Read Q4FY23 conference call and heard Q1FY24 conference call. Here is my understanding:
Management is neither shy to share the tough news (say margin pressure in the short term, inventory losses etc.) nor hesitant to share its forward outlook about the business. I wish every management’s communication was so transparent to the minority shareholders.
Sales will increase ~20% in FY24, but profitability will be down [EBITDA by 15~20% and PAT by 30~40%] due to below factors:
- Nitrile latex sales would be ~20% of overall sales and margin contribution would be almost NIL.
- Continuation of inventory losses: Q1FY24 results confirmed that inventory losses,which were assumed to be over in Q4FY23, are still continuing due to immense correction in raw material price.
- Increase in interest and depreciation expenses compared to the last year due to capitalization of the recent capex.
Disc: No position.
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