The company had a concall on its Q2 results yesterday,below are a few of the points that I have noted down
a) Demand remains subdued across all geographies. However there is some positive news like better employment data from the US. Quantitative easing from ECB
b) Company is positive on India because of reforms undertaken by the government. Coal reforms to help in the mining sector. The company is also focusing on the agricultural sector
c) The bhuj plant is complete and the company has capitalized 2570 Cr as on 30/9/15. Company will break even at 20-25% of capacity utilization at EBIDTA level
d) Sales volume for the quarter 34333 MTPA, overall guidance for the year below than the last year
e) Gross debt 1900 Cr cash & cash equivalents – 800 Cr, hence net debt is 1200 Cr
f) Imposition of anti dumping duty by Titan on Chinese and Indian players will not effect the company as this will effect the commercial vehicles
g) companies cost of debt works out to less than 2%
h) $-rupee hedge has been done, however the EUR-$ hedge is still open for FY17
i) Gross margins were higher due to lower RM costs. Rubber cost at 95/KG versus 104/KG
j) Company is not facing pricing pressure due to lower RM costs, however company may offer discounts in the future to encourage sales
k) Production at bhuj facility at 7100 MTPA
l) Everyone working with thin inventory due to slow down in demand
m) Growth drivers for the company are as follows 1) OTR segment – 10 billion opportunity company has sales of only 200 million 2) growth in the present market 3) OEM segment 4) India opportunity 5) demand from CIS countries
n) global market share of 4%
o) Markets that are doing well in Europe – Italy, France & Germany. Brazil and Poland are not in good shape. Do not see any recovery in the European market for the next 1-2 quarters
p) EBIDTA per KG Rs 72
If other members have gone through the concall, please share your inputs which I may have not covered.
Regards,
Chetan Chhabria
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