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Conference Call Details • Date: May 21, 2024 • Submission Date: May 27, 2024 • Moderated by: Miraj Shah (Arihant Capital) • Key Management Present: • CFO Alex Varghese • Vice President Dhananjay Mirlay Srinivas
Financial Highlights • Record Annual Revenue: INR 4,828 crores (20% increase) • Net Profit: INR 81 crores (29% increase) • Key Growth Drivers: • Expansion of value-added steel products • Increase in non-steel offerings • Strong performance from Fotia Ceramica • Improved Margins: Reduction in net debt • Demerger in Progress: Aimed at enhancing shareholder value • Future Revenue Target: INR 10,000 crores by FY '28/'29 with a CAGR of 20-30%
Margin and Growth Projections • Expected EBITDA Margin for FY '25: • Marketplace: 3.5% to 3.75% • Consolidated: 3.3% to 3.5% • Retail Margins: Improved to 6.4%, expected to sustain at 6% to 6.5% • Growth Projections: • Steel Revenue: CAGR of 20% to 25% • Non-Steel Revenue: CAGR of 30% to 35% • EBITDA Margins: Steel (2% to 3%), Non-Steel (6% to 6.5%)
Manufacturing and Asset Management • Capacity Utilization: Currently at 50%, with no additional capital expenditure required • Warehouse Ownership: Most warehouses owned, serving the manufacturing division • Focus on Value-Added Products: Enhancing product offerings and direct sales
Business Model and Competition • Marketplace Structure: Operates with physical stores and brand relationships • Working Capital Model: Credit-based, with inventory and receivables averaging 30-40 days • Sales Cycle: Average of 30 days, with 55% retail and 45% project/wholesale
Future Expansion Plans • Geographic Expansion: Plans to grow in Eastern and Northern India after consolidating in Southern and Western regions • Manufacturing Capabilities: Potential for brownfield expansion and contract manufacturing
Conclusion • Closing Remarks: Dhananjay M. Srinivas thanked participants and expressed optimism for future growth. • Contact Information: Provided for CFO Alex Varghese and company offices.
Q3 FY24 Earnings Conference Call Summary - Shankara Building Products Limited
Call Overview • Date: February 14, 2024 • Moderated by: Miraj M Shah, Arihant Capital • Key Management Participants: • C Ravikumar (Executive Director) • Alex Varghese (CFO) • Dhananjay Mirlay Srinivas (Vice President) • Giridhar Parthasarathy (Manager Finance) • Format: Listen-only mode until Q&A session
Company Performance • Revenue Growth: • 22% year-on-year growth for first nine months of FY24 • Non-steel revenues increased by nearly 35% • Financial Metrics: • EBITDA margin: 3.4% for the quarter • Net profit increase: 31% year-on-year • Challenges: • Rising inflation and flooding affecting operations
Strategic Developments • Demerger: • Aimed at enhancing operational efficiency and focusing on value-added products • Approval from NCLT expected within 8 to 10 months • Product Expansion: • Focus on tiles and sanitaryware • Plans to open 2-3 new stores annually
Market Insights • Retail Segment: • Margins dropped to 5.4% year-to-date from pre-pandemic levels of 8-9% • Sales growth driven by price realization rather than volume • Future Growth: • Targeting 25-30% growth by capturing market share from smaller competitors • Projected future mix: 55% retail and 45% non-retail
Operational Strategies • Manufacturing Capacity: • Current utilization at 40%, aiming for maximum utilization within 3-4 years • Focus on improving operational efficiencies post-demerger • Inventory Management: • Improvements expected to enhance working capital cycles
Financial Projections • Growth Targets: • Annual growth target of 20% to 25% at the EBITDA level • Non-steel vertical expected to grow at 40%, steel at 20% • Contribution Margins: • Fotia Ceramica gross margins around 12% to 15%
Conclusion • Management expressed confidence in achieving growth targets and improving margins while navigating industry challenges. The call concluded with acknowledgments from participants.
Conference Call Overview • Date: December 19, 2023 • Moderators: Key management personnel including Managing Director Sukumar Srinivas. • Purpose: Update on the company's demerger and corporate services.
Demerger Announcement • Demerger Details: • Separation of building materials marketplace from manufacturing business. • New entity: Shankara BuildPro Limited. • Focus on optimizing operations and enhancing competitiveness. • Shareholder Impact: • Shareholders will receive shares in the new entity. • Expected to simplify business structure and improve profit margins.
