Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Time Technoplast Ltd (BOM:532856, Financial) reported a year-on-year volume growth of 16% and revenue increase of 14% for Q1 FY25.
- The CNG Composite Cylinder business saw a notable 32% rise, contributing significantly to the overall growth.
- Profit after tax surged by 41% year-on-year, driven by improved capacity utilization and reduced finance and depreciation costs.
- The company has a strong order book for Type IV Composite Cylinder for CNG cascade, valued at approximately INR175 crores.
- EBITDA margin improved to 14.2% from 13.7% in the same period last year, reflecting better performance in value-added products and improved CapEx utilization.
Negative Points
- There is a 2% gap between volume growth and revenue growth due to price variance and exchange rate fluctuations.
- The company faces challenges in maintaining consistent EBITDA margins, especially in the CNG and LPG segments.
- Delays in expansion projects due to geopolitical issues like the Russia-Ukraine war and Hamas-Israel conflict have impacted timelines.
- The power cost remains a significant expense, constituting around 3% of revenue, with varying rates across different states in India.
- The company is still in the process of disinvesting 50% of its Middle East business, which has been delayed but is expected to complete in the next 45 to 60 days.
Q & A Highlights
Q: What would be the possible revenue for CNG cascade this year? And at full capacity utilization, what is the CNG cascade revenue possibly?
A: This quarter, we achieved around INR73 crores in CNG business, up from INR55 crores last year. For the full year, we estimate around INR450 crores from CNG and LPG combined. At full utilization, which we consider 90% to 95%, we expect to reach this target. Expansion plans are in progress and expected to complete by Q4 FY25.
Q: How sustainable is the 13.1% EBITDA margin achieved with established products this quarter?
A: We aim for an overall contribution margin of around 18% for composite products, including CNG and LPG. The sustainability of the margin depends on cost management and maintaining pricing strategies.
Q: What is the company's power cost as a percentage of revenue?
A: Power cost is around 3% of revenue. We are working on reducing this by increasing the use of green energy, targeting 30% solar power usage by year-end.
Q: Any projected growth targets for the next two to three years?
A: We aim for a CAGR of 15% in revenue, targeting around INR7,500 crores in the next three years. This includes growth in both India and overseas markets.
Q: Can you provide more details on the E-Rickshaw battery containers?
A: Our subsidiary, NED Energy Limited, is developing advanced TBS and low-cost, low-maintenance E-Rickshaw batteries. We expect these products to be ready in the next three to four months, with a potential business of around INR100 crores in the next two years.
Q: What are the plans for CapEx in FY25 and beyond?
A: For FY25, we have projected a CapEx of around INR175 crores, including INR75 crores to INR80 crores for maintenance and INR100 crores for value-added product expansion. We also plan to dispose of non-core assets worth INR90 crores to fund part of this CapEx.
Q: How does the company plan to reduce its debt?
A: We aim to be debt-free in the next 2.5 years. The sale of 50% of our Middle East business is expected to realize funds in the next 45 to 60 days, which will help reduce debt.
Q: What is the impact of increased freight costs on exports?
A: Our overseas business is primarily local manufacturing, so the impact of freight costs is minimal. We negotiate freight costs with customers for exports, ensuring we maintain our margins.
Q: What is the status of the development of composite heaters or geysers?
A: We are developing composite fire extinguishers and water heaters, leveraging our polymer and composite technology. These products have significant market potential due to their lightweight and durability.
Q: How does the company plan to handle the competitive landscape in the industry?
A: We are market leaders in 9 out of 10 countries where we operate. We focus on maintaining our podium position through continuous product development and capitalizing on new opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
