Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rossari Biotech Ltd (BOM:543213, Financial) reported a strong start to FY25 with a 19.3% year-on-year revenue growth and a 19.5% increase in profit.
- The SPPC segment achieved a robust 21% growth, and the textile specialty chemicals division also saw a 21% growth.
- The company is experiencing notable success in export markets, which are growing faster than domestic markets.
- Recent expansions at Dahej and increased ethoxylation capacity are expected to meet growing demand across key segments.
- Rossari Biotech Ltd (BOM:543213) continues to focus on R&D, driving innovation and creating sustainable value for stakeholders.
Negative Points
- The AHN division faced challenges due to industry headwinds, resulting in flat performance.
- EBITDA margin dropped to 13.3% from 14.1% in the previous year, primarily due to increased other expenses.
- Higher freight, travel, maintenance, and selling and distribution costs contributed to increased expenses.
- The company faces industry-wide issues with IGST refund claims, which could potentially impact financials.
- Working capital days have been increasing, and the company expects this to be the new normal due to the nature of the surfactant business.
Q & A Highlights
Q: How has been the volume growth over the last few quarters?
A: The primary driver for the last few quarters has been volume growth, particularly in the SPPC and textile specialty chemicals segments. Prices have remained stable, with some slight price cuts to gain volume.
Q: Can we expect to return to the 15-17% EBITDA margin range seen pre-COVID?
A: Given the current business mix and market conditions, it is more realistic to consider the current EBITDA margin range of 12-13% as the new normal.
Q: What is the contribution of the Brazil Grocery segment to HPPC revenue?
A: The Brazil Grocery segment contributed around 60 crores for the quarter. While it is a lower-margin business, it is essential for long-term growth despite its current impact on blended margins.
Q: Should we expect a provision for the 25 crore penalty notice?
A: No provision is expected. The company has taken legal views and is confident of a favorable outcome on appeal.
Q: Have there been any changes to the reporting of segment revenues?
A: Yes, a reclassification of a product from textiles to HPPC was made in Q2 of last year. This correction has been reflected in the current presentations.
Q: Why has the textile segment not grown as fast as peers?
A: The textile segment has seen better volumes, but falling raw material prices have impacted revenue growth. The company is confident of better sales in the coming quarters.
Q: Can you provide an update on the new product portfolio in the SPPC segment?
A: Several new products have been launched, including bio-surfactants and green chemistry products. These innovations are now in production and contributing to market growth.
Q: How is the cosmetics side of the business performing?
A: The cosmetics business is growing well, with significant quarter-on-quarter growth. The company is introducing new initiatives in personal care, expecting good traction going forward.
Q: What is the current utilization rate of production capacities?
A: The ethoxylation capacity is operating at 90%, while overall capacity utilization is around 55-60%.
Q: What is the strategy behind incorporating a subsidiary in Dubai?
A: The Dubai subsidiary will serve as a hub for global expansion, starting with marketing and potentially adding manufacturing facilities as the business grows.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
