Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tile volumes grew by 7.8% year-over-year to 26.98 billion square meters despite softness in domestic demand.
- Consolidated revenue for the quarter increased by 5% to INR1,114 crores compared to the same period last year.
- The recently acquired ceramide unit in Morbi is expected to achieve optimum capacity utilization by Q4 FY25.
- India's tile exports experienced a 26% growth in FY24, reaching INR20,175 crores.
- The company anticipates low double-digit volume growth for the current financial year, driven by extensive branding and distribution efforts.
Negative Points
- PAT for the quarter decreased by 16% to INR90 crores compared to INR108 crores in Q1 FY24.
- Working capital days increased to 59 days from 58 days as of March 31, 2024.
- Gas prices remained high, impacting overall costs.
- The bathware segment's EBIT margin declined due to the new plant's initial low production.
- Freight rates have increased significantly due to geopolitical issues, affecting export margins.
Q & A Highlights
Q: Hi sir. Very good evening. Just wanted to start with the budget. That's essentially any takeaway, sir for our industry and any changes would you see over the next 12 months?
A: Budget has been positive for two, three fronts. While a lot of business will come from Bihar, a lot of business will come from Andhra and also the Finance Ministers announced an INR10 lakh crore budget for urban housing for the next five years for one course itself. So I think because when it's urban housing, that is the demand of tiles we'll further go.
Q: Done sir. I'll jump to questions on the company, sir you guided for a low double digit volume growth fiscal 25. Any views on the revenue growth because, first quarter, obviously you've seen price in compression. Do you see revenue growth to be lower than volume growth this year?
A: I think, it will be slightly lower. Our revenue growth to be around 8%, 9% compared to 11%, 12% of volume growth. And just to tell you that the prices are more or less stabilized. If you see the numbers of quarter four last year, that means 2024 quarter four and up 2025 quarter one. There is no pricing change -- no pricing change realization. The differences have a percent only. So prices are more or less stabilized.
Q: Perfect sir. And any comments on the gas pricing? So how was it in first quarter for north, south, west? And what is the expectation?
A: Price is more or less the same what it was in quarter four and quarter three of last year (multiple speakers).
Q: INR39 on an average for the company?
A: Pardon me (multiple speakers)? INR37.
Q: INR37.
A: Yeah.
Unidentified Company Representative: For north it is INR37, south it is INR36, for west it is INR36, and our overall is at INR37.
A: Yeah, it's not a guess. It's about the combination of all three.
Q: Any comments on gas prices sir?
A: Gas prices are more or less same, marching internationally as of now.
Q: Right. Then the last question we hear, propane seems like it's been cheaper than what you guys are moving. Are you seeing any price disadvantage or there is no material change?
A: More or less the same. INR1, INR2 difference doesn't make a big difference. Because that's how they're pricing each other.
Q: Yeah, good evening sir. I believe good set of numbers. What surprised me was the volume growth. I mean, as per my (inaudible), this quarter have not been great. We had an 8% growth. I believe for second quarter would be a little well because of the monsoon. So do you think we'll be able to make, I mean it will be somewhere around mid-teens in terms of volume growth? Second is, as per my understanding, the gas consumption of 75 (inaudible) has not come down. Is there any change in this quarter where the gas consumption has come down? If not, when do we expect the production to be at same levels and therefore, the third quarter and fourth quarter should see a pickup in demand?
A: Volume growth for the quarter, which is now should be close to about 11%, 12%. That's number one.
Q: This quarter? Quarter two you're saying 11%, 12%?
A: Yes.
Q: Nice. Okay.
A: And secondly, the question on gas, the answer is no. Not much change in the price of gas.
Q: And third sir on the container side, I understand that the material, which is produced for exports cannot be sold in the Indian market, typically because of your expectations in terms of -- but do you think a shortage of container in any way impact the domestic market. Now that you are seeing pickup in demand and hopefully it won't sustain in the next few quarters, 11%, second quarter is a very good number. I hope --
A: Yeah, just to interrupt. This question keeps on coming, whether export material can come to the domestic market, which I've always answered it in the manner that the dealer -- suppose I'm a dealer, I'm keeping a material of [Kagaria or Somani] or someone else. I cannot keep on changing. (spoken in Hindi language) If I have displayed something -- if I'm a dealer of X, I have displayed that, but if somebody comes to offer 10%, 15% less, if I'm a dealer, so basically, export materials cannot go to the domestic market and some of the people who are making for exports, they are basically making it for export market.
Q: Thank you. Thank you for the opportunity. Good evening to everyone. So I must say, a good set of volume growth, was a positive surprise for all of us. I noticed one thing that, you know, despite a weaker realization, our gross margin has been improved. And you are looking forward for a better growth volume in 2Q. So presumably the realization phase has improved from here. So is there a score from margin to improve from here as well as gross margin? Can you think about that?
A: So we are looking at a 15% to 16% EBITDA margin. As we have said previously also and we are maintaining that right now. There was a price differential volumes in the market going ahead while keeping our projected margins.
Unidentified Company Representative: Shaleen, as far as gross margins are concerned, I think it's 38.5% this time, which is 100 bps higher than the YoY quarter. So I think you're alluding to this right?
Q: Yes. Yes, yes.
Unidentified Company Representative: So it's all with respect to raw material costs, I think the raw material costs was significantly lower compared to YoY that keeps changing because of outsourcing mix keeps changing. So one is not very much into this quarter. But as far as gross margin is concerned, I mean it should be in this range of plus minus 1%.
Q: Okay. You've been given if let's say some realization improvement happen, we should get some benefit out of it. Like is it fair assumption to say?
A: Right
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
