Release Date: May 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indo Count Industries Ltd (BOM:521016, Financial) achieved its highest-ever quarterly and yearly revenue of INR1,093 crores and INR3,600 crores respectively in FY24.
- The company recorded its highest-ever annual EBITDA in FY24 amounting to INR603 crores.
- Indo Count Industries Ltd (BOM:521016) has successfully met its volume and margin guidance for FY24.
- The company has embarked on a strategic growth phase with the acquisition of the iconic Wamsutta brand and expansion of its licensed brand portfolio with Fieldcrest and Waverly.
- Indo Count Industries Ltd (BOM:521016) has made significant strides in its ESG initiatives, including the inauguration of a 9.3 megawatt solar power generation unit in Gujarat, contributing to a total renewable energy capacity of 21.5 megawatts.
Negative Points
- EBITDA margin for Q4 FY24 was impacted by one-time promotional activities, reducing the margin by around 2%.
- The company faces challenges in the synthetic product market due to higher costs in India compared to China, impacting competitiveness.
- Indo Count Industries Ltd (BOM:521016) anticipates additional promotional expenses in the coming quarters, which may affect short-term profitability.
- The company’s expansion plans and brand acquisitions require significant investment, which could strain financial resources in the short term.
- Geopolitical risks and inflationary pressures continue to pose challenges to the company’s growth and profitability.
Q & A Highlights
Q: How do you see realizations moving forward in the next two years given the stabilization of cotton prices and the increasing contribution of utility bedding?
A: Our focus is on value-added products, including branded acquisitions and licensed brands. We aim to improve margins through operational leverage and selling higher-value goods. (Kailash Lalpuria, CEO)
Q: Why is India's market share in the bedding space stable while Pakistan's is increasing?
A: India faces higher costs for synthetic materials and shipping, making it less competitive. However, with recent investments in fashion bedding units, we are better positioned to service this product category and expect improvements. (Kailash Lalpuria, CEO)
Q: Can you provide insights into the margins of branded businesses and other segments?
A: We are focusing on seven verticals, including branded and licensed brands, to elevate our market position. Each business segment is being strategically developed to enhance margins and market footprint. (Kailash Lalpuria, CEO)
Q: What is the expected traction from recent brand acquisitions over the next two to three years?
A: We anticipate significant traction from the Wamsutta brand starting in FY25, with gradual build-up. Our goal is to achieve 10% of our revenue from branded businesses, with potential for further growth. (Kailash Lalpuria, CEO)
Q: Will promotional expenses remain high in the initial months of the financial year?
A: Yes, there will be additional promotional expenses to establish the infrastructure and market presence. However, these will be absorbed by the higher margins from branded business sales starting in Q4. (Kailash Lalpuria, CEO)
Q: Are you still maintaining the guidance of doubling revenues to INR6,000 crores by FY27?
A: Yes, we are targeting FY27 for doubling revenues, considering geopolitical and economic factors. Our strategic initiatives and market conditions support this goal. (Kailash Lalpuria, CEO)
Q: How do you plan to penetrate the Indian market and increase market share?
A: We are optimistic about the Indian market and are enhancing distribution and exposure to large format stores. The Wamsutta brand will help us position ourselves in the premium segment. (Kailash Lalpuria, CEO)
Q: What impact will the UK FTA have on Indo Count?
A: The UK FTA will provide a level playing field with Pakistan and Bangladesh, enhancing our competitiveness. We are already growing our market share in the UK, and the FTA will further boost this growth. (Kailash Lalpuria, CEO)
Q: How will the acquisition of the Wamsutta brand impact your financials?
A: The Wamsutta brand, acquired for INR85 crores, has significant potential. We aim to generate INR800 crores in revenue from this brand over the next two to three years, leveraging its strong market presence and legacy. (Kailash Lalpuria, CEO)
Q: What is the timeline for reducing consolidated debt?
A: Our philosophy is to reinvest profits into growth and debt reduction. We aim to become a debt-free company in the next two to three years, balancing investments in business growth and debt repayment. (Kailash Lalpuria, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
