Release Date: February 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Improved EBITDA margin year-on-year from 9.1% to 12.3% due to better cost management.
- Net profit before tax increased from INR40.4 crore to INR49.7 crore year-on-year.
- Operational revenue for the quarter is INR485 crore, showing resilience despite market pressures.
- Company is on track with its CapEx plan to reach a production volume of 210,000 tonnes next year.
- Strong relationships with marquee clients across various sectors, ensuring stable demand and margins.
Negative Points
- Quarterly operational revenue decreased from INR598 crore to INR486 crore compared to the previous quarter.
- EBITDA dropped from INR85.8 crore to INR59.6 crore quarter-on-quarter.
- Net profit before tax margin decreased from 12.7% to 10.2% quarter-on-quarter.
- Lower production volumes due to scheduled maintenance and seasonal demand fluctuations.
- Increased competitive intensity expected in the market due to new capacities coming online.
Q & A Highlights
Highlights from Styrenix Performance Materials Ltd (BOM:506222, Financial) Q3 2024 Earnings Call
Q: If not for scheduled maintenance, what would have been the production volume for the quarter?
A: Without the scheduled maintenance, production volumes would have been in line with the previous year's quarter volumes. Typically, Q3 sees lower demand due to seasonality and planned shutdowns by OEM clients. (Rahul Agrawal, Managing Director)
Q: Given the stable gross margins for Q2 and Q3, was it just negative operating leverage that played out? Will margins return to Q2 levels in Q4?
A: Margins for ABS remained stable, while PS margins were lower due to reduced volumes and sales. We believe annualized margins are sustainable. (Rahul Agrawal, Managing Director)
Q: What gives you confidence that you will maintain good margins over the long term?
A: Despite global demand-supply pressures, our margins have remained stable due to strong client relationships and a focus on customized and specialty business. (Rahul Agrawal, Managing Director)
Q: Can you explain your capital allocation policy given the large CapEx and high dividend payouts?
A: We aim to use resources in the best interest of shareholders. Current CapEx requirements have been factored into our dividend outflow decisions. Future profits will be allocated based on detailed engineering studies. (Rahul Agrawal, Managing Director)
Q: Will the company be able to maintain its EBITDA margin of 15% with new capacities and import pressures?
A: We have not given a specific guidance of 15%. However, we believe that with efficiencies, additional capacities, and differentiated products, margins will be sustainable. (Rahul Agrawal, Managing Director)
Q: Has the engineering polymers plan started?
A: The engineering polymers plan has not started yet. (Rahul Agrawal, Managing Director)
Q: How has the Red Sea crisis impacted your business?
A: There has been no major impact on our business due to the Red Sea crisis. Minor impacts on materials from Europe or the US are manageable. (Rahul Agrawal, Managing Director)
Q: With the upcoming capacity increase, how confident are you about reaching the estimated capacity of 360,000 tonnes?
A: We are on track to achieve the specified volume targets for this year and next year. Detailed studies are ongoing for future targets. (Rahul Agrawal, Managing Director)
Q: Are there any plans for backward integration for raw materials like styrene monomer?
A: We do not find backward integration to be a financially attractive proposition at this time. (Rahul Agrawal, Managing Director)
Q: What is the market share of Styrenix in India, and how much of the market is served by imports?
A: For ABS, we have a 30% market share, and for polystyrene, around 22-23%. The total market for both is roughly 300,000 tonnes. (Rahul Agrawal, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
