Usha q2 fy 24 concall brief notes
q2 fy 24 volumes and revenues were lower because of lower sales of LRPC and wires, (mainly due to monsoon impact) both lower margin segments. Wire ropes segment did well, maintaining sales, but improving margins. Hence overall sales was down, but overall margins were much higher.
Management expects next half to be better in terms of sales from LRPC, Wires segments. Asbolute profits will be higher but blended overall margins could be slightly lower due to higher contribution from these segments.
Capex (first phase) coming on stream from next month and majorly from January when a furnace will become operational, thus improving capacity. Benefits of capex will be seen to small extent in q3 fy 24, much more in q4 fy 24 and fully in FY 25.
Debt is marginally higher because of higher inventory due to expectation of higher business in second half.
Market share gains seen in Europe. The other players in Europe are seeing problems and hence Usha with its cost advantage and product offering is gaining market share. Not looking at acquisition as of now, but if opportunity arises and is very lucrative, will be interested.
Saudi market can be a good market oopportunity for the company. (needs to be seen.)
Dividend payout policy of minimum 25% of profits spelled out. If capex needs are low, dividend can be higher, or some other forms of returns to shareholders can be thought about.
Company has improved cash flows significantly y on y.
These are things I can recollect first hand and struck me as important. Overall company seems to be well placed for FY 25.
disc: invested, added more in recent correction.
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