Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orient Bell Ltd (BOM:530365, Financial) achieved a 7% volume growth and a 3.7% value growth in Q4 FY24.
- The company has successfully increased its share of glazed vitrified tiles (GVT) in the sales mix to 30% from 23% in FY23.
- Operational efficiencies have helped maintain gross margins despite offering better discounts to counter competition.
- The company launched its first-ever all-India TV campaign, resulting in a 50% increase in brand awareness over four months.
- Orient Bell Ltd (BOM:530365) commissioned its Dora plant GVT line ahead of schedule and at a reduced CapEx cost of about 18%.
Negative Points
- Net sales for FY24 dropped by 4.3% to INR669.5 crore compared to INR699.6 crore in FY23.
- Volume dropped by 2% for the full year, indicating a slowdown in overall demand.
- The slowdown in exports, especially in H2, led to Morbi capacity being diverted to the domestic market, putting pressure on realizations.
- Reported EBITDA margins were lower at 5.9% due to additional investments in brand building.
- The company faces challenges from potential anti-dumping duties on Indian tiles by the US, which could impact future exports.
Q & A Highlights
Q: Based on the current capacity, what is the GVT portion?
A: Aditya Gupta, CEO: The GVT portion is 40%.
Q: What is the utilization rate of the Dora plant?
A: Aditya Gupta, CEO: The plant is ramping up and should reach optimum utilization in about a year. Currently, the effective capacity utilization on GVT is around 75% to 80%.
Q: What is the contribution of project sales versus retail sales in FY24?
A: Aditya Gupta, CEO: Project sales, defined as orders above 3,000 meters, contributed about 35% of the total sales.
Q: Can you provide details on the new capacity being added by the associate entity?
A: Himanshu Jindal, CFO: The associate entity, Proton, is adding a 5.5 million square meter GVT capacity, expected to be operational in Q2 FY25.
Q: What is the status of the patent for the anti-viral, anti-microbial tile?
A: Aditya Gupta, CEO: The patent has been granted, and the tile will be marketed primarily to health facilities in FY25.
Q: What are the current gas prices and their impact on costs?
A: Himanshu Jindal, CFO: Gas prices have remained stable sequentially. Any significant changes in gas prices will impact ASPs and margins accordingly.
Q: How do you see the volume growth and margin pressure given the current market conditions?
A: Himanshu Jindal, CFO: If demand normalizes, volume growth should improve. The focus remains on operational efficiencies and brand building to maintain competitiveness.
Q: What is the outlook for retail and project demand?
A: Aditya Gupta, CEO: Retail demand is expected to improve with ongoing marketing efforts. Government projects are anticipated to pick up from Q2 FY25, while private projects launched in FY22 should contribute to tile revenue this year.
Q: How is the channel inventory situation?
A: Aditya Gupta, CEO: Channel partners have become more conscious about inventory levels, leading to more controlled stocking.
Q: What is the average gas price for Q4 and FY24?
A: Himanshu Jindal, CFO: The average gas price for FY24 was around INR50, with additional savings from alternative fuels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
