Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pharma and polymer segments have shown strong growth, contributing 15% and 10% to revenue respectively.
- Investment in a hybrid power plant is expected to save approximately INR15 crores annually, moving towards energy net-zero by 2027.
- Significant traction in Japan and the US markets, with expectations of one-third of sales originating from Japan in the next two to three years.
- Successful commercialization of 12+ molecules in the last year, with multiple LOIs securing long-term contracts.
- Strategic focus on cost optimization and operational efficiency to achieve ESG goals and long-term growth.
Negative Points
- Consolidated operating revenue for the quarter saw a Y-o-Y degrowth of 34%, primarily due to lower volume offtake in the agrochemical segment.
- EBITDA margin decreased by over 5 percentage points to 23% in Q1 FY25 due to lower sales.
- Profit after tax dropped significantly to INR12 crores in Q1 FY25 from INR52 crores in Q1 FY24.
- Working capital remains high, with expectations of stabilization only by the end of FY26.
- Challenges in the agrochemical industry due to unwinding of channel inventories, expected to persist until the end of H1 FY25.
Q & A Highlights
Q: How much will the reversal of deferred orders add to the second half revenue? What is the additional revenue expected from new capacity and new LOIs and Contracts?
A: We expect around INR100 crores more than what we reported today on a stand-alone basis due to deferred demand. The new capacity will contribute marginally this year but significantly next year. Approximately 20% to 25% of this year's revenue will come from LOIs and Contracts commercialized over the last one to two years.
Q: What will be the mix between agro and non-agro by FY27?
A: Pharma should be around 20%-25% of revenue, polymers around 15%, and personal care around 10%-12%. The balance will be from other segments.
Q: Are you recalibrating next year's CapEx given the current environment and competition from China?
A: We are confident in completing the current INR670 crores CapEx. No significant new CapEx is planned for next year, except for some investments in solar and wind energy and minor repurposing of plants.
Q: What is the expected share of fluorination chemistry in overall revenue, and how does it impact margins and ROCE?
A: Fluorination is currently around 15% of revenue, expected to increase to 20%-25% this year and 30%-35% by 2027. Margins will be in the 25%-28% range on a blended basis. The new CapEx should yield a revenue of INR1,100 crores to INR1,200 crores, with an asset turn of over 1.5 times, leading to a healthy ROCE.
Q: How much of HF has been firmed up with Tanfac, and does it meet future requirements?
A: The planned CapEx for Tanfac will ensure sufficient capacity for Anupam's growth needs and current customer demands.
Q: What is the breakup of exports and domestic business this quarter, and how much deferment can be expected in other businesses?
A: The deferment is largely from the agro segment, with around INR80 crores to INR100 crores expected to be recouped by year-end. Other segments like personal care and polymers have been stable.
Q: What is the expected resurgence in the agro segment in the latter half of the year?
A: We expect the revenue for the year to be equal to or higher than last year, indicating a growth despite the deferment in the first half.
Q: What is the impact of the new CapEx on asset turn and ROCE?
A: The new CapEx should yield a revenue of INR1,100 crores to INR1,200 crores, with an asset turn of over 1.5 times, leading to a healthy ROCE.
Q: What is the expected timeline to achieve the additional revenue from new LOIs and CapEx?
A: We expect to achieve the additional revenue by FY27 or FY28, with a growth rate of 25%-30% annually.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
