Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales volume achieved was 95,962 metric tonnes, showing resilience despite market challenges.
- Operating EBITDA grew by 35% to INR61 crores from INR44 crores in Q1 FY24.
- Net profit increased to INR32 crores from INR18 crores in Q1 FY24.
- Rural demand is showing signs of recovery, which could positively impact future performance.
- The company is investing in sustainability initiatives, including a patented process for textile-to-textile recycling.
Negative Points
- Sales volume decreased from 1,00,211 metric tonnes in Q1 FY24 to 95,962 metric tonnes.
- Domestic demand remains subdued, impacted by massive imports of fabrics from China.
- Margins are under pressure despite year-on-year performance improvement.
- Geopolitical tensions and economic uncertainties are affecting global economic recovery and market confidence.
- The textile industry faces significant challenges due to environmental regulations and the need for sustainable practices.
Q & A Highlights
Q: What is the status of the cationic yarn expansion?
A: The cationic yarn trial production has started, and commercial production is expected to commence within the next week or 10 days. The delay was due to environmental clearances, which have now been obtained. - Madhu Bhageria, Executive Chairman and Managing Director
Q: Where is the land for the new plant located?
A: The land has been procured, and registration will happen within the next 15 days. It is located around 5 kilometers from the existing plant. - Madhu Bhageria, Executive Chairman and Managing Director
Q: Is there any CapEx guidance for the next 2 years?
A: We will be investing INR300 crores in a subsidiary for recycling, using a mix of equity and loans. Additionally, we plan to invest INR125 crores in increasing our POY and FDY facility as the market improves. - Madhu Bhageria, Executive Chairman and Managing Director
Q: What is the demand outlook for the second half of FY25?
A: The second half is expected to be very good, with increased demand for fabric in winter and potential export orders being diverted to India. There is also a constant year-to-year increase in demand, and no new capacity is expected in the next 6 months to 1 year. - Madhu Bhageria, Executive Chairman and Managing Director
Q: How have imports in India been after June or July?
A: Yarn exports have decreased since the beginning of the year, but fabric exports continue. The government is in the process of putting a minimum import price on certain HS codes, which should further reduce imports. - Madhu Bhageria, Executive Chairman and Managing Director
Q: What is the outlook for EBITDA margins this year and next year?
A: No improvement is expected in the first half, but margins in the second half should be close to 9%. - Madhu Bhageria, Executive Chairman and Managing Director
Q: What are the plans for exports?
A: Export volumes are expected to remain small, around 2%, due to cheaper raw materials in China. However, fabric exports could increase, inducing demand for our products in India. - Madhu Bhageria, Executive Chairman and Managing Director
Q: How are the current spreads and margins?
A: Current spreads are not very good, reflected in our results with around 5-6% EBITDA margin. No significant improvement is expected in the second quarter, but the third and fourth quarters should be significantly better. - Madhu Bhageria, Executive Chairman and Managing Director
Q: Will the cationic yarn production help improve margins in the second quarter?
A: It may slightly help, but not significantly, as the initial volume will be small. - Madhu Bhageria, Executive Chairman and Managing Director
Q: Is there any guidance on future debt?
A: No debt is being taken currently. For the recycling plant, we will take a debt of around INR150 crores in the subsidiary company, mostly in FY26, to avail intra-subsidies from the state government. - Madhu Bhageria, Executive Chairman and Managing Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
