Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rushil Decor Ltd (BOM:533470, Financial) recorded a 25% year-over-year increase in MDF volume, with export volume rising by 26.1% year-over-year and 13.7% quarter-over-quarter.
- The company achieved a 25.7% year-over-year increase in laminate volume, with export volume growing by 35.8% year-over-year and 4.5% quarter-over-quarter.
- Rushil Decor Ltd (BOM:533470) secured board approval for INR122.66 crores in preferential funding, with 75% allocated to developing a new facility for jumbo-sized laminate sheets.
- The new laminate facility is expected to commence operations by Q3 FY25, adding approximately 2.8 million sheets annually and enhancing production capacity.
- The company reported a 15.9% year-on-year increase in revenue from operations, reaching INR23.5 crores for Q1 FY25.
Negative Points
- There was a minor 1.2% decline in MDF volume quarter-over-quarter.
- Domestic laminate volume experienced a 13.8% decline quarter-over-quarter.
- The laminate segment saw a 9.8% year-over-year decrease in realization, with domestic pricing being more affected than exports.
- Revenue from the Indian MDF market declined by 9% quarter-over-quarter.
- The company faced challenges related to container availability and rising freight rates, impacting export logistics.
Q & A Highlights
Q: How is the demand sentiment for both laminates and MDF segments in the domestic market, and what are the growth expectations?
A: With the festive season starting, laminate demand is expected to pick up. The MDF market is also performing well, with a target to achieve 95% capacity utilization for the financial year.
Q: Are there any plans to expand in the MDF space given the high utilization rates?
A: Internal discussions are ongoing regarding the next project. The company will provide updates once decisions are finalized.
Q: How has the company managed to achieve strong export numbers despite industry challenges like container availability and freight rates?
A: The company fulfilled its export obligations by the end of the last financial year, allowing it to focus on customers who offer better realizations. Container availability remains a challenge but is managed effectively.
Q: What is the price stability of value-added MDF products compared to raw boards?
A: Value-added products typically command a 30% to 50% premium over raw boards. Price changes in raw boards do not significantly affect the pricing of value-added products.
Q: What are the revenue growth targets for FY25 and FY26, and how will new capacities impact these targets?
A: For FY25, the company targets INR 950 crores in revenue. With new capacities coming online, an additional INR 250 to INR 270 crores is expected for FY26, along with a 10% to 12% growth from existing capacities.
Q: How will the new laminate and MDF capacities affect EBITDA margins?
A: The new laminate project is expected to improve margins to 13%-15%. Overall, the company aims to maintain a 14% EBITDA margin for the current financial year and improve it further in FY26.
Q: How does the company plan to manage rising freight rates, and are these costs passed on to customers?
A: Freight costs are generally passed on to customers, and the company does not book profits from transportation. The impact on EBITDA margins is minimal.
Q: What is the outlook for domestic and export markets for MDF and laminates?
A: Domestic demand is expected to improve in the coming quarters. The company is focusing on increasing value-added exports, which offer better margins compared to standard exports.
Q: What are the current timber costs, and how are they expected to trend?
A: Timber costs increased by 1% to 2% in Q1. The company does not foresee significant supply pressures affecting timber costs in the near future.
Q: How confident is the company in reaching its INR 2,500-crore milestone target?
A: The company is confident in achieving its target, supported by strategic planning and ongoing capacity expansions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
