Release Date: May 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NOCIL Ltd (BOM:500730, Financial) reported a 5% sequential growth in revenue from operations for Q4 FY24, reaching INR356 crores.
- Volume growth was impressive at 12% in Q4 FY24 compared to the preceding quarter.
- The company recorded a year-on-year volume growth of 9% in its export segment for FY24, despite geopolitical tensions and fluctuating raw material prices.
- NOCIL Ltd (BOM:500730) has received board approval for a INR250 crore investment to expand rubber chemical capacities at its Dahej site.
- The company has implemented several green initiatives, including the installation of solar panels and sourcing of green energy, to reduce its carbon footprint.
Negative Points
- Despite the revenue growth, the selling price dropped by 6.5% on a QoQ basis.
- EBITDA margin for Q4 FY24 stood at 12.5%, down from 14.3% in Q3 FY24.
- Operating EBITDA for FY24 was INR195 crores, a decrease from INR253 crores in FY23, with EBITDA margins dropping by 220 basis points.
- Profit after tax (PAT) for FY24 stood at INR133 crores, down from INR149 crores in FY23.
- The company faces challenges from aggressive dumping by China and other markets, impacting domestic volume growth.
Q & A Highlights
Q: Can you break down the 12% volume growth in Q4 between the export and domestic markets? Also, was there any growth in specialty volumes this quarter?
A: Both domestic and export markets showed double-digit growth, with domestic in higher single digits and exports slightly higher. There was some improvement in specialty volumes, but not significant. The growth came from both existing and new customers.
Q: How confident are you about additional volume placements to customers compared to 8-12 months ago?
A: Confidence levels are higher now compared to 12 months ago. We have added new customers recently, and we expect this growth trajectory to continue over the next 9-12 months.
Q: Given the current utilization rate of 65%, when do you expect to reach peak utilization, and what is the rationale for new capacity expansion?
A: The 65% is an overall number; some products are already at peak capacity. The new capacity is planned for products that are at peak and have growth opportunities. We expect to start commercial activity from the new capacity in FY26-27.
Q: What is your outlook on the Chinese dumping situation and its impact on your business?
A: The dumping is likely to continue until domestic consumption in China picks up. However, our strategic engagements with international customers and the China de-risking strategy provide a positive outlook.
Q: Can you provide details on the volume growth for FY24, particularly in the domestic and export markets?
A: Overall volume growth for FY24 was 2%, with domestic being flattish and exports growing by 9%. The growth was primarily in non-latex rubber chemicals.
Q: How do you view the market given the capacity additions by Chinese players and your own expansion plans?
A: Despite the capacity additions by Chinese players, our value proposition includes long-term supply reliability and the China plus one strategy. This gives us traction in both domestic and international markets.
Q: What are your plans for diversifying into other segments beyond rubber chemicals?
A: While our growth in rubber chemicals will continue, we are also working on diversification. However, it is difficult to provide a specific timeline as discussions are at different stages.
Q: Can you explain the higher other expenses in Q4 on a YoY basis?
A: The higher percentage of other expenses is due to reduced revenue prices. However, on a per metric ton basis, other expenses have come down.
Q: How are rising raw material prices, like Aniline and MIBK, affecting your margins, and have you taken any price increases to offset this?
A: Raw material prices have been fluctuating, but typically finished goods prices also move with raw material costs. We expect to realize higher prices as raw material costs increase.
Q: What is the contribution from exports in Q4, and how does it compare to the same quarter last year?
A: Exports contributed around 33-34% in Q4, compared to approximately 30-31% in the same quarter last year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
