Release Date: February 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Solar Industries India Ltd (BOM:532725, Financial) achieved its highest ever nine-month EBITDA at INR1,042 crores and PAT at INR633 crores.
- The company recorded a significant volume growth of 27% in the quarter and 18% over nine months.
- The defense order book stands at a robust INR2,200 crores, with expectations of substantial revenue increase from defense products in the next quarter.
- The company has received export orders for defense products worth INR994 crores, to be supplied over the next two to three years.
- Solar Industries India Ltd (BOM:532725) is expanding into new geographies like Kazakhstan and Saudi Arabia, which are expected to contribute to revenue from the next financial year.
Negative Points
- International business was impacted by higher inflation and currency volatility, which are expected to stabilize over the next one or two quarters.
- Revenue from Coal India and other domestic customers saw a decline compared to the previous year.
- The company faced disturbances in shipments due to issues in the Red Sea, affecting overall performance.
- There was a significant drop in revenue from defense in the quarter, from INR110 crores to INR62 crores.
- The company experienced a fire incident resulting in a financial loss of around INR2 crores, which will be claimed from insurance.
Q & A Highlights
Highlights of Solar Industries India Ltd (BOM:532725) Q3 FY24 Earnings Call
Q: Could you shed some light on the order inflow, particularly from which segments and regions?
A: The total order book stands at INR4,802 crores, divided into Singareni, Coal India, and defense orders. Out of this, INR2,200 crores is from the defense sector, excluding the Pinaka orders which are in the final negotiation stage. - Manish Nuwal, CEO and Managing Director
Q: When will the INR994 crores defense order execution start, and what revenue can we expect for FY24 and '25?
A: The INR994 crores defense order will be executed over the next three years, starting from Q4 FY24. We expect around INR1,500 crores in revenue from the defense sector in FY25. - Manish Nuwal, CEO and Managing Director
Q: What are the key drivers behind the strong international segment performance, and when will new geographies like Kazakhstan and Saudi Arabia start contributing?
A: The strong performance is due to increased market presence and sales in new territories. Kazakhstan and Saudi Arabia will start contributing from the next financial year. - Manish Nuwal, CEO and Managing Director
Q: Can you provide details on the ammonium nitrate prices and how you manage the volatility in raw material costs?
A: The blended ammonium nitrate price for the quarter is around INR44,000. There is a 1 to 1.5 months lag in passing on price changes to customers. We expect prices to stabilize or increase slightly. - Shalinee Mandhana, Joint CFO
Q: What is the expected CapEx for new geographies and the overall company for FY24 and '25?
A: The CapEx for FY24 is around INR750 crores, with INR470 crores already spent. The remaining INR280 crores will be spent in the next quarter. CapEx plans for FY25 will be provided in the Q4 results. - Manish Nuwal, CEO and Managing Director
Q: What is the outlook for defense revenue and the impact of the Red Sea issue on Q3 performance?
A: We expect defense revenue to be around INR650 crores for FY24, slightly lower than the initial guidance of INR700 crores due to the Red Sea issue. The impact of the issue is not quantified separately. - Manish Nuwal, CEO and Managing Director
Q: What is the expected volume growth and margin outlook for the medium term?
A: We expect a conservative volume growth of around 15% over the next three to five years. Profitability is expected to be higher than the volume growth rate. - Manish Nuwal, CEO and Managing Director
Q: What is the net debt as of December?
A: The net debt as of December is around INR850 crores. - Shalinee Mandhana, Joint CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
