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Supreme Petrochem Ltd Q1 FY25 Earnings Conference Call Summary
Key Financial Highlights • Operating Income: Increased by 28% year-on-year to INR 1,574 crores. • Operating EBITDA: Rose by 78% to INR 161 crores. • Net Profit After Tax: Up 76% year-on-year to INR 122 crores. • Sales Volumes: Grew by 27% to 93,323 metric tonnes. • Domestic volumes: Increased by 38%. • Export volumes: Decreased due to rising freight costs. • Debt Status: Company remains debt-free with an investible surplus of INR 1,040 crores.
Management Insights • Volume Growth Expectations: Discussed potential for future growth and seasonal demand fluctuations. • Expansion Projects: Plans for EPS and XPS expansions; Haryana plant expansion estimated revenue of INR 2,000 crores.
Production and Market Focus • SMMA Production: Minor adjustments made, but focus remains on polystyrene (PS) due to market demand. • ABS Line Power Costs: Current figures unavailable; joint venture for solar power generation to meet 50% of power needs.
Supply Chain and Market Dynamics • Masterbatch Sourcing: Entirely from SPC division for ABS production. • Freight Rates: Increased rates for imports leading to reduced volumes; differentiation between liquid and solid cargo rates discussed.
Future Projections • ABS Revenue Contribution: Expected to start impacting financial results by FY 2026-27. • Polystyrene Demand: Current demand at 325,000 tonnes; company capacity at 300,000 tonnes. • Revenue Potential from New Projects: New ABS plant and Haryana extension could generate INR 3,500 to 4,000 crores by FY 2028-29.
Conclusion • Current Capacity Utilization: Over 83%. • Trading Contribution: Approximately 20% to revenues. • Closing Remarks: Management thanked participants for their engagement.
Supreme Petrochem Ltd Q4 and FY24 Earnings Conference Call Summary
Key Financial Highlights • Q4 Performance: • Operating income increased by 32% QoQ to Rs. 1,563 crores. • EBITDA rose by 76% to Rs. 194 crores. • Year-on-year EBITDA and net profit after tax decreased; net profit at Rs. 132 crores, down 18%. • Sales volume surged, particularly exports, which rose by 44% in Q4.
• FY24 Overview: • Total operating income at Rs. 5,253 crores; flat YoY due to lower Styrene Monomer prices. • Company remains debt-free with an investable surplus of Rs. 1,080 crores. • Recommended final dividend of Rs. 7 per share.
Future Growth Projections • Anticipated growth of 8-10% for FY25. • Ongoing expansions expected to contribute to growth in FY26. • Mass ABS project facing delays; projected operational by Q4 FY25.
Management Insights • Financial Outlook: • Full capacity utilization could yield around Rs. 2,200 crores in revenue. • Improved margins for ABS compared to polystyrene. • Geopolitical factors create uncertainty in future predictions.
• Capacity Utilization: • Current utilization at approximately 75%, potential to reach 90%. • Peak revenue could reach Rs. 6,500 crores at full capacity.
Market Dynamics • ABS Capacity Expansion: • Responding to growing demand in EV and appliance sectors. • Concerns about potential oversupply due to new market entrants.
• Competitive Landscape: • Acknowledgment of pressure from increased ABS capacity in China. • Emphasis on customer service and quality to drive preference for domestic products.
Operational Details • Production Capacities: • Polystyrene: 300,000 tonnes • EPS: 110,000 tonnes • SPC: 35,000 tonnes (effective capacity of 25,000 tonnes) • XPS: 72,000 cubic meters
• Employee Costs: • Increased by 16-17% due to expanded capacities and wage revisions.
Conclusion • Management expressed gratitude to participants, highlighting the company's strategic initiatives and market positioning.
Supreme Petrochem Q3 FY24 Earnings Conference Call Summary
Key Highlights • Date of Call: January 23, 2024 • Management Team: Introduced by Mr. Anuj Sonpal; included Mr. Rakesh Nayyar (Executive Director and CFO).
Financial Performance • Operating Income: INR 1,187 crores (0.6% YoY increase) • EBITDA: INR 110 crores • Net Profit: INR 68 crores • Sales Growth: • Quarterly: 1.7% • Nine-month period: 12% • Debt Status: Debt-free with an investable surplus of INR 793 crores.
Operational Insights • Chennai EPS Plant: Experienced operational downtime due to cyclone damage. • Sales Composition: 76% from manufactured products.
Energy Strategy • Renewable Energy Agreement: New partnership with Tata Power to reduce power costs starting FY25. • Nagothane Project: 50% power from renewable sources, potential savings of 30-40%.
Investment and Expansion Plans • Haryana Investment: Projected revenues of ₹1,900 crores with a payback period of less than five years. • New Products: Introduction of EPS and 3D panels with estimated revenue potential of ₹100 crores. • Engineering Plastics: Plans to expand into this market, replacing glass in various applications.
Market and Volume Analysis • Volume Drop: 13% sequential drop attributed to post-festive season slowdown; year-on-year volumes consistent. • Polystyrene Spreads: Significant year-on-year decline of nearly 30%, but confidence in maintaining current spreads.
Capacity and Competition • Capacity Utilization: Around 70% for polystyrene and EPS; plans to expand SPC capacity by 25,000 tonnes. • Market Growth: Potential for multiple players due to increasing demand projections.
North India Plant • New Plant: Aimed at capturing market share in North India; 100% styrene currently imported.
Export Challenges • Freight Costs: Rising rates impacting export prices; recent slowdown in exports due to geopolitical issues. • Volume Guidance: Maintains a growth target of 10% to 12% for the fiscal year.
Conclusion • Management expressed optimism about future growth and thanked participants for their engagement.
Supreme Petrochem Ltd Earnings Conference Call Summary
Date and Participants • Date of Call: December 18, 2023 • Key Speaker: CFO Rakesh Nayyar
Company Overview • Leading manufacturer of polystyrene with over 50% market share. • Significant export capabilities. • Expanding product range with a new ABS manufacturing project in collaboration with Versalis (ENI Group). • Planned capital expenditure of ₹1,200 crores over the next two years, funded through internal accruals.
Market Insights • Polystyrene Demand: Expected to grow modestly; EPS and XPS markets may see higher growth. • Global Pricing Trends: Current pricing deltas are low compared to previous years, attributed to the global economic environment. • Typical Price Deltas: • General-purpose polystyrene: $175 to $200 • HIPS: $250 to $300
Financial Performance • Current ABS imports: 130,000 to 140,000 tons. • No specific EBITDA per ton figures provided; performance linked to global market conditions. • Approximately ₹500 crores spent on capital expenditure; plans to invest an additional ₹700 crores.
Growth Capacity • Sufficient land available for future expansions. • Robust Indian market for ABS with an estimated size of 275,000 tons.
Production Insights • Differences in production costs between mass ABS and emulsion ABS explained. • Majority of cost differences stem from power and fuel expenses.
Market Position • Only player in the extruded polystyrene market. • Total Indian polystyrene market: approximately 315,000 tons, with 70,000 to 75,000 tons imported. • Pricing linked to global prices, adjusted for local factors.
Regulatory Environment • Recommendations for anti-dumping measures on polystyrene made but not implemented. • Awareness of polystyrene bans in some countries discussed, primarily affecting disposable products.
Styrene Monomer Prices • Stable prices around $1,050, with fluctuations of about $50. • