- Strong volume growth in both Crop Protection and Pigment segments in Q1 FY25
- Revenue remained flat at INR 411 crore, EBITDA increased by 194% YoY and 40% QoQ to INR 14 crore
- Profitability impacted by lower product price realization across markets
- Management expects price improvement and demand recovery to enhance profitability going forward
- Crop Protection segment revenue was INR 272 crore, EBITDA of INR 11.3 crore with 73% capacity utilization
- Pigment segment revenue was INR 138 crore, EBITDA of INR 9.4 crore with 45% capacity utilization
- Management is optimistic about regaining normal double-digit growth trajectory
- Focus on new product launches in Crop Nutrition segment to provide comprehensive solutions for farmers
- Inventory levels have become reasonable across most products after a period of destocking
- Received Responsible Care Accreditation for Crop Protection segment and Committed Badge from EcoVadis for sustainability efforts
- Launched 8 new products in Crop Nutrition segment during the quarter
- Demand recovery seen across both Crop Protection and Pigment segments
- Gradual price improvement expected going forward
- Focus on new product introductions and improving capacity utilization
- Headwinds: Lower product price realizations, volatile raw material prices
- Tailwinds: Improving demand, potential antidumping duty on Titanium Dioxide from China
- Launched 8 new products in Crop Nutrition segment
- Titanium Dioxide plant in Phase 1 running at 35% capacity utilization, expected to reach 70% in H2 FY25
- Nano Urea plant expected to run at 35-40% capacity utilization in the first year
- Potential antidumping duty on Titanium Dioxide imports from China expected in Q3 FY25
- Targeting 20% revenue growth this year and next year
- Expecting EBITDA margin of around 15% in the next financial year
- Confident about regaining normal double-digit growth trajectory
- Expect profitability to improve from Q2 onwards
- Focus on sweating the current asset base before considering further capacity expansions
- Debt reduction is a priority, targeting significant reduction in the next 2 years
- Question on demand recovery and pricing trends:
- Demand has started improving across both Crop Protection and Pigment segments, not just in one market. This is due to destocking of high inventories and improving market conditions.
- They expect gradual price improvement going forward as the demand picks up.
- Question on Brazil market and monsoon impact:
- Inventory levels have become reasonable in most products, and they expect good demand from Brazil due to the positive monsoon forecast.
- Question on product pricing:
- Prices have been at the bottom level but expect improvement as demand recovers, as the current pricing is not sustainable.
- Question on China behavior and freight challenges:
- Chinese prices are already at rock bottom levels and cannot go down further. They expect the freight challenges to normalize from Q3 onwards.
- Question on new product launches and their contribution:
*Launched 8 new products in the Crop Nutrition segment, which are relatively high-value and have better profitability. These new products will be a key focus area going forward. - Question on Pigment segment performance and capacity utilization:
- Focusing more on profitability rather than aggressive capacity utilization in the Pigment segment. They expect capacity utilization to improve gradually but not drastically.
- Question on Titanium Dioxide facility and its economics:
- Provided details on the Phase 1 capacity, revenue potential, and the expected 20% margins once the facility reaches 70% utilization, along with the potential benefit of the antidumping duty.
- Question on Nano Urea segment’s profitability and utilization:
- Expect 15-17% margins on Nano Urea and the plant is designed to be profitable even at 30-40% utilization in the initial years.
- Question on capital allocation and return thresholds:
- Typically target an IRR of 18-20% for new projects, but the dynamics have changed, and they are now more focused on sweating the existing assets before considering further expansions.
- Question on revenue and EBITDA guidance:
- Guided for 20% revenue growth this year and next year, and an EBITDA margin of around 15% in the next financial year.
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