- Consolidated Sales: 1,184 crores, almost the same as Q1 FY 24.
- Consolidated Abrasives Growth: 6.3% year-over-year.
- Consolidated Ceramics and Electronics Degrowth: 6% and 9%, respectively.
- Profit After Tax (PAT): 149 crores, a degrowth of 3.5% year-over-year.
- PBT Margin: 12.6%, compared to 13% in Q1 FY 24.
- Standalone Business Growth: 1% to 664 crores year-over-year.
- Standalone PAT: 93 crores, almost flat year-over-year.
- Consolidated Abrasives Revenue: 552 crores, a growth of 6.3% year-over-year.
- Standalone Abrasives Sales: 303 crores, a growth of 7.3% year-over-year.
- Consolidated Ceramics Revenue: 270 crores, a degrowth of 6% year-over-year.
- Standalone Ceramics Revenue: 217 crores, a degrowth of 6.2% year-over-year.
- Consolidated PBT for Abrasives: Grew by 76% year-over-year.
- Standalone PBT for Abrasives: Grew by 23.6% to 53.4 crores year-over-year.
- Consolidated PBT for Ceramics: Degrew by 42% year-over-year.
- Standalone PBT for Ceramics: Grew by 46% to 16 crores quarter-over-quarter.
- Consolidated PBIT Margin: 12.6%, compared to 13% in Q1 FY 24.
- Standalone EBIT Margin: 18%, compared to 18.5% in Q1 FY 24.
- Consolidated Debt: 112 crores at the end of Q1 FY 25.
- CapEx Investment: 63 crores at a consolidated level in Q1 FY 25.
- Return on Capital Employed (ROCE): 16.9% at a consolidated level, compared to 19.7% in Q1 FY 24.
Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated abrasives revenue for Q1 FY 25 grew by 6.3% compared to the same period last year.
- Standalone abrasives business margins improved from 15.3% to 17.6%, driven by better realizations and operational efficiencies.
- Rhodia's delivered a profit in Q1 FY 25, showing a significant improvement from a loss in the same period last year.
- The company remains debt-free on a standalone basis, with a consolidated debt-to-equity ratio of 0.03.
- The company is confident of delivering a full-year consolidated sales growth of 9% to 11%, maintaining its guidance.
Negative Points
- Consolidated ceramics revenue for Q1 FY 25 de-grew by 6% compared to the same period last year.
- Profit after tax for Q1 FY 25 was almost flat at 113 crores compared to Q1 FY 24, indicating limited growth.
- Electro Minerals segment saw a significant decline in margins from 17.7% to 11.4% year-over-year.
- The company faced logistics-related challenges impacting sales volumes, particularly in the ceramics segment.
- Exchange rate fluctuations negatively impacted profits, particularly in the Russian subsidiary, leading to a reduction in profit by 22 crores.
Q & A Highlights
Q: Can you provide an update on the capacity utilization and de-bottlenecking efforts at VW?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: VW is operating at full capacity for silicon carbide. De-bottlenecking is ongoing and will be completed in time. The current flat volumes are a function of comparative quarters, but we expect capacity augmentation next year.
Q: How is the Chinese competition impacting the abrasives and electro minerals segments?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: The abrasives segment is performing well despite Chinese pricing pressures, which we believe are temporary. In electro minerals, prices have been falling since Q1 last year, but we expect a reversal as Chinese prices start to rise.
Q: What is the outlook for the ceramics and refractories business, particularly with the single customer in Engineered Ceramics?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: Q1 was a high base due to a single customer, but we expect a pickup from Q2 onwards. Refractories are not impacted by elections but by project execution timelines. We have a strong order book and expect to deliver higher growth in ceramics.
Q: Can you provide more details on the high-purity silicon carbide (HPSIC) and graphene synthetic graphite projects?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: The HPSIC project is on track and will serve semiconductor and technical ceramics markets. We expect to see benefits from FY 26 onwards. For graphene, we are working on multiple areas like bio-packaging and coatings, with a three to five-year window for significant business growth.
Q: What is the progress on the clean energy segment, particularly with solid oxide fuel cells?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: We are working with the largest player in solid oxide fuel cells and diversifying into semiconductor fab equipment-based ceramics and defense and aerospace. These initiatives will help us grow in meaningful market size areas.
Q: What is the status of the armored vehicle protection business?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: We are focusing on the domestic market initially and will expand to exports. We are investing around 30 to 40 crores in CapEx for this segment, which has a large market size and niche area.
Q: Why did Foster incur losses in Q1 FY 25, and what is the outlook?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: Foster's losses were due to lower price realization and product mix. We expect Q2 and the rest of the year to be better, with plans in place to address these issues.
Q: What is the reason for the high tax rate at the subsidiary level this quarter?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: The high tax rate is due to deferred tax benefits not being taken in Foster. The overall company's tax rate should be in the range of 20% to 30%.
Q: Can you elaborate on the market size and growth potential for new areas like HPSIC, defense, and aerospace?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: We will share more details as these projects mature. These are part of our long-term strategy, and we see significant opportunities in these areas.
Q: What are the assumptions for price and volume in the electro minerals segment for the rest of the year?
A: Sridharan Rangarajan, Managing Director - Carborundum Universal Limited: We are maintaining our full-year guidance based on a combination of stand-alone growth and Foster's recovery. We expect Foster to perform consistently, delivering around 1,000 tons per quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
