The latest Rating Update has few useful points:

• Significant improvement in bookings; recent and upcoming launches to drive the momentum: As on September 30, 2023, the company has booked more than 70% of the total revenue potential of ongoing projects. Among ongoing projects, the company has sold more than 80% of area in three projects: Maxx World- Naigaon, Sunteck City-4th Avenue, and 2nd Avenue Pinnacle, Goregaon. It has sold more than 60% area in two projects: Sunteck One World and Sunteck Skypark and close to 40% in the recently launched project: Sunteck Beach Residency- Vasai.

• Strong committed receivable coverage ratio indicating low funding risk and healthy cash flow visibility: The company has achieved substantial booking level in its ongoing project portfolio, which resulted into build up of sizeable- committed receivables. As on September 30, 2023, the company has committed receivables of over ₹2,200 crore, which covers more than 120% of the balance project cost and outstanding debt. Around 10% of committed receivables pertains to completed projects which are due to be received post possession delivery; hence, there is strong cash flow visibility in the near-term. Amongst ongoing projects, three ongoing projects are in advanced stage of completion with over 70% of cost stands incurred, and three projects in the nascent stage of construction with less than 30% of cost incurred. As on September 30, 2023, SRL has incurred close to 60% of project cost, reflecting intermediate stage of execution. While residual execution risk exists, adequacy of committed receivables indicate a low level of funding risks.

Somany Ceramics Q3 FY 24 highlights –

Sales – 612 vs 622 cr

EBITDA – 59 vs 41 cr ( Margins @ 10 vs 7 pc – sharp margin recovery despite sub-optimal capacity utilisation – down from 91 to 82 pc )

PAT – 23 vs 11 cr ( jump in PAT is due to due margin recovery )

Company successfully commissioned a large format tiles / slab plant in Q3

Looking ahead – company is confident of demand recovery as Tiles are consumed towards the end of any project’s construction cycle. A lot of projects went live wef 2022, 23 – should now be nearing completion

Sanitary and Bathware sales @ 65 vs 60 cr. Adhesives sales @ 15 vs 9 cr

For 9M ending Dec 23, Sanitary and Bathware sales @ 187 vs 170 cr. Adhesives sales @ 41 vs 22 cr

Invested aprox 4 cr to set up a solar power plant at the Haryana facility to bring down the power costs in the long run

Spending 70-80 cr/ yr on advertising. Added 300 new dealers this yr

Aim to grow at rates 5-6 pc higher than Industry levels in FY 25

Capex for next yr only at 15-20 cr for Nepal plant

Company’s exports are aprox 3 pc of sales

Company has expanded its total capacity by aprox 25 pc in last 24 odd months vs under 20 pc capacity expansion for the Industry leader ( Kajaria ). Somany shall announce further capex only after 12-18 months from now

In Jan, the company has grown in mid single digits (unlike Q3). Same or better trend should continue in Q4. Margins are likely to be at or above 10 pc at EBITDA levels in Q4 as well

Disc: holding, inclined to add more at CMP, biased, not SEBI registered

Q3 FY24 Concall Notes:

RETAILER SHAKTI QUARTERLY INVOICE DATA – 11K RETAILER, 1.33L AVG QTRLY INVOICE
Q2 FY24 – 9684, 1.27L

PURE B2B BUSINESS SO GROSS MARGINS ARE LOWER BUT OPERATIONAL COSTS ARE LOWER COMPARED TO HEALTHBUDDY BIZ. IS OPERATIONALLY PROFITABLE IN CALCUTTA, NOT IN OTHER REGIONS BECAUSE TECH COSTS AND BUSINESS DEVELOPMENTS COSTS. OPERATIONAL LEVERAGE IS YET TO PLAY OUT.

E-PHARMACY BUSINESS IS FACING CONSUMER SENTIMENT ISSUE BECAUSE DISCOUNT IS MOVING AWAY SINCE BUSINESSES ARE FOCUSING ON SUSTAINABILITY AND THUS REVENUE IS TAKING HIT BECAUSE OF PEOPLE ORDERING LESS BECAUSE OF LOWER DISCOUNTS.

