UPDATES
- Revenue growth of 11.66% year-on-year in Q2. MDF segment saw revenue growth of 17.8%, while plywood revenue saw degrowth of 16.6%, although volumes were subdued.
- MDF gross margins improved by 205 basis points.
- PAT is up by 8.05% year-on-year to INR 72.46 crore
- Made advance payments of INR 30.5 crore during Q2 against expansion project.
- For FY2023, we are guiding for 12% volume growth for MDF in the domestic markets, although export volumes are expected to be flat.
- Long-term sustainable margins will be around 27% to 28%.
- Management is looking to increase in marketing expenditure from 1% to 2.25%.
- Exports will be a challenge due to multiple reasons – one of them being replacement of China by Vietnam and Indonesia as furniture exporters to the U.S. and Europe ence in the landed cost of the imports versus the domestic realization. – 8 to 10% cheaper to import
- Difference in the landed cost of the imports versus the domestic realization. – 8 to 10% cheaper to import
- Don’t see any further inflation in raw material prices. Margins should be maintained from the current level
- Topline target between INR 1,900 crore to INR 1,950 crore (mgmnt had guided 2000 earlier)
- At present, domestic capacity in general for whole India is around 2.3 million cubic whereas demand 1.9 million cubic. The trend will continue as more players are putting capacities – despite this management seems confident to maintain margins
- Will be investing approximately INR 600 crore over the next 18 to 20 months on the expansion projects. Will not be having any surplus cash flows up to FY24.
- Currently exploring other business opportunities, but they are at a very infancy stage.
- Management mentions that expiration of anti dumping duty is challenging along the coastal areas BUT not inwards due to freight costs.
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Comment on future margins as compared to competitors: Rushil’s margins are closer to us and Rushil’s margins will be lower due to a mix of lower pricing and lower capacity utilization.
- Winding up of the Wholly Owned Subsidiary; M/s. Greenpanel Singapore Pte. Ltd.
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