Management Insights • Operational Focus: • Plans to expand non-steel product offerings. • Aim for 4% EBITDA margin in marketplace by FY25 and 5% by FY27. • Growth Projections: • Targeting revenue growth of 20% to 25%. • Maintaining previous CAGR targets while improving margins.
Clarifications and Concerns • Business Separation: • Sukumar Srinivas to mentor both teams; Dhananjay to manage marketplace. • Competition and Market Strategy: • Plans to expand nationally and diversify customer base. • Current production sold through marketplace is 80%, expected to decrease.
Financial Metrics • Capital Employed: • Manufacturing capital at INR 400 crores with RoCE of 4-5%. • Marketplace projected RoCE over 30%. • Revenue Sources: • Approximately 60% from end consumers. • Low debt-equity ratio of 0.2 to 0.4.
Future Plans and Developments • Utilization Levels: • Competitors operate at 25-30% capacity; exploring optimization. • Sales Growth: • Estimated same-store sales growth (SSSG) around 25%. • Revenue growth rates: 20% for manufacturing, 67% for marketplace last year.
Additional Insights • Private Labels: • Gross profit margin of 12% to 15% for private labels. • Store Expansion: • Cautious about new store openings; plans to add 3-4 locations next year. • Market Position: • Fragmented market with many players; potential symbiotic relationship with APL Apollo's SG MART model.
Conclusion • The call concluded with no further questions, emphasizing the company's commitment to growth and operational improvement post-demerger.
Submission Details • Date: November 16, 2023 • Enclosed: Transcripts of Q2 and H1 FY2024 earnings conference call (held on November 10, 2023) • Key Personnel: • CFO: Mr. Alex Varghese • Vice President: Mr. Dhananjay Srinivas • Manager: Mr. Giridhar Parthasarathy • Moderator: Mr. Vatsal Vinchhi (Choice Equity Broking)
Company Performance Highlights • Revenue Growth: • 31% year-on-year increase to Rs. 2,275 Crores for H1 FY2024 • EBITDA Growth: • 26% increase to Rs. 71 Crores • Segment Performance: • Retail segment: 27% growth • Channel and enterprise business: 36% growth • Strategic Initiatives: • Expansion of fulfillment centers • Focus on non-steel product offerings, including Fotia Ceramica • Technology leverage for customer engagement • Target to increase non-steel business contribution to 25% in 4-5 years
Q&A Session Insights • Cash Flow Concerns: • Deterioration noted in Q2; expectations for improvement in upcoming quarter • Steel Prices: • 30% year-on-year volume growth; prices have softened • Partnership with APL Apollo: • No divestment; expected growth in partnership • Revenue Growth Assurance: • Management optimistic about achieving 30% growth in H2 FY2024 • Store Performance: • Same-store growth rate of 23%; strategic store closures with minimal revenue impact
Market Strategies • "Store in Store" Concept: • Collaboration with Nippon for enhanced brand visibility • Geographic Expansion: • Strong presence in South; growth in Maharashtra and Madhya Pradesh • Plans for a display center in Morbi, Gujarat • Digital Business: • Minimal current contributions but potential for growth
Financial Metrics • Non-Steel Business Margins: • Gross margins: 10% to 12% • EBITDA: 5% to 5.5% • Overall EBITDA Margin Guidance: • Expected growth of 3% to 3.5% by year-end FY2024
Conclusion • Management remains optimistic about long-term growth targets of 25% to 30% CAGR and improving operating margins. The call concluded with well wishes for Diwali.
Conference Call Details • Date: August 10, 2023 • Hosted by: ICICI Securities • Key Executives: • Mr. Sukumar Srinivas (Managing Director) • Mr. Alex Varghese (CFO) • Mr. Dhananjay Mirlay Srinivas (VP of Business Development)
Company Performance Highlights • Resilient Performance: • Increased residential and commercial real estate activity. • Growth in home improvement demand due to the pandemic and government investments. • Omnichannel Marketplace Evolution: • Expanding product offerings and fulfillment centers. • Targeting non-steel revenue growth from 10% to 25% in 4-5 years. • Retail Growth: • Achieved 31% year-on-year same-store sales growth. • Plans for new fulfillment centers in Maharashtra and Madhya Pradesh.
Financial Performance • Revenue: Rs. 1,132 crores (36% YoY increase). • EBITDA: Rs. 34.5 crores (30% YoY increase), slight margin decline due to steel price softening. • Net Profit: Rs. 17.3 crores (44% increase). • Segment Performance: • Retail segment: Rs. 631 crores (31% growth). • Non-retail segment: Rs. 501 crores (43% growth).
