Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved a total income of INR5,137 million, reflecting a growth of 33% over Q1 FY24.
- Beer volumes increased by close to 32% over Q1 FY24, while IMFL volume increased by 14%.
- EBITDA of INR648 million with a margin of 12.6%, reflecting a growth of 13% over the same period last year.
- Net profit for the quarter was INR376 million with a margin of 7.3%, compared to INR337 million in the same period last year.
- Significant improvement in net debt position with gross debt reducing to INR1,560 million and net debt improving to INR1,400 million as of June 30, 2024.
Negative Points
- Beer realization for the quarter was INR550 per case compared to INR559 in Q1 FY24, influenced by higher sales of lower-priced Power Cool.
- Despite strong financial performance, the stock has declined, potentially due to market perception issues or external factors.
- Capacity utilization for the Woodpecker plant in Karnataka was only 70%, indicating underutilization.
- No plans for stock buybacks or dividends as the company is in a growth phase and focusing on capacity expansion.
- The company faces margin pressures and cost management issues, although they have stabilized compared to the previous year.
Q & A Highlights
Highlights of Som Distilleries Breweries & Wineries Ltd (BOM:507514, Financial) Q1 FY25 Earnings Call
Q: Can you explain the overall industry situation and Som Distilleries' strategic growth areas?
A: The industry has seen growth, and Som Distilleries has outpaced this growth. The company has consolidated market sales and made substantial progress in markets like Rajasthan, Delhi, and Jharkhand. Capacity utilization for MP and Odisha plants was at 100%, while the Karnataka plant was at 70%.
Q: What is the revenue and EBITDA margin outlook for FY25?
A: The company targets a top line of INR1,500 crores to INR1,600 crores and an EBITDA margin of 12% to 13%.
Q: Are there any market perception issues or external factors affecting the stock despite strong Q1 results?
A: The company cannot comment on stock performance but notes that their results have been better than the industry average. Margins are slightly better than competitors, and cost pressures have stabilized.
Q: What is the company's stance on stock buybacks and dividend policy?
A: Currently, there are no plans for stock buybacks or dividends as the company is in a growth phase and focusing on capacity expansion, particularly for the Odisha plant.
Q: Will raw material price corrections improve EBITDA margins beyond the guided 12%-13%?
A: While raw material prices have stabilized, the company uses more glass bottles than it recycles, affecting costs. The guided EBITDA margin of 12%-13% is considered achievable.
Q: Can you provide details on the premiumization strategy and expected product launches?
A: The company plans to launch premium products this financial year, priced higher than their flagship brand Hunter, around INR1,000.
Q: What are the CapEx plans and growth projections beyond FY25?
A: The company plans a CapEx of INR30 crores to INR40 crores for the Odisha plant and is eyeing acquisition opportunities. Growth projections are 25%-30% year-on-year for the next two to three years, with sustainable margins of 12%-13%.
Q: What is the current capacity utilization of the plants?
A: Capacity utilization for MP and Odisha plants is at 100%, while the Karnataka plant is at 70%. Utilization is expected to be around 85%-90% by next season.
Q: Why is the company using a mix of equity and debt for recent expansions?
A: The mix includes exercising promoter warrants, not fresh equity dilution. The Odisha plant's capacity utilization has crossed 100%, necessitating additional capacity.
Q: What is the guidance for upcoming quarters and potential challenges?
A: The company maintains a full-year guidance of INR1,500 crores to INR1,600 crores in net sales, despite seasonal variations in beer consumption.
Q: How does Som Distilleries maintain a higher growth rate compared to the industry?
A: The company has a strong team, recognized brands, and good market share in key markets. It aims to maintain a growth rate of 22%-25% over the next three years, compared to the industry growth rate of 8%-9%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
