Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q1 FY25 increased to approximately INR89 crore from INR80 crore in Q1 last year.
- EBITDA, PBT, PAT, and EPS excluding exceptional items grew by 15.34%, 15.42%, 14.55%, and 16.96% respectively year-over-year.
- Key business verticals approach as part of the sales strategy is expected to drive future growth.
- Focus on expanding global footprint in Middle East, Africa, and Asian countries.
- Track and trace segment and digital printing business show promising potential for future growth.
Negative Points
- Cost of goods sold remains high at 38% of revenue, though slightly decreased from previous periods.
- Consolidated PBT is lower than stand-alone PBT due to losses in overseas subsidiaries, particularly CP Italia.
- CP Italia incurred a loss of approximately INR5 crore, impacting overall profitability.
- Uncertainty in predicting future profitability due to lumpy sales in track and trace and digital printing segments.
- Significant investment required for CP Italia and other subsidiaries, with a budgeted expense of EUR3 million for CP Italia this year.
Q & A Highlights
Highlights of Control Print Ltd (BOM:522295, Financial) Q1 FY25 Earnings Call
Q: Can you provide an update on your global market access and new product and technology introductions?
A: (Shiva Kabra, Joint Managing Director) We are confident in our execution within the Indian market and are now expanding into international markets such as the Middle East, Africa, and Asia. We are also focusing on the digital printing business and have integrated technologies from our acquisition of Markprint. Additionally, we are developing our track and trace segment, primarily focused on pharmaceuticals, and have invested in V-Shapes for innovative packaging solutions.
Q: What should investors expect in terms of the variation in profitability between stand-alone and consolidated results?
A: (Shiva Kabra, Joint Managing Director) The major difference is due to CP Italia, where we have a planned investment of EUR3 million for this year. This includes costs for technology development, R&D, and sales and marketing. While this results in a current loss, it is part of our strategy to grow the business. We expect other businesses like track and trace and digital printing to break even or turn profitable this year.
Q: Can you provide the revenue mix across printers, consumables, spares, and service income for Q1?
A: (Jaideep Barve, CFO) For Q1, printers contributed 14% of overall revenue, consumables 66%, spares 7%, and service income 13%. We sold about 622 printers this quarter, which is flat year-over-year.
Q: How are you managing the expenses and investments for CP Italia?
A: (Shiva Kabra, Joint Managing Director) We have an expense budget of INR28 crore for CP Italia this year, which includes costs for personnel, R&D, and other operational expenses. We expect to recover some turnover as the business stabilizes and grows.
Q: How is the pharmaceutical vertical performing, especially with the mandatory QR code requirement for top-selling formulations?
A: (Shiva Kabra, Joint Managing Director) The pharmaceutical business looks promising. The track-and-trace division is responsible for all pharmaceutical sales, and we are working on deals with several companies. We aim to provide an update on our progress by the end of this financial year.
Q: What are your plans for major CapEx and capacity expansion this year and next?
A: (Jaideep Barve, CFO) There are no major CapEx plans for the coding and marking business. However, we are considering setting up a unit in India for producing packaging materials, which could significantly reduce costs and improve margins.
Q: How do you see the mask business going forward?
A: (Shiva Kabra, Joint Managing Director) The mask business is currently marginally profitable and not a major focus. We are keeping it operational in case of future demand but will reassess its long-term viability in the next one or two quarters.
Q: How do you compare your market share and margins with competitors like Domino?
A: (Shiva Kabra, Joint Managing Director) Domino has a higher base and benefits from economies of scale. Additionally, they have diversified into digital printing, which affects their margin profile. Our investments in R&D and new business segments also impact our margins, but we aim to maintain competitiveness through innovation and strategic growth.
Q: What is the long-term potential of your overseas investments in Markprint, Codeology, and CP Italia?
A: (Shiva Kabra, Joint Managing Director) While it's difficult to predict exact figures, we believe these investments have the potential to significantly increase our addressable market and profitability. Each investment serves a different strategic purpose, and we are focused on executing our plans to realize their full potential.
Q: How predictable is your revenue from consumables given the installed base of printers?
A: (Shiva Kabra, Joint Managing Director) The consumables business is quite predictable due to the recurring nature of sales. However, the upfront printer sales can be lumpy. We are focusing on larger customers to ensure stability and predictability in our consumables revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
