Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bodal Chemicals Ltd (NSE:BODALCHEM, Financial) achieved a total revenue of INR424 crores in Q1 FY25, marking a 24% year-on-year growth and 6% quarter-on-quarter growth.
- The company reported an EBITDA of INR37 crores, reflecting a 19% year-on-year growth.
- Revenue from dyestuffs increased by 18% year-on-year and 15% quarter-on-quarter, reaching INR135 crores.
- The Chlor Alkali business reported a revenue of INR78 crores, with a 12% year-on-year growth and 15% quarter-on-quarter growth.
- The Saykha Greenfield Project has commenced commercial production of benzene downstream products, with expected meaningful contributions to revenue in the second half of FY25.
Negative Points
- The company reported a consolidated net loss after tax of INR1.17 crores for Q1 FY25.
- Revenue from Dye Intermediates saw a 6% quarter-on-quarter decline, despite a 46% year-on-year growth.
- The Saykha Benzene downstream project had negligible revenue contribution due to the quality stabilization process.
- Turkey's hyperinflation negatively impacted the performance of the company's wholly-owned subsidiary, Sen-er Boya, resulting in a loss of INR2.4 crores.
- Increased interest, depreciation, and overhead costs due to the capitalization of new projects offset partial profitability from other divisions.
Q & A Highlights
Q: Sir, my first question is regarding Basic Chemicals. The revenue growth has been around 15% on a year-on-year basis and almost 15% sequentially. Can you explain why the Basic Chemical realizations are going up?
A: There are some volume improvements in a product called thionyl chloride, which is one of the reasons for the increase in volumes and realizations. However, the finished good prices were slightly higher, which is the main reason for the revenue increase.
Q: Does the increase in Basic Chemical prices indicate that commodity prices are inching up, and will our basic raw material prices also start to move up?
A: The 15% improvement in Basic Chemicals revenue is negligible in the context of our total revenue. There is no upward trend in raw material prices, and we have experienced some cooling in aniline oil prices.
Q: Regarding benzene derivatives, we have not booked any revenue for this quarter due to quality issues. Have these issues been resolved, and how did the overhead costs impact the bottom line?
A: The quality issues have been resolved, and production will stabilize this month. We had to capitalize the plant in March as per accounting standards, but significant production will start now. We expect the benzene derivatives to contribute INR100 crores to INR125 crores in the second half of FY25.
Q: For Chlor Alkali, the realization has been flattish at around INR34-35 per kilo for the last 3 to 4 quarters. Is there any structural demand issue?
A: The demand for Chlor Alkali is moderately stable. Our location gives us an advantage, and our production numbers have improved. We expect gradual improvement in demand due to growth in chemical, pharma, and other sectors in India.
Q: This quarter saw a good jump in EBITDA. With benzene derivatives and caustic soda starting to flow in, what could be the peak EBITDA we can expect? Are we on an improved trajectory?
A: We are on a growth trajectory across all divisions. Benzene derivatives will be commercialized this month, and we aim for 80-90% volume utilization within 2-3 months. Maintaining the current EBITDA level of INR35 crores is possible, and we expect to do even better in the coming quarters.
Q: The interest cost this quarter was INR21 crores. Can we assume it will be around INR80-85 crores for the year, or will there be a reduction?
A: Interest costs will start reducing from this level as we are repaying our term loan quarterly. We do not expect significant changes in working capital. For the full year, we do not expect interest costs to exceed INR74-75 crores.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
