Tega extends falls; slips 17% in 2 days on disappointing Q2 results

In Q2FY25, the company's EBITDA decreased 58% YoY at Rs 34.4 crore; margin contracted to 9.7 per cent from 21.6 per cent in Q2FY24, impacted due to onetime expenses incurred during the quarter.

Tega Industries shares slipped 12 per cent to Rs 1,698.55 on the BSE in Monday’s intra-day trade; thus falling 17 per cent in the past two days after the company reported a disappointing set of numbers for the second quarter ended September 2024 (Q2FY25). 

 

In the last six days, the stock has plunged 27 per cent, erasing the majority of its gain recorded in the month of October. The stock had hit a record high of Rs 2,327 on November 7 and rallied 30 per cent between October 25 and November 7. At 01:53 pm; Tega was trading 11 per cent lower at Rs 1,721, as compared to 0.21 per cent decline in the BSE Sensex.  ALSO READ:  MGL, IGL plunge up to 20% as govt reduces APM gas allocation to CGDs again

 

For Q2FY25, Tega reported 84.8 per cent year-on-year (YoY) decline in its consolidated profit after tax at Rs 7.2 crore, due to weak operational performance. Operating revenue was down 6.4 per cent YoY at Rs 353.3 crore mainly due to delay in shipment and deferment of procurement from customers. Earnings before interest, tax, depreciation, and amortization (EBITDA) decreased 58 per cent YoY at Rs 34.4 crore; margin contracted to 9.7 per cent from 21.6 per cent in Q2FY24, impacted due to onetime expenses incurred during the quarter.

 

Tega is a global leader in designing and manufacturing of ‘critical-to-operate’ consumables and offers a comprehensive range of solutions including equipments in the mining, mineral processing and material handling industries.

 

During the quarter, company incurred onetime expenses (Rs 17-20 crore) in certain projects, where consumables at sites were charged into accounts, for which revenue will be recognised in upcoming quarter. Hence margins are expected to be higher in coming quarters. Hence margins are expected to be higher in coming quarters, according to analysts at JM Financial Institutional Securities. 

 

Tega will be incurring capex of $35-40mn over next two years, mainly towards Chile and Dahej plant. Management maintains its guidance for revenue growth of 15 per cent and EBITDA margins in range of 21-22 per cent for FY25.

 

The brokerage firm said they remain positive on stock due to healthy penetration opportunity for DynaPrime lines, cross selling opportunity for equipment (McNally), upcoming Chile plant to tap LATAM markets and expansion in newer geographies. “We expect revenue and earnings CAGR of 19 per cent/27 per cent over FY24-27E, factoring in 19.8 per cent revenue CAGR in consumable business and 16.3 per cent CAGR in equipment business,” analysts said and maintain ‘buy’ rating on the stock with target price of Rs 2,120 per share.