See revenues at Rs 550-600cr in FY11: ACE Construction

The demand for infrastructure equipment is seeing a pick up. Non-Banking Financial Companies or NBFC funding is also available now to equipement buyers. Crane manufacturing company, ACE Construction which manufactures mobile cranes and crawler cranes is expecting to finish the second half of FY10 well. Also, with a pick up in real estate demand, the company's fixed tower and mobile tower cranes business are seeing good traction.

Action Construction has touched a 52 week high of Rs 49 and an intraday low of Rs 42.80. At 15:25 pm the share was quoting at Rs 44.90, up Rs 3.15, or 7.54%. It was trading with volumes of 970,987 shares, compared to its 5-day average of 102,276 shares, an increase of 849.38%. Yesterday the share closed down 0% at Rs 41.75.

In an interview with CNBC-TV18, Sorab Agarwal, MD, ACE Construction spoke about the company's business and gave his outlook.

Here is a verbatim transcript of the interview. Also watch the accompanying video

Q: You delivered Rs 97 crore odd on the topline and your bottomline performance was almost Rs 5.5 crore odd. Now with the demand pickup and the fairly available NBFC funding as well, what is the kind of revenue target that one should look at for FY10 from you?

A: As a matter of fact the scenario has grossly improved especially in the last 3-4 months. As you rightly said all the NBFCs are also back on track. So equipment funding is available.

But I still feel because the first two quarters were slow, by this complete year end we should be looking at more or less flattish. It will definitely be more than what we did last year. But with respect to FY10-11 I can see the momentum has built up now. We should be back on track with at least 30-40% growth in revenues, and similarly our profit percentage will go back on track. We should be back again in double-digit EBITDA in FY10-11.

Q: So 30-40% growth in revenues, in FY09 you did about Rs 430 crore. Do you expect it to go up to Rs 600-650 crore?

A: Yes for FY10-11, I think it should be at least somewhere between Rs 550-600 crore and for the current year it will be flattish because the first two quarters were totally in that recessionary mode.

Q: The volumes in which of your segments will see the most uptick?

A: Our bread and butter product is the pick and carry crane in which we are the leaders in the country, which had taken a beating because of all these things that happened in the last one and a half years. That is back on track now.

Our second main product is fixed tower cranes and the mobile tower cranes which is sort of related to real estate, a good percentage of our revenue comes from these tower cranes. And now the real estate sector especially the residential sector has again gotten back on track to quite an extent. So this has also started improving.

Q: So you expect your margins to be 8-8.5% in FY10?

A: Yes, in this current year about 8-8.5% which will go into double digits next year.

Source : Moneycontrol