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Himatsingka Seide Limited Q1 FY '25 Earnings Call Summary
Earnings Call Overview • Date: August 6, 2024 • Submitted transcript to BSE and NSE on August 12, 2024 • Participants: Senior management including Executive Vice Chairman Shrikant Himatsingka
Operating Performance • Capacity Utilization: • Spinning: 99% • Sheeting: 66% • Terry: 67% • Gross Debt: Stable at Rs. 2,794 crores • Management's Outlook: Optimistic about increasing capacity utilization to over 90% in 12-18 months
Brand Expansion • Focus on Indian Market with Three Brands: • Himêya • Atmosphere • Liv (newly launched, competitive pricing) • Revenue Target: Rs. 1,000 crores over five years with EBITDA margins of 18% to 20%
EBITDA Margins • Current Margins: Stable between 20% and 22% • Factors Affecting Margins: Product mix and raw material costs
Asset-Light Strategy • Leverage existing distribution networks without significant capital investment • Working capital management: Plans to improve efficiency in debtors and inventory
Future Funding • Exploring various instruments for capital raising to support growth
Market Demand Insights • US Market: Stable, with focus on expanding in EU, UK, India, and Asia Pacific • Growth Opportunities: Potential 5% to 10% incremental share in FY '24
Competitive Landscape • Challenges in Pakistan and China may create opportunities for the company
Interest Costs and Working Capital • Ongoing efforts to reduce interest costs and strengthen the balance sheet
Conclusion • Call concluded with an invitation for further inquiries for detailed insights.
Himatsingka Seide Limited Conference Call Summary
Compliance and Submission • Transcript submitted to BSE and NSE on May 31, 2024. • Conference call held on May 24, 2024, with senior management.
Operating Performance • Stable performance for FY '24 due to: • Stable demand • High capacity utilization • Softening raw material costs • Spinning plant at full capacity; sheeting and terry plants at 67% utilization.
Revenue Goals • Targeting INR 1,000 crores in revenue from India over the next five years. • Launch of the HIMEYA brand to support revenue growth.
Recognition and Financials • Recognized for export achievements and certified as a Great Workplace. • Consolidated net debt decreased to INR 2,634 crores. • Management optimistic about future revenue growth.
Growth Outlook • Focus on achieving full capacity utilization within 18 to 24 months. • Stable operating performance and healthy EBITDA margins. • Growth reliant on enhancing market share and client mix.
Demand and Market Dynamics • Demand remains stable but cautious in major markets. • Brand demand dynamics similar to private labels. • Ongoing efforts to optimize brand costs.
Working Capital and Debt Management • Need for improvement in working capital acknowledged. • Focus on reducing working capital days to decrease debt over time. • Commitment to enhancing product quality and manufacturing flexibility.
Future Plans • Aim to return to growth and strengthen equity. • Plans to raise equity within the fiscal year to improve debt profile. • Targeting net debt to EBITDA ratio below 3.5x and debt service coverage ratio of 1.8x to 2.2x. • Acknowledged loss of market share with Bed Bath & Beyond, but inventory issues resolved. • No significant capital expenditures planned beyond maintenance and organic needs.
Himatsingka Seide Limited Q3 FY '24 Earnings Conference Call Summary
Submission Details • Date of submission: February 9, 2024 • Regulatory compliance: Submitted transcript to BSE and NSE as per SEBI regulations • Call date: February 5, 2024 • Key executives present: • Shrikant Himatsingka (Executive Vice Chairman) • Sankaranarayanan M. (CFO) • Shilpa Shanbhag (VP)
Company Performance Overview • Improved capacity utilization and stable raw material costs • Better operating margins year-on-year • Focus on expanding client base and market presence, especially in India
Q&A Highlights • Revenue Trends and Utilization Rates • Analysts inquired about revenue trends and utilization rates • Fundraising Purpose • Proposed INR 400 crore fundraising through QIP aimed at deleveraging • Himeya Brand Launch • Expected to maintain stable EBITDA margins (18% to 22%)
Financial Insights • EBITDA Margins • Stable margins historically between 18% and 22% • Confidence in maintaining these levels • Debt Management • Current leverage levels slightly lower than the previous year • Prioritizing deleveraging to improve financial health • Raw Material Prices • Stability in cotton prices, with selective procurement based on favorable prices • Acknowledgment of inherent volatility in commodity prices
Brand Performance • Atmosphere Brand • Generates around INR 20-25 crores annually • Recognized as a luxury brand
Analyst Inquiries • Impact of Rising RM Costs • A 1% increase in RM costs could reduce EBITDA by 20-25 basis points • Inventory Holding Period • Typical inventory holding period for cotton is around three months • Debt Situation • Average cost of debt estimated at 8-10% • Revenue Guidance and Capex Plans • No revenue guidance provided; capex plans limited to maintenance needs
Conclusion • Call concluded with an invitation for further inquiries.
