Release Date: January 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bharat Wire Ropes Ltd (BOM:539799, Financial) reported a consolidated revenue of INR157 crore for Q3, marking a 9% year-on-year growth.
- The company's EBITDA for Q3 stood at INR44 crore, showcasing a 19% year-on-year increase.
- Net profit for Q3 was INR26 crore, reflecting a significant 39% year-on-year growth.
- For the nine months of FY24, consolidated revenue reached INR475 crore, an 11% year-on-year increase.
- The company has successfully reduced power and fuel costs from 10% to 7% of sales, contributing to improved EBITDA margins.
Negative Points
- Revenue for Q3 decreased by 1.2% compared to the previous quarter.
- Capacity utilization is currently at 60%, indicating underutilization of existing capacity.
- The company faces challenges in increasing product mix contributions, which remain in single digits.
- There is a dependency on subsidies, with INR55 crore yet to be disbursed and future subsidies uncertain.
- The company anticipates a significant time frame of 18-24 months to achieve 80-85% capacity utilization through debottlenecking.
Q & A Highlights
Q: Can you highlight the changes in the product mix that have supported the net realization?
A: The product mix change has been in single digits. We focused some part of our order book on high-value items like slings, but the overall contribution remains in single digits. (Mayank Mittal, Joint Managing Director)
Q: What is the long-term roadmap for the company as you ramp up capacity to 80%-85% utilization?
A: The focus is currently on maximizing utilization to 80%-85%. Once achieved, we will consider expanding capacities or adding new products. This is expected to take 18-24 months. (Mayank Mittal, Joint Managing Director)
Q: What is the status of the INR30-35 crore debottlenecking investment mentioned in the last call?
A: The debottlenecking process is ongoing and on track. This will help achieve higher capacity utilization. (Mayank Mittal, Joint Managing Director)
Q: What is the current demand environment in domestic and international markets?
A: Demand is strong in both domestic and international markets. Growth is driven by infrastructure development and a strong macroeconomic outlook. (Mayank Mittal, Joint Managing Director)
Q: What is the subsidy amount for this quarter and how much is pending?
A: The subsidy amount for this quarter is INR11 crore. Up to March '23, we received INR46 crore, with INR55 crore yet to be disbursed. (Sushil Sharda, Director - Finance)
Q: What are the growth strategies to achieve 80%-85% capacity utilization?
A: The strategy includes debottlenecking capacities to utilize machines better, which will take 18-24 months. (Mayank Mittal, Joint Managing Director)
Q: What is the current order book position?
A: The order book is secure, equivalent to three to four months of operation, approximately INR150 crore. (Mayank Mittal, Joint Managing Director)
Q: How are you addressing the challenges in expanding the value-added segment of your business?
A: We are focusing on establishing credentials and track records by giving our ropes for trials and tweaking them to meet stringent criteria. The target is for 20% of total revenue to come from special ropes in the next few years. (Mayank Mittal, Joint Managing Director)
Q: What is the impact of recent shipping route challenges on your export business?
A: The additional freight costs due to shipping route challenges are being borne by customers. There is no expected impact on revenue or margins for Q4. (Murarilal Mittal, Managing Director)
Q: What is the expected revenue growth for the company over the next three to five years?
A: While specific forecasts are not publicly available, the company expects to maintain consistent growth based on past performance. (Sushil Sharda, Director - Finance)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
