IFB Industries – Can it Deliver!

IFB Industries Investor presentation notes

• Revenue grew 17% in Q1 FY25 compared to Q1 FY24.
• AC sales were impacted in June ’24 due to supply constraints, otherwise revenue growth would have been higher.
• EBITDA grew 113% in Q1 FY25 compared to Q1 FY24.
• EBITDA margin increased by 312 basis points compared to last year.
• EBITDA growth was driven by an increase in gross contribution and control over fixed expenditures.
• EBT and PAT grew significantly by 1376% and 1377% respectively.
• ROCE increased from 4.62% to 23.34%.

Divisional Highlights

Home Appliances : To increase revenue, the Division continues to expand its presence in the channel networks across India through better extraction and by increasing dealer billing count.

Engineering: Marketing strategy has been revisited to achieve an organic growth of 15%. A separate team has been made for M&A in order to achieve further growth.

Steel: Revenue growth will be achieved by way of improved capacity utilization, which will lead to better overhead absorption.

Motors: New project execution will help to boost revenue growth. Commercial production of BLDC appliances motors will be rolled out from FY 25.

• The debt position has further reduced to Rs.38.43Cr. as of July 31st, 2024.
• Total borrowing is of Rs.47.67Cr. which is primarily in the form of Term Loans.Loans were taken for capital expenditures by different divisions.
• As of June 30, 2024, the company had a positive net cash balance of Rs.282.63 crore after considering its total debts of Rs.47.67 crore.
• This positive balance is due to cash and bank balances of Rs.113.24 crore and investments in mutual funds of Rs.217.06 crore.
• Company has invested Rs.97 crore in its refrigeration subsidiary, IFBRL, to establish a state-of-the-art refrigerator plant in Pune. The plant commenced commercial production in May 2023. There Sales volumes have increases from 9,000 units in Q1 FY24 to 90,000 units in Q1 FY25.
• The company aims to achieve a monthly sales volume of 50,000 units by September-October 2024 and expand its OEM business.

Home Appliance Division

• Challenging market for washers, but growth in air conditioners and refrigerators.
• Focus on reducing material, indirect, and fixed costs.
• Introducing new product lines with advanced features to target high-end segments.
• Growth in order bookings for commercial laundry equipment.
• IFB Points is undergoing a redesign and expansion to 462 stores.
• Q2 and Q3 FY25 focus is to launching and expanding its new “Deep Clean Top Load Range”
• Q2 FY25: Launch of new platform configuration for 15 kg washer, 15 kg dryer, and 30 kg dryer.
• Q4 FY25: Introduction of new designs for 30 kg washer and calendar machines.
• Q1 FY26: Launch of stack configuration machines for laundromats.
• They are exporting into market like UAE, Africa, Russia and Exploring opportunities in Sri Lanka, Maldives, and CIS countries.
• There Air Conditioners have shown positive performance in Q1 FY 25 with sales growth compared to the previous quarter and the same period last year. However, the company is facing challenges in meeting sales targets due to supply chain issues and is working on improving inventory management.

Motor Division

• Production of BLDC motors for washing machines and ACs to start by December 2024.Expected financial improvement from FY26 onwards.Focus on cost reduction and new business opportunities.
• Acquiring new customers and developing new products to achieve a minimum monthly turnover of Rs.8 crore and an EBITDA margin of 10%.
• Expanding product range with the production of engine cooling fan motors for Nexon and blower controllers for FATC (Renault, Mahindra, Tata) by Q4 FY 25.
• Developing advanced BLDC motors for various automotive applications (engine cooling, battery cooling, seat ventilation) with expected implementation by Q2 FY 26.

Steel Division

• Sales for Q1 FY25 fell short of the target due to power outages and raw material delays.
• Production increased in June but also missed the target.
• Fine Blanking operations in Kolkata and Bangalore performed well.