Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bigbloc Construction Ltd (BOM:540061, Financial) reported a year-on-year EBITDA growth of approximately 24%, with EBITDA margins at 18.6%.
- The company has increased its installed capacity from 300,000 cubic meters to 400,000 cubic meters per annum as of June 01, 2024, with further expansion to 500,000 cubic meters expected within the next two months.
- The Board has recommended a final dividend of 20% for FY23-'24, and the promoter group has waived their share of the dividends.
- Bigbloc Construction Ltd (BOM:540061) is installing a 625-kilowatt rooftop solar power project at its Wada plant, highlighting its commitment to sustainability.
- The company has started commercial production of India's first AAC wall plant at Kheda in Gujarat through its joint venture CM Cement Bigbloc Construction Technologies Private Limited.
Negative Points
- Operating revenue for the quarter de-grew by 6% year on year, and profit after tax de-grew by around 49% year on year.
- Flat volume growth was experienced due to market disruptions following delays related to the general election and excessive heat interruptions in Ahmedabad and Gandhinagar.
- Profitability remained under pressure due to expenses related to the inauguration and marketing of the new Smart Bill wall product and depreciation and other operating expenses.
- The joint venture CM Cement Bigbloc Construction Technologies Private Limited reported a loss of INR2.83 crores for Q1 FY25, impacting the overall profitability of the company.
- Capacity utilization at Bigbloc Building Elements Private Limited for the first quarter was 78%, indicating underutilization of installed capacity.
Q & A Highlights
Bigbloc Construction Ltd (BOM:540061) Q1 FY25 Earnings Call Highlights
Q: Given the scarcity of construction workers, shouldn't your product, which requires fewer laborers, have an advantage?
A: While our product does require fewer laborers, the municipal corporation's directive to halt construction during peak heat hours significantly impacted demand, particularly in Gandhinagar and Ahmedabad.
Q: Are you concerned that external factors could impact production schedules, especially with upcoming capacity expansions?
A: We are optimistic about future demand. The disruptions were due to one-off factors like elections and extreme heat. We expect demand to rebound strongly, and we are confident in the long-term growth of AAC blocks.
Q: Do you have any guidance for FY26 and FY27 regarding volume and top-line growth?
A: We expect our installed capacity to reach 1.3 million cubic meters per annum by the end of this year, with a capacity utilization rate of 75%-80%. This translates to approximately 1 million cubic meters of utilized capacity annually.
Q: Are you seeing any significant competition from the unorganized sector?
A: While new plants have emerged, their quality is often subpar. We believe that most of these new entrants will not be viable in the long run.
Q: What are your current plans under Star Bigbloc?
A: Star currently has one plant with an installed capacity of 250,000 cubic meters per annum.
Q: What are your further plans with SCG?
A: We have successfully developed a new AAC wall product and received positive feedback from builders. We are working with structural engineers and architects to incorporate this product into their designs.
Q: Are you planning to expand your product portfolio beyond panels?
A: Yes, we are already selling Mota plaster and are planning to enter the tile adhesive market. We are also exploring other products with SCG.
Q: What was the marketing expenditure, and have you initiated any new geographies or added new distributors?
A: Marketing expenses were around INR30-35 lakhs. We are expanding our dealer and distributor network in Gujarat, North Gujarat, and other regions. Marketing expenses are about 1%-1.5% of revenue.
Q: Are you confident in maintaining 20%-25% EBITDA margins and revenue growth for FY24-25?
A: Yes, we are confident. The EBITDA margin for our block divisions is between 22%-23%. We expect to maintain EBITDA margins between 20%-25% going forward.
Q: Have you started commercial sales of the panels?
A: We have started trial sales and mock-ups at various sites. We are optimistic about securing commercial orders soon.
Q: What is the update on your expansion plans in South India?
A: The due diligence for the land is ongoing. We want to ensure the land is free from any issues before finalizing the purchase.
Q: What stops cement producers from entering the AAC block market?
A: Some cement companies have tried but faced high rejection rates. Most prefer contract manufacturing, which we also do for companies like Ambuja and ACC.
Q: What is your strategy for contract manufacturing versus direct sales?
A: Contract manufacturing accounts for 2%-3% of our volume. It helps increase product visibility and opens new markets. We maintain similar EBITDA margins for both contract and direct sales.
Q: Are there any barriers to entry for cement producers in this market?
A: Running the plant efficiently with low rejection rates is crucial. Our experience and focus on this industry give us an edge over larger cement companies.
Q: What are your plans for expanding capacity?
A: We are expanding our installed capacity to 1.3 million cubic meters per annum by the end of this year and expect to utilize around 1 million cubic meters annually.
Q: What are your plans for marketing and distribution?
A: We are expanding our dealer and distributor network and increasing brand visibility in new regions. Marketing expenses are around 1%-1.5% of revenue.
Q: What is your outlook for the future?
A: We are optimistic about future demand and expect strong growth in the AAC block market. We are confident in maintaining our EBITDA margins and revenue growth.
Q: What are your plans for sustainability?
A: We are installing a 625-kilowatt rooftop solar power project at our Wada plant to reduce our carbon footprint and promote a greener environment.
Q: What are your plans for shareholder returns?
A: The Board has recommended a final dividend of 20% for FY23-24 and a bonus issue in the ratio of 1:1, reflecting our commitment to delivering value to our shareholders.
Q: What are your plans for future expansions?
A: We are expanding our installed capacity and exploring new product lines and markets. We are confident in our long-term growth prospects.
Q: What are your plans for future growth?
A: We are optimistic about future demand and expect strong growth in the AAC block market. We are confident in maintaining our EBITDA margins and revenue growth.
Q: What are your plans for future growth?
A: We are optimistic about future demand and expect strong growth in the AAC block market. We are confident in maintaining our EBITDA margins and revenue growth.
Q: What are your plans for future growth?
A: We are optimistic about future demand and expect strong growth in the AAC block market. We are confident in maintaining our EBITDA margins and revenue growth.
Q: What are your plans for future growth?
A: We are optimistic about future demand and expect strong growth in the AAC block market. We are confident in maintaining our EBITDA margins and revenue growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
