Release Date: May 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Insecticides (India) Ltd (BOM:532851, Financial) reported a 9% growth in revenue for FY24, reaching INR1,966 crores.
- The company's EBITDA grew by 33% to INR163 crores, and PAT increased by 62% to INR102 crores.
- The Maharatna product line contributed significantly, with a 27% growth in the B2C segment.
- The company plans to launch 7-8 new products in the upcoming season, focusing on insecticides, herbicides, and fungicides.
- Insecticides (India) Ltd (BOM:532851) has optimized its working capital days from 169 to 150 and improved its debt-equity ratio from 0.18% to 0.09%.
Negative Points
- Q4 revenue declined to INR273 crores from INR302 crores in the previous year, indicating a drop in quarterly performance.
- The export segment faced challenges due to international currency issues and credit ratings, contributing only 5% to total sales.
- There was an increase in other costs, particularly in power, fuel, and marketing expenses, impacting profitability.
- The company experienced a dip in profitability in Q1 due to higher cost inventories, affecting overall margins.
- The approval process for the new plant in Dahej is delayed, impacting the timeline for production and potential revenue growth.
Q & A Highlights
Q: Can you highlight the reasons behind the EBIT performance in Q4 and the volume growth for the quarter and full year?
A: Volume growth for the full year was around 20%, with revenue increasing by nearly 10%. The weak performance in Q4 was due to falling prices and market hesitation to restock materials. Distributors were cautious, and we strategically did not push for advance placements to focus on Q1 of the next year. (Rajesh Aggarwal, Managing Director)
Q: What contributed to the increase in other costs by 16%?
A: The increase was mainly due to higher power and fuel costs and increased marketing expenses related to new product launches. (Sandeep Aggarwal, CFO)
Q: What are the expectations for margins in FY25?
A: We are working to improve our margins to double digits in the next one to two years. The focus on premium products and new launches should support this goal. (Rajesh Aggarwal, Managing Director)
Q: Can you provide guidance on volume growth for FY25?
A: We are targeting a double-digit growth in revenue and a 20% volume growth, considering the expected decline in product prices by about 10%. (Rajesh Aggarwal, Managing Director)
Q: What is the market share in the B2C segment in the domestic market?
A: Our market share is around 5% to 5.5%, with some areas reaching 6% to 7%. We aim to increase this share through new product introductions and strategic tail cutting of older generics. (Rajesh Aggarwal, Managing Director)
Q: How do you decide which products qualify as Maharatna?
A: Products should show growth potential for the next three to five years and contribute at least INR5 crores to INR10 crores initially. Focus Maharatna products should have margins of 30% to 35% and sales of about INR35 crores in the first or second year. (Rajesh Aggarwal, Managing Director)
Q: What is the status of the Dahej plant?
A: The plant is ready, but we are awaiting final state approvals. We expect to start production in the next two to three months. (Rajesh Aggarwal, Managing Director)
Q: What is the potential revenue from the new product being developed with OAT Agrio?
A: The product should hit the market in 2026, with potential revenue starting from INR50 crores and possibly reaching INR100 crores to INR200 crores over time. (Rajesh Aggarwal, Managing Director)
Q: How do you see the raw material trend currently?
A: Raw materials are in shortage, and prices have stabilized after touching the bottom. There might be a slight increase from the current levels. (Rajesh Aggarwal, Managing Director)
Q: What is the expected revenue from the new CapEx in Dahej?
A: The new plant should contribute around INR100 crores in the current fiscal year and potentially INR300 crores in the next fiscal year. (Sandeep Aggarwal, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
