Release Date: February 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Anupam Rasayan India Ltd (BOM:543275, Financial) maintained its EBITDA margins at 30.1% on a standalone basis for Q3 FY24, despite challenging market conditions.
- The company commercialized six new molecules in Q3 FY24, with a total of 11 new molecules launched in nine months FY24, expected to positively impact revenue in FY25 and FY26.
- Anupam Rasayan India Ltd (BOM:543275) signed a letter of intent worth $61 million (INR507 crores) for the next nine years with a leading Japanese chemical company, showcasing strong future demand.
- The company is investing INR59 crores in a hybrid power plant (wind and solar), expected to reduce energy costs by approximately INR15 crores per year.
- Anupam Rasayan India Ltd (BOM:543275) has a strong focus on sustainability, winning the CII 3R Award for best industry practices in waste management.
Negative Points
- Total revenue for Q3 FY24 stood at INR298 crores, showing a YoY degrowth of 23% on a consolidated basis.
- For the nine months FY24, total revenue was INR1,092 crores, posting a YoY degrowth of 1%, indicating ongoing challenges in the market.
- The agrochemical sector continues to face demand issues and falling raw material prices, impacting revenue and growth.
- Working capital days target of 180 to 200 by end of FY24 is unlikely to be achieved due to demand compression and inventory liquidation challenges.
- Short-term demand is expected to remain subdued, with recovery anticipated only from H1 FY25, indicating near-term revenue pressures.
Q & A Highlights
Q: What are we looking at in the current quarter from the orders perspective, and are we on track with the LOIs and customer engagements?
A: Engagement on the customer side for LOIs has been strong, with robust interest. However, the short-term demand is subdued, and we expect tepidness in the next quarter as well. We anticipate revenue growth to pick up from H1 FY25.
Q: How are we looking in terms of overall growth for FY25 and FY26?
A: Pharma and polymer sectors should contribute significantly to growth in FY25 and FY26. Historical products will provide stability, while new LOIs and contracts will drive additional volumes.
Q: What is the interest saving expected in FY24 and FY25 after the recent debt repayment?
A: Interest savings for FY24 will be limited to around one quarter. For FY25, we estimate savings of approximately INR24 crores.
Q: Has there been any improvement in working capital?
A: There has been some improvement, but not to the extent we targeted. We are moving in the right direction but have not achieved the 180 to 200 days target for FY24 due to demand compression.
Q: Can you provide an update on the gross and net debt position at 9M FY24?
A: We have repaid INR200 crores of long-term debt, bringing our long-term debt to just under INR400 crores. With cash equivalents of INR577 crores, we aim to be long-term debt-free soon.
Q: What is the expected revenue contribution from new product launches in FY25?
A: New product launches, particularly in pharma and polymer sectors, should contribute significantly. We expect these sectors to make up a substantial portion of our revenue, with pharma in the higher teens and polymers around 15-20%.
Q: How do you see the revenue mix evolving over the next three to five years?
A: We anticipate pharma and polymer sectors to contribute around 20% each to our revenue, with agrochemicals continuing to provide stability and growth.
Q: Will the current CapEx plan suffice for future growth, or will additional investments be needed?
A: The current CapEx plan of INR670 crores should be sufficient for our growth plans over the next three years. Any additional CapEx will likely be for maintenance or minor debottlenecking.
Q: When do you expect the revenue deferrals to end, and when should we see an uptick?
A: We expect the destocking cycle to end by Q4 FY24, with demand stabilizing and growth resuming from Q1 FY25.
Q: What has led to the high uptick in gross margin this quarter?
A: The increase in gross margin is due to the product mix. We focus on EBITDA levels as they provide a more accurate representation of our business model, which includes pass-through costs for raw materials and overheads.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
