The shares of a prominent player in the industrial sector hit a 2 percent upper circuit on NSE to reach an intraday high at Rs. 729.55 during the trading session of Monday.
Stock Performance:
With a market capitalisation of Rs. 810 crores, the shares of Tembo Global Industries Limited opened at Rs. 729.55 on NSE, up by 2 percent, as against its previous closing price of Rs. 715.25.
The stock has delivered multibagger returns of nearly 210 percent of returns in one year, as well as around 221 percent returns in the last six months. So far in 2024, the shares of Tembo Global Industries have given multibagger returns of about 171.5 percent.
Financials:
The company reported a significant growth in consolidated revenue from operations, experiencing a year-on-year increase of nearly 44 percent, rising from Rs. 114 crores in Q2 FY24 to Rs. 164 crores in Q2 FY25.
Likewise, during the same period, the company’s net profit increased from Rs. 5.2 crores to Rs. 14.6 crores, representing an impressive growth of around 180 percent YoY.
EBITDA for Q2 FY25 stood at Rs. 14.7 crores, reflecting a 76.6 percent YoY increase from Rs. 8.3 crores in Q2 FY24, while the EBITDA margins improved significantly, rising from 7.3 percent to 9 percent, over the same period.
In FY24, Tembo Global Industries reported a net profit growth at a CAGR of nearly 91 percent, reaching Rs. 14 crores. Meanwhile, the company’s revenue increased by around 61 percent CAGR, rising to Rs. 432 crores over the past three years, from FY21 to FY24.
Key Financial Ratios:
In terms of key financial metrics, Tembo Global Industries has a Return on Equity (RoE) of 26.8 percent and a return on capital employed (RoCE) of 24.4 percent. Additionally, the company’s debt-to-equity ratio stands at 2.69.
Shareholding Pattern:
As per the July 2024 shareholding pattern, the Promoters hold a 55.41 percent stake in the company, Foreign Institutional Investors (FII) hold a 0.68 percent stake, while Retail Investors hold a 43.91 percent stake in Tembo Global Industries.
Key Business Verticals:
Tembo Global operates across multiple key business verticals, including EPC Project Delivery and the Manufacturing of Structural Support Systems, with expertise in fuel farm & piping, infrastructure, buildings & factories, refinery projects, renewable energy, marine jetty projects, and manufacturing of engineering products used in construction and infrastructure. In FY24, this vertical achieved an EBIT margin of 15%, with a 23.5% CAGR in revenue from FY20 to FY24. By FY27, it is expected to contribute 60% in revenue.
Another key vertical is Textiles, focusing on the Processing and Supply of Fibres & Yarn. This segment posted an EBIT margin of 2.4% in FY24, and its revenue grew at a robust CAGR of 77.9% from FY20 to FY24. The company anticipates that Textiles will contribute 10% of revenue by FY27.
The company ventured into Defence with Tembo Defence Products Limited in Q2 FY25 and proposed a 20% revenue contribution by FY27.
Finally, in the Power segment, Tembo Global forayed into solar power by securing its first Power Purchasing Agreement for a 124 MW Solar Power Project with Maharashtra State Electricity Distribution Co. Ltd. This segment is expected to account for 10% of revenue by FY27.
Management Guidance & Order Book:
The ongoing greenfield expansion at Vasai is expected to increase the company’s total capacity by six times, reaching 1.5 lakh MTPA by FY25 from 15,000 MTPA. This expansion aims to improve production capabilities and meet growing demand across various sectors, including automotive and infrastructure.
The capex incurred for this new facility stood at Rs. 75 crores, with Rs. 50 crores financed through debt, and the remainder funded by the company and its promoters.
This new facility will introduce two new product lines: ERW pipes with a capacity of 60,000 MTPA and Strut Channels with 30,000 MTPA capacity.
As of Q2 FY25, Tembo has a robust order book valued at Rs. 1,200 crores and has ventured into the EPC sector as part of its forward integration strategy into engineering products.
The company’s order bidding pipeline, including EPC Projects, stood at Rs. 1,400 crores as of Q2 FY25, with water & marine infrastructure projects accounting for Rs. 500 crores and land infrastructure projects totaling Rs. 900 crores.
Tembo is also planning to enter the Defence sector by FY26, targeting a 20% revenue contribution by FY27, further diversifying its business operations.
Recent Developments:
On 11th September, Tembo Global Industries announced a significant strategic partnership with a leading European company to establish a state-of-the-art arms and ammunition manufacturing facility in India.
The newly signed Memorandum of Understanding (MoU) represented a major milestone for Tembo Global as it ventures into the defence manufacturing sector, backed by a renowned international partner.
The MoU outlines a comprehensive partnership wherein the European company will lend its expertise to assist in the establishment of the new manufacturing plant.
The agreement also includes a strategic buy-back arrangement, under which the European partner will purchase a significant portion of the firearms produced by Tembo Global Industries Limited.
Furthermore, the European company will provide crucial technical expertise and operational support, ensuring that the new manufacturing facility meets the highest standards in arms production.
About the Company:
Incorporated in 2010, Tembo Global Industries Limited is a prominent engineering company, manufacturing high-quality specialised metal products for a wide array of applications, including pipe support systems, fasteners, anchors, and HVAC systems, catering to industries like automotive, real estate, infrastructure and oil & gas. Additionally, the company processes and supplies fibres and yarn (Textiles Division).
Written by Shivani Singh
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