Himatsingka Seide Limited Q2 FY2024 Earnings Conference Call Summary
Submission Details • Date of submission: November 13, 2023 • Conference call date: November 8, 2023 • Compliance: Submitted transcript to BSE and NSE as per SEBI regulations
Management Insights • Key Participants: Executive Vice Chairman Shrikant Himatsingka • Performance Highlights: • Improved year-on-year operating performance • 99% capacity utilization in spinning; 67% in sheeting and terry towel divisions • Launch of Himêya brand targeting ₹1,000 Crores in revenue over five years
Financial Overview • Net Debt: Stable at ₹2,579 Crores; focus on reducing debt by ₹100-200 Crores annually • Trade Receivables: Increased from 18-20 days pre-COVID to 91 days in FY2023 • Other Expenses: Rose by 32% year-on-year; further details to be provided offline
Brand Strategy • Himêya Brand: Aimed at broad audience across various price points with minimal investment • Market Approach: Focus on balanced revenue streams and improved brand visibility
Market Outlook • Demand Stability: Current demand in key markets (US, Europe, GCC) is stable • Future Utilization: Aiming for high utilization levels sooner than projected three years
Cotton Prices and Margins • Impact on Margins: Rising cotton prices can squeeze margins; falling prices may enhance EBITDA margins • Pricing Power: Strategy to diversify markets and focus on innovation to improve pricing power
Client and Revenue Insights • Client Additions: Significant growth, especially in the terry towel division • Revenue Expectations: New brand expected to generate revenue above current levels
Conclusion • Debt Repayment Plans: Gradual approach over the next three years; no immediate plans for further equity raising • Stakeholder Engagement: Invitation for additional queries from stakeholders
Himatsingka Seide Limited Q1 FY2024 Earnings Conference Call Summary
Submission Details • Date of submission: August 17, 2023 • Conference call date: August 11, 2023 • Compliance with SEBI regulations
Key Highlights • Improved capacity utilization across divisions • Stable demand environment • Reduction in net debt from Rs. 2797 Crores to Rs. 2512 Crores year-over-year • Cautious approach to capital expenditure • Strong EBITDA margins with potential fluctuations based on product mix • Focus on enhancing market share and deleveraging efforts
Margin Profile and Financial Outlook • Operating margin expected to remain between 18% to 22% • Recent increases in interest expenses due to general rate hikes • Cotton prices have stabilized; inventory held for a couple of months • Focus on deleveraging rather than prepayment of debt
Utilization and Capacity • Current utilization levels: Sheeting at 66%, Terry Towels at 67% • Plans to enhance utilization and consolidate operations • Capital expenditure proposals on hold due to sufficient capacity
Product and Market Strategy • Strategy to expand presence across retail formats and product portfolio • Positive traction in European markets • "China plus one" strategy to attract new clients
Working Capital and Revenue Segmentation • Ongoing efforts to improve working capital cycle • No specific segment margins or revenue breakdowns disclosed • Capex plans for expanding capacities on hold, focusing on maintenance
Operational Performance • Better traction in bed sheet production compared to towels in Q1 • Commitment to deleveraging and improving working capital cycles • Not exiting outsourcing completely, but reducing certain categories
Conclusion • Anticipated improvements in margins from in-house manufacturing, though not substantial • Call concluded with thanks to participants and invitation for further questions.
