VBL Concall Q2-CY23
Disc: no reco to buy or sell.
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Consol revenue grew by 13% due to growth in international market.
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New lines for Greenfield are now commercialised along with debottlenecking at various plants. The new facilities in juice and dairy products, along with the upcoming facility in DRC, are expected to be fully operational before the season next year.
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Remain optimistic about full year performance even after low demand in H1-CY23 due to non seasonal rains
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Gross margins improved due to softening of PET chip prices
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Working capital days have increased to 21 days as on Jun 30, 2023 from 17 days as on Jun 30, 2022 due to untimely rains
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Out of 3 plants; one will be commissioned by Dec. Capex in India will be around 1900cr for CY23 & 400cr in DRC for CY23. Capex will be 2400cr to 2500cr for CY24.
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The peak debt will be around 3600cr to 3800cr for the company.
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Energy drink journey is continuing at same pace; won’t share the specific numbers.
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Margins could further increase by 50bps but it also depends on the PET chip price; in Q2 this price has came down bcz of which gross margins improved; overall EBITDA margins for full year will be around 21 to 22%. Can do better if commodity prices remains at same level or goes down further
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In Zimbabwe company is gaining market share from other players.
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This qtr growth in India volume is very low due to rains;
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Even with disruption company is doing well and will do the same in future. Key growth drivers are energy drink, tropicnaca, gatorade, and sugar free products like Pepsi Black.
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The asset turn on the new capex will be around 1.8 to 1.9x.
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Test markets are done for new products and get the feedback on the basis of that the company will launch new products. The new products are normally 1 or 2 new products at a time; there are thousands of products of PepsiCo; In India we are just touching the surface currently as every market has different capabilities.
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South Africa looks like a very big market after India; it is a large market with around billion case. VBL has created a subsidiary company, company is looking very seriously over there.
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Dairy based products has around 6 months shelf life; distribution can be done from same setup of carbonated drinks. Nothing extra to be done for these products. Realisation for dairy products is higher as compared to current realisations.
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Drink, dairy and juices will be the next leg of growth for the company and management is very confident to grow this segments. They just need the plant to be commercialise all other things like distribution and other infra is already in place.
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Currently Pepsi is very weak in the South Africa, VBL is currently looking at the market, it is at very early stage; nothing is finalised yet.
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During Q2 it was peak season for North which has been completely washed out; growth came from Southern market for India.
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In long term VBL is targeting to get 25% of its bottles as PET recycled bottles. Company has just started using it, in this qtr it is only 0.5%
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On campa cola competition, it is too early to say on it as management doesn’t know about their plans.
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