Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HIL Ltd (BOM:509675, Financial) reported a consistent 7-8% growth momentum despite a challenging macroeconomic environment.
- The company achieved strong volume growth in the pipes and fittings segment, with a 63% increase year-on-year.
- HIL Ltd (BOM:509675) expanded its market share in roofing solutions by 100 basis points, despite an industry decline.
- The construction chemicals segment saw a 29% year-on-year revenue growth, with the tiling segment growing by 60%.
- HIL Ltd (BOM:509675) is optimistic about demand in the second half of the year, expecting stronger performance driven by increased volumes and sustained demand.
Negative Points
- The company faced a tough quarter with weaker macroeconomic and demand conditions impacting profitability.
- Parador, a key segment, reported increased losses despite revenue growth, attributed to one-time costs and increased spending.
- The roofing solutions segment experienced a 3% year-on-year revenue decline due to pricing pressure and raw material challenges.
- HIL Ltd (BOM:509675) had to manage inventory losses in the pipes segment due to price reductions.
- The company is facing challenges in the European market with Parador, which has not yet achieved the expected turnaround.
Q & A Highlights
Q: In spite of revenue increasing by around 7% in H1, Parador's losses have increased. What is leading to higher losses despite revenue growth?
A: (CFO) There are one-time costs, including a severance pay of six crore. Additionally, increased spending on people and marketing, including salaries and trade fairs, has contributed to the losses. These are calculated costs expected to yield results in subsequent quarters.
Q: Previously, it was mentioned that Parador would achieve APBT break-even at a turnover of around 45 million. Does this still hold true?
A: (CEO) Yes, that statement holds true. In fact, some measures taken may help lower that number slightly.
Q: What is the current debt level at Parador, and is this the peak debt?
A: (CFO) The debt level at Parador is EUR31.9 million. We may need to provide some support from India this year due to first-half losses, but it will not be a large number.
Q: Why have gross margins at Parador decreased both QoQ and YoY?
A: (CEO) At an H1 level, material costs are about the same as last year. However, in Q2, there was a shutdown and inventory buildup, creating a transient operation.
Q: The roofing business revenue is almost flat YoY, but EBITDA seems to have halved. What is happening in the roofing industry?
A: (CEO) There has been pressure on pricing with a 1-2% drop in price realization. Additionally, Q2 was disappointing for the industry, impacting variable costs. Material cost challenges also contributed to margin erosion.
Q: How is the demand and raw material supply trend now compared to earlier?
A: (CEO) PVC prices have stabilized with an upward trend. Cement prices have been soft, providing relief. Fiber pricing is stable, but certain grades remain a challenge.
Q: What is the demand outlook for H2, and how is the international market, especially Parador, performing?
A: (CEO) We are optimistic about H2 demand, expecting government spending to return. Internationally, Parador is focusing on markets beyond Europe, like North America, due to flat market sentiment in Europe.
Q: What are the three key monitorables or milestones for Parador's success?
A: (CEO) The three milestones are achieving volume and revenue growth, EBITDA break-even, and APBT break-even.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