Strategic Focus • Cost Control: • Rental costs increased by only 5%. • Profitability Margins: • Targeting EBITDA margin of 3.5% by FY24, aiming for 4% in subsequent years. • Digital Initiatives: • Enhancing online platform for discovery and marketing. • Plans to increase catalog offerings and online sales.
Growth and Expansion Plans • Non-Steel Revenue Goals: • Targeting 25% of total revenue from non-steel products in 4-5 years. • Debt Management: • Total debt around Rs. 330 crores. • Geographical Expansion: • Focus on pan-India growth while strengthening southern market presence.
Future Outlook • Revenue Projections: • Targeting Rs. 10,000 crores in revenue over the next 4-5 years. • Market Opportunities: • Significant potential in CP, sanitary products, and flooring. • Private Label Development: • Successful launch of a private label tiles brand generating over Rs. 100 crores in revenue.
Conclusion • Management expressed optimism about growth potential, particularly in the non-steel sector, and emphasized a strategic shift towards a marketplace model to enhance revenue.
Meeting Details • Date: June 22, 2023 • Format: Video conferencing • Compliance: In line with Ministry of Corporate Affairs and SEBI regulations • Chairman: V. Ravichandar
Key Highlights • Annual Report: FY 2022-23 circulated; auditor's report free of qualifications • Financial Performance: • Revenue growth: 67% to Rs. 4,029.72 crores • Profit after tax increase: 84% to Rs. 63 crores • Retail segment contribution: 58% of total income • Operations: 91 retail stores; focus on brand and digital presence • Corporate Governance: Emphasis on social responsibility initiatives
Resolutions Discussed • Re-appointment of directors • Declaration of final dividend • Approval of increased remuneration for key executives
Shareholder Engagement • Mr. K Bharath Raj: • Praised revenue increase; inquired about expansion to 200 stores • Suggested developing in-house brands and acquiring NCLT companies • Requested bonuses for shareholders • Chairman’s Response: Focus on quality of stores; acknowledgment of bonus and dividend requests
Additional Inquiries • Ms. Celestial Elizabeth Mascarenhas: • Questions on CSR, ESG ratings, growth plans, and capital expenditure • Company Response: • ESG rating in progress; plans for Mumbai expansion and capital expenditure of approximately 30 crores for the year • Considerations for strategic acquisitions
Conclusion • Meeting concluded with thanks to shareholders and announcement of voting procedures.
Key Participants • Mr. Sukumar Srinivas - Managing Director • Mr. Alex Varghese - Chief Financial Officer
Financial Performance Highlights • Revenue Growth: • FY '23 revenue increased by 67%. • Q4 FY '23 revenue reached INR 1,210 crores, a 54% increase from Q4 FY '22. • Profitability: • EBITDA for FY '23: INR 125 crores (3.1% margin). • PAT for FY '23: INR 63 crores. • Dividends: Final dividend of INR 2.5 per share recommended. • Debt Management: Net debt reduced to INR 70 crores.
Operational Updates • Sales Growth: • Same-store sales growth (SSSG) of 53.5% in Q4. • Targeting 25-30% revenue growth in FY '24. • Product Strategy: • Focus on expanding non-steel product lines and premium offerings. • Successful online sales initiative and customer engagement strategies.
Market Outlook • Growth Projections: • Anticipated top-line growth of 4-5% with retail sales target of 55%. • Emphasis on omnichannel sales approach. • Product Launches: • New color-coated products expected to contribute to 10% volume growth.
Competitive Positioning • Market Strategy: • Focus on thicker color-coated products to differentiate from competitors. • Strong brand presence in smaller towns for enhanced delivery flexibility.
Working Capital and Cost Management • Working Capital Needs: • Retail: 20-30 days; Channel and enterprise: around 40 days. • Cost Management: • Cautious approach to ROCE, aiming for 20% in FY '24.
Analyst Inquiries • Store Expansion: • Limited new store growth anticipated; focus on enhancing existing operations. • Cash Flow: • Improvement in net cash from operations expected. • Capital Expenditures: • Approximately INR 25 crores allocated for upcoming capital expenditures.
Conclusion • The call emphasized Shankara Building Products' strategic positioning for growth through product diversification, improved working capital management, and a focus on online sales, while maintaining a cautious approach to market competition and operational efficiency.
• Date of Submission: February 13, 2023 • Recipient: Department of Corporate Services and National Stock Exchange of India • Content of Submission: • Enclosed transcripts of Q3 and 9M FY23 Earnings Conference Call • Conference Call Date: February 7, 2023 • Signatory: Ereen Vikram, Company Secretary and Compliance Officer • Purpose: • Inform relevant authorities • Ensure information is on record