Went through the Q1 FY 25 Earnings call, here are some notes
Stable demand
Detergents – Moderation during monsoon – picked up after winters – remains robust
Chinese soda ash demand strong during Jan – May
Solar glass/ Lithium carbonate – strong within china, Americas – largely flat
Chinese soda ash operations – slightly reduced due to issues in inner Mongolia, also possible quality issues
Overall demand-supply remains fairly balanced – likely to continue for couple of quarters
During this quarter, commissioned 2.3L Tons of soda ash capacity – this capacity will come on screen in coming months.
Export market
- US market saw sequentially lower volume, slight increase QoQ
- UK, stable volume prices softened
- Kenya – Marginally higher volume and prices sequentially
Capex plans on schedule, Bicarbonate capacity of 70K and Pharmaceutical salt by second half of year in UK
Q&A
- US Peer announces price increase
Domestic market – More clarity when new contracts are booked in Jan. Expected increase 10-20 USD EBITDA per ton
UK – margins to remain similar through the year
Kenya – Slightly higher transportation and shipping costs – expect to normalise
Soda ash demand – Fully sold out – expected to remain fully sold out in future
Capacity expansion of soda ash
70 K is already on screen
Another 70K to come online around Mid Oct
Aggregate capacity after that – 2.9 L Ton capacity
The additional 70K capacity should get fully absorbed during the year and the additional 70K expected to get fully absorbed by Q1 next year, maybe earlier.
Demand outlook
- Europe, muted demand
- Growth in demand from China – be watchful whether that continues – these could be softness in future
- South/ North America – Lithium prices are at bottom – Solar glass, supply is ahead of demand
Soda ash demand continues to be fine, Market conditions seems to have bottomed out and should start improving.
Overall looks balanced upto Q3
Margin expansion reasons
- Energy and material cost have trended down
- US – steady production – maintained efficiency and cost line within control
Working capital increase of 800Cr
- Should normalise during the year
- Generally stock up before monsoon
- 170 Cr – warehouse taken on lease
Forecast for the year
- Even if margins remain flat the capacity expansion should give 400Cr up move in EBIDTA
- If market conditions continue to improve – that will be a bonus
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