Release Date: February 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue for the 9 months of FY '24 increased by 18% year-over-year on a standalone basis.
- Net profit after tax for the 9 months of FY '24 increased by 17% year-over-year on a consolidated basis.
- The company has secured a guaranteed revenue of INR 1,200 crores over 15 years from one company for its cryogenic project.
- The JNPT terminal is operating at 100% utilization, and the Cochin terminal is at 95% utilization.
- The company is exploring new products and expanding its portfolio at the Goa terminal to increase utilization levels.
Negative Points
- The Goa terminal is currently underutilized, operating at only 50% to 60% capacity.
- The company faces competition from other terminals, which may impact its market share and pricing.
- The demerger of the chemical business is delayed due to ongoing court cases.
- The company is taking on significant debt (70% of the project cost) for its expansion projects, which could impact its balance sheet.
- The company’s future growth projections are based on forward-looking statements and market assumptions, which carry inherent risks.
Q & A Highlights
Ganesh Benzoplast Ltd (BOM:500153, Financial) Q3 FY '24 Earnings Call Highlights
Q: Can you explain the purpose and utilization of the recent INR 62.5 crores fundraise?
A: The fundraise is primarily for the equity portion of our expansion into cryogenics, which we have already announced. The total project cost is estimated at INR 650-700 crores, with GBL contributing approximately INR 100 crores in equity. The project is expected to be completed by March 2026.
Q: What are the expected revenue margins from the cryogenic project?
A: These projects typically run at an EBITDA margin of 80% plus. We have a guaranteed revenue of about INR 1,200 crores over 15 years from one company, and we expect to achieve 3 to 4 times that amount with other customers.
Q: How do you plan to increase the utilization levels at the Goa terminal?
A: We are expanding our product portfolio in Goa, converting tanks back to white oil and handling products like edible oil, specialized chemicals, and POL products. We expect utilization levels to be upwards of 50% to 60% in Q3.
Q: Can you explain the increase in the projected CapEx for the LPG terminal from INR 400-500 crores to INR 650-700 crores?
A: The increase is due to the projected demand and the need to handle larger ships, which now range from 50,000 to 55,000 tonnes. We are increasing the terminal capacity by about 20% to 25%.
Q: What is the status of the demerger of the chemical business?
A: The demerger is under process but is delayed due to a court case. We have already moved the chemical business into a 100% owned subsidiary to expedite the process once the court order is received.
Q: What is the expected growth in revenue and bottom line for the next 2 years until the new CapEx is operational?
A: We expect a steady growth of 8% to 10% in rental income. JNPT is operating at 100% utilization, and we see potential for a 3% to 4% increase in revenue through product changes and tank modifications. Goa's utilization is expected to reach 70% to 75%, and Cochin is already at 95%.
Q: What are the competitive dynamics in the terminal space, especially with new players like Aegis setting up terminals?
A: While competition exists, our older terminals and established customer base give us an advantage. We continuously strive to remain competitive by offering the best services to our customers.
Q: How do you plan to finance the INR 650-700 crores CapEx for the LPG terminal?
A: The project will be financed with a 30-70 equity-debt mix. The debt will be long-term, spanning 15-20 years, and structured to be serviced by guaranteed revenue from our partners.
Q: What is the expected impact of the new LPG terminal on your margins?
A: LPG terminals generally operate at about 80% EBITDA margins. We expect similar margins for our new terminal.
Q: What are your plans for future expansions and new projects?
A: We are exploring opportunities in other cryogenic expansions like propylene and ammonia. We are also looking at new ports and inorganic growth opportunities to expand our LST division.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
