 6,422 | 6,789 | 8,122 | 9,215 |
| Profit Before Tax (Cr.) | 380 | 474 | 324 | 335 | 395 |
| PBT Margin | 6.1% | 7.4% | 4.8% | 4.1% | 4.3% |
| Net Profit (Cr.) | 271 | 316 | 165 | 252 | 216 |
| Earnings Per Share | 35.3 | 41.0 | 16.3 | 24.9 | 29.3 |
Analyst Recommendations
No analyst recommendations available.
Company Overview
Show Company Profile
Isgec Heavy Engineering Limited provides engineering solutions worldwide. It operates in two segments, Manufacturing of Machinery & Equipment; and Industrial Projects. The company provides process plant equipment, including reactors, high pressure vessels, shell and tube heat exchangers, columns and towers, and high pressure boiler drums; boilers, such as solid and biomass fuels, bagasse and biomass, oil and gas fired, blast furnace gas fired, waste to energy, and heat recovery boilers, as well as auxiliaries comprising air pollution control equipment, bag filters, SCR/SNCR, flue gas desulphurization systems, and deaerators; and site construction and commissioning, operation and maintenance, supervision, retrofitting and modernization, residual life assessment studies, spares, and technical assistance services. It also offers engineering, procurement, and construction services; sugar plants and machinery that include mills, diffusers, process house equipment, sugar refinery, turnkey distillery plants, and spares and retrofits; presses, such as mechanical and hydraulic straight sided, mechanical gap and ring frame, and servo presses; and steel castings, including steam/gas turbine, hydro turbine, valve, pump, mining and crushing, and general engineering castings. In addition, the company provides iron castings, air pollution control equipment, and liquefied gas containers, as well as contract manufacturing services. Further, it manufactures and sells sugar and its by-products, and ethanol and its by-products. It serves power, fertilizer, sugar and distillery, oil and gas, petrochemicals, automobile, steel, defense, cement, and chemicals industries. The company was formerly known as The Saraswati Industrial Syndicate Limited and changed its name to Isgec Heavy Engineering Limited in 2011. The company was incorporated in 1933 and is based in Noida, India.