Himatsingka Seide Limited Q4 and FY '23 Earnings Conference Call Summary
Submission Details • Date of submission: June 6, 2023 • Earnings call date: May 31, 2023 • Compliance with SEBI regulations
Management Insights • CEO Shrikant Himatsingka's Update: • Improved operating performance due to: • Better capacity utilization • Lower raw material prices • Reduced energy costs • Q4 capacity utilization: • Spinning: 98% • Sheeting: 61% • Terry Towels: 65%
Financial Performance • Revenue: • Q4: INR 424 crores (down from INR 548 crores YoY) • FY '23: INR 1,713 crores (down from INR 2,260 crores in FY '22) • Debt Management: • Raised INR 560 crores from the International Finance Corporation • Reduced net debt to INR 2,587 crores
Future Outlook • Anticipated improvements in demand and operational efficiency for FY '24
Q&A Highlights • Cotton Sourcing: • Fluctuating sourcing mix; benefits expected from lower cotton prices • Logistics and Energy Costs: • Significant decrease in supply chain costs; energy costs softened • Sales Fluctuations: • Seasonal fluctuations explained for Q3 to Q4 sales decline • Margin and Capital Concerns: • Optimism about returning to historical EBITDA margins (18-21%) • High debt levels and potential equity dilution discussed
Capacity and Demand • Capacity Expansions: • Completed before COVID-19; recovery in performance metrics noted • Market Demand: • Reasonable improvement in demand; proactive market share expansion • Opportunities from "China plus one" strategy
Raw Material and Financial Costs • Cotton Prices: • Slight softening in Indian cotton prices; stable outlook • Finance Costs: • Significant reduction in finance costs attributed to resumed interest subsidies
Competition and Trade Agreements • Competition: • Shift in inquiries and orders from Pakistan to India • Free Trade Agreements (FTAs): • Potential for incremental business opportunities despite price concession requests
Revenue and Interest Projections • Revenue Targets: • Focus on maintaining quarterly run rate in INR 700 to 750 crores • Interest Costs: • Projected future costs around INR 65 to 70 crores per quarter
Conclusion • Call concluded with an invitation for further questions and appreciation for participant engagement.
Himatsingka Seide Limited Q3 FY2023 Earnings Conference Call Summary
Submission Details • Date of submission: February 16, 2023 • Conference call date: February 13, 2023 • Compliance with SEBI regulations
Key Management Participants • Shrikant Himatsingka (Managing Director) • K.P. Rangaraj (CFO)
Performance Highlights • Improved capacity utilization: • Terry Towel: 65% • Sheeting: 58% • Spinning: 90% • Consolidated total income: Rs. 750.04 Crores (down 5.4% YoY) • PAT: Rs. 2.2 Crores (decline noted) • Optimism for future improvements in capacity utilization and market conditions
Q&A Session Insights • Order Bookings: • Increase in orders in Q3 compared to Q2 • Future performance dependent on inflation cooling in cotton, energy, and supply chain costs
• Interest Costs: • Rising interest costs attributed to phased-out subsidies and increasing rates • New subsidies expected to alleviate cost pressures
• Margin Improvements: • Attributed to increased revenues and reduced raw material/energy costs • Signs of stability and incremental improvements noted
• Performance Normalization: • Need for further reductions in cotton prices, energy costs, and supply chain expenses • Only two quarters of performance challenges due to inflation
• Subsidies and Working Capital: • Gross debt reduced from Rs. 2977 Crores to Rs. 2766 Crores • Phasing in and out of government subsidies discussed
• Inventory and Demand Outlook: • Record revenues in FY2022, challenges in FY2023 due to inflation • Optimism for revenue normalization aided by new terry division
• Pricing Power: • Difficulty in passing on price increases due to raw material cost volatility
• Post-COVID Demand: • Surge in pandemic demand unlikely to return • Future growth reliant on market and client expansion
• Textile Industry State: • Sufficient capacity but limited new additions due to entry barriers • Medium-term strength in the industry anticipated
• U.S. Market Demand: • Signs of improvement attributed to inventory corrections • Competitive intensity stabilizing
• Utilization Levels: • Higher utilization rates could significantly boost revenues • Sufficient cash flow to meet debt obligations confirmed
• Market Share Potential: • India may gain from challenges faced by suppliers in Pakistan and Turkey • Market share shifts will take time
• Retailer Strategies: • U.S. retailers adopting lean inventory strategies amidst store closures • Gradual demand recovery expected driven by market expansion and improved margins
Conclusion • Shrikant Himatsingka expressed gratitude for participant engagement and invited further questions.