DIAGNOSTIC BUSINESS: THIS BUSINESS WAS STARTED FOR OUR HEALTH BUDDIES TO TAKE ADVANTAGE OF B2C PRESENCE BUT GIVEN SASTASUNDR ACCQUISITION BY HEALTH+ THEY CAN’T MOVE FORWARD WITH THIS. SO THEY’RE DESIGNING A NEW STRATEGY ON THIS FRONT. WILL HAVE SOME UPDATES FOR THE DIAGNOSTIC BUSINESS IN THE NEXT FEW MONTHS.

10% BLENDED GM NOT POSSIBLE FOR NEXT 2-3 QTRS BUT FOR A 2 YEAR HORIZON THE GM WILL BE 10%. EXPECTING INCREASE IN PROCUREMENT MARGIN BY 3-4% OVER THE LONG TERM DUE TO HIGHER VOLUME OFF-TAKE IN RETAILER SHAKTI.

EXPECT OPERATIONAL COSTS TO STABILISE AFTER THE MARCH QTR AND WILL NOT GROW AT LEVELS OF REVENUE GROWTH

APPLYING PREDECTIVE ANALYSIS TO INCREASE WALLET SHARE OF THE RETAILER BY PROVIDING THEM ADDITIONAL OFFERS RELEVANT TO THEM, PASS ON ADDITIONAL BENEFITS.

RETAILER SHAKTI BUSINESS: ORDERS ARE FULFILLED ONLY AGAINST ADVANCE PAYMENT/COD MODEL, SO NO CREDIT MODEL YET RETAILERS CONTINUE TO STICK TO THEM INSTEAD OF COMPLETE BIZ FROM UNORGANISED DISTRIBUTORS WHERE CREDIT IS PROVIDED, SO WE SEE DROPOUTS BUT RETAILERS THEN COME BACK TO US BECAUSE OF OUR TRANSPARENCY AND PRICING MODEL. LOTS OF CASES WHERE AFTER FEW MONTHS RETAILERS COME BACK. LARGE RETAILERS DO GET CREDIT FROM US WHO HAVE MULTIPLE STORES, IN DISCUSSIONS WITH FINTECHS AND BANKS FOR FINANCING CREDIT TO THE RETAILERS WHERE RISK LIES WITH THE FINANCIAL ENTITY AND NOT WITH US.

THERE IS SOME INCENTIVE RELATED TO VOLUMES FOR RETAILERS AND OFFERS QUOTED TO THEM FOR MONTHLY QUOTAS

WC TO STAY AT 10% OF REVENUE

OPERATIONAL LEVERAGE WILL PLAY OUT WITH INCREASING VOLUMES EVEN WITH SIMILAR GROSS MARGIN PROFILE

TARGETING 15K RETAILERS ON THE RS PLATFORM BY THE END OF THIS QTR.

EXISTING WAREHOUSES(7) ARE SUFFICIENT TO TAKE CARE OF GROWTH FOR NEXT 1-2 YEARS

OUR SHARE IN RETAILER’S TOTAL SUPPLY IS VERY MINISCULE ESPECIALLY FOR MOM AND POP STORES

NO PLANS FOR OUR OWN OFFLINE PRESENCE, FOCUS IS ON RETAILER SHAKTI FOR NOW

IN PROCESS FOR COSTS CUTDOWN IN THE HEALTHBUDDY SUPPLYCHAIN BUSINESS BECAUSE OF LOWER SHORT-TERM EXPECTATIONS FROM THIS BUSINESS, SO EBITDA NUMBER NEXT YEAR WILL BE DEFINITELY HIGHER

CASH IS PRESENT IN SUBSIDIARY COMPANIES AND CORPORATE SIMPLIFICATION WILL LEAD TO CASH COMING BACK TO HOLDING COMPANY ONLY THEN FURTHER INSTRUCTIONS CAN BE GIVEN ON CASH UTILISATION

See Lot Of Growth Potential In India: IndiGo CEO Pieter Elbers | CNBC TV18

CEO Pieter Elbers said, “We have a projection for planes to be delivered well into the next decade. We expect to have deliveries of one plane every week”

Some other updates which are related:
Jet Fuel (ATF) price cut to ₹1.00 lk/kL from ₹1.01 lk/kL in Delhi

Order inflow has been very low in the 3rd quarter. No inflow in January as well. Will this continue for next 5 months, till elections are over?