Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved highest ever quarterly EBITDA and PAT at INR474 crores and INR301 crores respectively.
- Turnover increased by 5% over Q4 of FY24, reaching INR1,695 crores.
- Domestic explosives volume grew by 16% year-on-year.
- Defense revenue grew by 32% year-on-year, reaching INR204 crores.
- Expansion into new international markets, including Kazakhstan and Thailand, and acquisition of Problast in South Africa.
Negative Points
- Realization of explosives showed a degrowth of 12%.
- Export and overseas revenue decreased from INR605 crores to INR579 crores.
- Employee costs increased by 31%.
- Interest costs rose by 11%, and depreciation increased by 17% due to CapEx.
- Uncertainty in predicting market opportunities and timelines for new defense products.
Q & A Highlights
Highlights of Solar Industries India Ltd (BOM:532725, Financial) Q1-FY25 Earnings Call
Q: Can you provide an update on the new explosives developed for the Defense sector and their market potential?
A: (Manish Nuwal, CEO) The new explosives are cutting-edge and have been qualified by the Indian Navy. The Army and Air Force are also expected to acquire these products. However, it's difficult to predict the market size and timeline at this stage.
Q: What is the status of the recently commissioned chaff factory and its market potential?
A: (Manish Nuwal, CEO) The chaff and flares facility has started production. We are the first company in India to produce these indigenously. Orders from the Air Force are expected soon.
Q: What led to the significant decline in other expenses this quarter?
A: (Manish Nuwal, CEO) The decline is due to better performance in international business, increased Defense business, and a reduction in hyperinflation and foreign exchange losses. These factors contributed to achieving a better EBITDA margin.
Q: Can you provide a split of the current order book between Defense and other sectors?
A: (Shalinee Mandhana, Joint CFO) The current order book stands at INR4,750 crores, with INR2,500 crores from Defense. No major new orders were received this quarter.
Q: What are the expectations for ammonium nitrate prices going forward?
A: (Manish Nuwal, CEO) Ammonium nitrate prices are expected to remain stable, similar to Q4 levels.
Q: What is the expected growth in Defense revenue over the next few years?
A: (Manish Nuwal, CEO) Last year's Defense revenue was INR550 crores, and this year we expect INR1,500 crores. With upcoming orders like Pinaka, we anticipate much larger numbers in the coming years.
Q: What is the planned CapEx for FY25, and how is it distributed?
A: (Manish Nuwal, CEO) The planned CapEx for FY25 is around INR800 crores, with INR200 crores already spent in Q1. This includes expansions in Kazakhstan, Thailand, and Defense.
Q: What is the capacity utilization for Defense products?
A: (Manish Nuwal, CEO) Due to the variety of SKUs and Defense terminology, it's difficult to provide a specific capacity utilization factor.
Q: What are the strategic plans for entering new Defense areas?
A: (Manish Nuwal, CEO) We are focusing on R&D to develop new products and technologies. Our efforts include manufacturing rockets, loitering munitions, chaffs, flares, and other products, aiming for better revenues and results in the Defense sector.
Q: What is the expected EBITDA margin for FY25?
A: (Manish Nuwal, CEO) We expect to achieve an EBITDA margin of around 25% for FY25, driven by better performance in international business, increased Defense business, and stable domestic growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
