Mr. Abhishek Somany, Jt MD, addr the call.Highlights by Capital Mkt
The Company has delivered decent set of numbers maintaining positive trajectory on Volume growth and market share gain despite seasonally lower Q2 and first half and challenging demand environment. The Company strong Brand has helped to maintain Business momentum.Loss in volumes due to truck strike in late September and an exceptional loss of Rs 3.8 crore pertaining to last year impacted the second quarter earnings. The Company lost out of about Rs 22-23 crore of sale partly on the 29th and on the 30th on non-availability of trucks. The Company has paid Rs 3.83 crore to GAIL India towards one time settlement of ‘Pay for If Not Taken Obligation’ for CY14.Net sales of the Company grew 8.4% YoY to Rs 403.33 crore in Q2FY 2016 and rose 13.2% to Rs. 794.79 crore in H1FY 2016. Q2FY 2016 PBT before Exceptional Item grew by 24% to Rs. 20.28 crore, a margin of 5%. In H1FY 2016, PBT before Exceptional Item grew by 27.3% to Rs. 36.36 crore, a margin of 4.6%.Q2FY 2016 PAT grew marginally to Rs. 10.65 crore and 13.8% to Rs. 21.14 crore for H1FY 2016
The Company gross revenue grew 8% YoY to Rs 419.48 crore in Q2FY16. The revenue mix was Rs 147.54 crore from own manufacturing, Rs 170.73 crore from JVs, and Rs 101.21 crore from outsourcings. For H1FY 2016, gross revenue grew 13% YoY to Rs 827.48 crore, with revenue mix was Rs 294.81 crore from own manufacturing, Rs 337.66 crore from JVs, and Rs 195.01 crore from outsourcings.
Sales mix in Q2FY 2016 was Own manufacturing (35%), JV (41%) and Others (24%) while for H1FY 2016 sales mix was Own manufacturing (36%), JV (41%) and Others (23%)
As on September 30, 2015, the Company total debt stood at Rs 199.60 crore as against Rs 187.76 crore at end of March 2015. Working capital days increased to 43 days for H1FY 2016 from 39 days in FY 2015. Also, leverage ratio stood at 0.73 in H1FY 2016 as against 0.74 in FY 2015.
Operational Performance – The Company tiles business sales volumegrew 5.7% YoY to10.78million square meters (msm) in Q2FY 2016, while it rose 9.7% to 21.49 msm in H1FY 2016. For Q2FY 2016, sales volume mix was 4.6 msm from own manufacturing, 3.88 msm from JVs and 2.30 msm from others. For H1Fy 2016, sales volume mix was 9.13 msm from own manufacturing, 7.82 msm from JVs and 4.54 msm from others.
Capacity Expansion- 1) The Company plans to increase capacity to ~60 msm p.a. by end of Q1FY 2017 from current capacity of ~56 msm p.a.2) Somany Fine Vitrified Private, a subsidiary company expected to commence production of 4.3 msm p.a. of polished vitrified tiles in October 2015. 3)The Company brown field expansion at Kassar plant, Haryana, to produce 4 msm of glazed vitrified tiles is expected to be commissioned in Q1FY17.The Company remainsoptimistic about its future growth prospects in general and building and construction material industry in particular especially in the backdrop of various initiatives being taken by the incumbent government which would fructify in near future.The company remains confident over demand growth for H2FY 2016 on hopes that (i) Pay commission and One Rank One Pension (OROP) are likely to boost demand, (ii) CSR activities of Corporate India will pick up further steam than in the previous year helping overall industry growth, (iii) Exports continue to offer growth opportunities, and (iv) The recent cut in mortgage rates is likely to spur demand for Real Estate benefiting Buildings Material industry immensely.The Company guides tiles industry would benefit in coming quarter after initiation of anti-dumping duty on vitrified tiles by the Ministry of Commerce. Also, Government machinery is moving at a healthy clipping and will improve sentiments and demand prospects for the Buildings Material Industry.
The Company guidesGovernment plans for smart cities, dedicated freight corridor, Swachh Bharat Abhiyan, and housing for all will also bode well for Buildings Material Industry.80 Lakh Toilets built under the Swachh Bharat Abhiyan. Huge sums allocated by Corporate India under CSR. Framework laid for Smart Cities & Make in India programs; to lead to enormous investments and improve the quality of living in India. Relative Strength in Economy has allowed for cut in Interest rates leading to lower Home loan rates in nearly 4 years.
The company guides capex of Rs 100 crore for next 2-years. Of the total capex, the company guides a routine capex of Rs 30 crore and Rs 70 crore for brownfield expansion for FY16 and FY17.The Company trims topline growth of around 15-16% for FY 2016 from earlier guidance of 18-19%.The Company plans to take price hike between second half of December 2015 – January 2016.
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