AYM Syntex (was Welspun Syntex)

AYM Snntex highlights from the latest credit rating report. India Ratings and Research: Most Respected Credit Rating and Research Agency India

Ind-Ra has affirmed Long Term Rating at ‘IND A’ with a stable outlook.

• AYM’s revenue increased 14% yoy to INR7,811 million in 1HFY23 (FY22: INR14,915 million; FY21: INR9,474 million; FY20: INR10,280 million), backed by an 8.7% yoy rise in the volumes and an increase in the blended realisation.

• the company’s EBITDA declined 30.5% yoy to INR517 million in 1HFY23 (FY22: INR1,617 million; FY21: INR914 million; FY20: INR943 million; FY19: INR716 million), mainly due to the higher raw material cost.

• In 1FHY23 , AYM recorded total sales volume of around 32,683 metric tonnes (mt; 1HFY22: 30,052mt ; FY22: 63,031mt; FY21: 50,031mt; FY20: 55,862mt).

• The share of exports in the revenue increased to 47% in 1HFY23 (FY22: 45%; FY21: 42% ). Ind-Ra believes the export demand to continue to be strong over the medium term, amid improved availability of containers and moderating shipping and freight costs.

• AYM’s sales book is largely order backed and the management stated that it typically maintains a two-to-three-month order book in strategic segments, thereby providing near-term revenue visibility.

• Company’s overall debt level, including accepted letters of credit (LC), decreased to INR3,763 million in 9MFY23 (FY22: INR4,040 million.

• Capex

  • AYM plans to incur discretionary capex largely in the strategic segments of INR700 million in FY23 . The company had incurred INR600 million for capex as of 1HFY23 (including maintenance capex). The capex would largely be funded by debt and the balance through internal accruals. The management expects the project to become operational in FY24-FY25 as only the required machinery is to be imported.

  • Over FY24-FY25 , AYM plans to incur additional capex of around INR750 million to enhance the capacity further including maintenance capex.

• AYM plans to move into forward integration. The government has approved Production Linked Incentive (PLI) Scheme for the company but the project is at a nascent stage. The company plans to set up a fabric manufacturing plant, where the end-product will be niche activewear . The management expects the project to start in 1QFY24 and will have a gestation period of 18-24 months .

• The company’s key export destinations include Australia and New Zealand, which account for roughly 23% of the overall exports, followed by the European Union, the US and the UK.