Indo Count Industries:
Q2FY24 Short Notes:
Product Mix:
Company’s product portfolio includes Bedsheets, Fashion, Utility and Institutional Bedding. Company Plans to increase Fashion, Utility and Institutional bedding as a proportion of the sales from 19% in FY 23 to 30%. All these are high Value-added products and will improve the Margin Profile of the company. There is significant opportunity in this segment due to China plus one Strategy as this segment was previously dominated by China.
Geography Mix:
Currently generating 70-75% of the revenues from US. Company plans to reduce this to 60%
Strategy for doing this:
FTAs with Australia and UAE has helped in reaching new customers. Also, we are getting significant inquiries from Latin America and Japan. China plus one is also helping in reaching new geographies. Potential FTAs with UK and EU will be a big boost to achieve this target.
India generated 2.5% of the Total Revenues in FY 2023. Company plans to increase this to 10% and beyond in the next 5 years. Currently, Indian Demography is positive towards consumer products. For this One Aspiration Brand Boutique Living and one Value brand Layers has been launched and company is working on B2C, D2C strategies.
Volume Growth Guidance:
Company has revised the Volume growth Guidance from 85-90 million metres to 90-100 million metres for FY24.Company said due to significant order inflows they are expecting to reach the higher end of the guidance but considering the geopolitical situation they are proving a range.
Capital Allocation Strategy:
Company has completed majority of the Capex in the last 2 years and company has no plans to do capex in the next 3 years and their plan is to enhance the capacity utilization from current 60-62% to 100%. Company’s plan is to reduce debts and make debt free. Company also invests in areas like Solar Plants to reduce the Costs.
Company is having all time High EBIDTA margins in the range of 16-18%. But, all the above efforts will not only help in sustaining the EBITDA Margins but also improve it.
Overall Positive Triggers for the Company:
Company has Significant Volume growth Opportunities.
Operating leverage Advantage due to Capacity Utilization currently at just 62%
Improving Product Mix and Cost Rationalization will help in Stable or Improving EBITDA margins.
PAT Margins will improve non-linearly as interest Cost will reduce due to reduction of debt and Depreciation will reduce as no capex was planned for next 3 years.
Disclosure: Invested and Biased
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