Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banswara Syntex Ltd (BOM:503722, Financial) has successfully launched its new brand, Simone Fredrico & Figli, which is gaining good traction in the market.
- The Fabric division witnessed a 10% growth in revenue to INR113 crores in Q1 FY25 compared to the same period last year.
- The company is focusing on high-value yarn products and modernizing existing machinery for better quality and efficiency.
- There are indications of market recovery in the second half of FY25, with a resurgence in demand expected.
- The company is proactively expanding its customer base, catering to midsized brands on a B2B basis in both domestic and export markets.
Negative Points
- Total income declined by 10% to INR274.7 crores in Q1 FY25 on a year-on-year basis.
- The Yarn division revenue witnessed a 25% decline in Q1 FY25 compared to Q1 FY24, attributed to muted demand and labor shortages.
- Garment sales declined by 14% year-on-year to INR53 crores due to subdued demand in both domestic and international markets.
- Margins have been hampered by subdued demand and pricing pressures in the industry globally.
- The capacity utilization in the Garment vertical stood at a low 46% for Q1 FY25.
Q & A Highlights
Q: How do you see the current situation in Bangladesh? Can you expect any incremental business coming to India?
A: The situation in Bangladesh is recent, and customers are waiting to see how it settles. Short-term, there won't be much benefit, but long-term, if political stability in Bangladesh is questioned, customers may look towards India. We expect benefits down the road. (Ravindra Toshniwal, Managing Director)
Q: Are we observing any signs of demand deterioration spilling over into the second half of the year?
A: We are seeing recovery in demand from all markets in the West, particularly from Eastern European countries like Poland and Slovakia. The demand seems to be improving quite well. (Ravindra Toshniwal, Managing Director)
Q: Is there any plan to expand into other parts of the garment sector rather than sticking to trousers and jackets?
A: Yes, we will utilize our existing capacities for more tailored clothing and reconvert some lines into more casual sportswear and knit jackets. We aim to bridge the gap between casual and tailored clothing. (Ravindra Toshniwal, Managing Director)
Q: What is the outlook for your Yarn division?
A: The outlook for the Yarn division in Q2 will be better, and Q3 and Q4 will be even better. Fabric looks strong throughout, and Garment will start to pick up significantly in Q3 and Q4. (Ravindra Toshniwal, Managing Director)
Q: When can we expect to see an increase in capacity utilization for the Fabric and Garment segments?
A: Fabric utilization improved from 65% to 70% in Q1 and should reach 80-85% by year-end. Garment utilization, which was at 45%, should reach 60-70% by Q3 and Q4. (Ravindra Toshniwal, Managing Director)
Q: Are there any developments or potential benefits for the textile industry beyond what's reported in the media regarding PLI and SPA?
A: Government initiatives may not achieve the reported results. We need to capture market share through innovation and better service, regardless of government support. (Ravindra Toshniwal, Managing Director)
Q: What kind of finance costs should we expect going forward?
A: Finance costs are increasing due to CapEx plans and realignment efforts. We expect finance costs to be around INR35 crores, but this will vary quarter-on-quarter. (Kavita Gandhi, Chief Financial Officer)
Q: What would be the total estimated CapEx for FY25 and FY26?
A: The expected CapEx over the next 18-24 months is around INR180-190 crores. (Kavita Gandhi, Chief Financial Officer)
Q: How is the Simone brand performing?
A: We have created a syndicate of distributors across the country and expect to achieve INR25 crores in sales in the first financial year. We aim to double this every year, reaching INR500-1000 crores in five to six years. (Ravindra Toshniwal, Managing Director)
Q: How is the Technical Textile business, Tesca, performing?
A: Tesca did a turnover of about INR19 crores in Q1. While growth is flat quarter-on-quarter, we expect improvements in Q2 and Q3. We are also developing technical textiles for defense forces, which continues to grow. (Ravindra Toshniwal, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
