Release Date: October 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rossari Biotech Ltd (BOM:543213, Financial) reported a steady quarter with a 3% increase in revenues to INR498.4 crore.
- The HPPC division showed a year-over-year growth of 6%, with revenues reaching INR390 crore.
- Exports grew by 32% in H1 FY'25, significantly supporting overall performance despite softer domestic growth.
- The company has made strategic investments, including the establishment of Rossari Biotech Trading FZE in the UAE and the acquisition of Unistar Thai Company Limited.
- Rossari Biotech Ltd (BOM:543213) is focusing on sustainability, having installed solar capacity, reduced water consumption, and implemented waste management initiatives.
Negative Points
- The textile specialty chemicals division faced headwinds, with revenues declining from INR96 crore to INR84 crore.
- Domestic sales remained flat, with the HPPC division experiencing softer growth due to flat FMCG home care volumes and pricing pressures.
- The company faced challenges in the Bangladesh and Egypt markets, impacting textile exports.
- Increased freight costs and professional expenses have impacted margins, despite improvements in gross profit.
- The animal health and nutrition business did not meet expected growth targets, with strategic shifts impacting revenue.
Q & A Highlights
Q: Can you provide the quarterly export numbers for Q1 and Q2, and compare them with last year? Also, what has been weak on the domestic side?
A: Exports for this quarter were about INR130 crores, and in Q1, they were INR118 crores. Last year, Q2 exports were INR107 crores. On the domestic front, the FMCG Home care volumes were flat, and with raw material prices coming down, there was pressure on pricing. The textile side saw better volumes than last year, but pricing pressures persisted.
Q: On the textile side, are we losing market share to competitors? Also, why is the AHN business softer than expected?
A: We haven't lost market share in textiles; volumes grew by 6-7% year-on-year. However, pricing pressures due to raw material cost reductions affected revenue. For AHN, we shifted focus from feed components to specialty additives, which grew by 20% year-on-year. Q3 and Q4 are expected to be stronger for AHN.
Q: Why has the EBITDA margin not improved despite gross profit margin increases?
A: Other expenses increased due to higher freight costs and professional expenses related to global restructuring. The export business, which bears freight costs, has impacted margins, but we aim to pass these costs to customers over time.
Q: What are the key export markets and segments driving growth?
A: Key sectors include home care, personal care, cosmetics, and agrochemicals. Major geographies are Europe, South America, the Middle East, and Turkey. For textiles, we are focusing on Bangladesh, Vietnam, Egypt, and North Africa.
Q: How are raw material price fluctuations affecting your revenue guidance?
A: If crude prices drop significantly, selling prices will fall, shifting focus to volume and margin growth rather than top-line revenue. We expect to maintain a low double-digit growth rate, around 12-13%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
