Release Date: May 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- India Pesticides Ltd (BOM:543311, Financial) has expanded its market presence and signed contracts with esteemed Japanese customers.
- The company initiated production in one of its subsidiaries, enhancing capability and market reach.
- The formulation segment is gaining traction and brand value.
- The China Plus One policy has helped diversify the supply chain and reduce dependency on China.
- The company has a robust pipeline of new innovative products and increased market presence.
Negative Points
- Revenue for FY24 declined by 23% compared to FY23.
- Export turnover declined by 44% due to higher channel inventory and global destocking trends.
- EBITDA margin for FY24 decreased to 15% from 24% in FY23.
- The company faced significant challenges due to volatile raw material prices and global economic uncertainties.
- Pricing pressure and sluggish global demand impacted profitability.
Q & A Highlights
Q: How much of the top-line decline was due to volume versus price realization on both annual and quarterly levels?
A: Quarterly volume declined by 34% and price by 4%, totaling a 38% decline. On an annual basis, capacity utilization declined by around 12%. (Dheeraj Jain, CEO)
Q: What is the current situation regarding pricing and realization?
A: Prices have stopped declining but are rising very slowly. Raw material costs have stabilized, but margins are slightly reduced compared to earlier. (Dheeraj Jain, CEO)
Q: What is driving the expected 15% to 20% growth in FY25 and FY26?
A: Growth will come from new products, which have started contributing, and better demand for older products. We have received good export orders, so it will be a combination of export turnover and new product contributions. (Dheeraj Jain, CEO)
Q: What caused the steep drop in EBITDA margin, and how do you see it for the coming year?
A: Higher other expenses due to job work charges of INR6 crore and increased freight charges by INR2 crore. These factors resulted in higher other expenses and reduced gross margins by 5% to 6%. (Satya Gupta, CFO)
Q: How many new products do you plan to introduce this year, and will they be for the domestic or export market?
A: We plan to register three more products in the Australian and European markets and have 12 products in the pipeline with local CIB authorities. (Dheeraj Jain, CEO)
Q: How has the pricing for key products like Prosulfocarb, Captan, and Folpet been in Q4 and FY24?
A: Prices for these products have fallen by around 10% to 12%. (Dheeraj Jain, CEO)
Q: What is the expected revenue for FY26?
A: We expect to cross FY23 numbers with a projected 15% to 20% compounded growth over the next few years. (Satya Gupta, CFO)
Q: What are the expected policy changes post-election, and how will they impact the industry?
A: The PLI scheme for the agrochemical industry and increased custom duty on technical products could benefit the industry by promoting Make in India initiatives. (Dheeraj Jain, CEO)
Q: What is the current order book position, and how will it impact Q1 FY25?
A: We have an order book of around INR100 crore in exports, and Q1 is expected to be 20% better than Q4, driven primarily by exports. (Dheeraj Jain, CEO)
Q: Will the job work charges continue in subsequent quarters?
A: Job work charges will continue from the second quarter onwards, but they may be lower in the current quarter. (Satya Gupta, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
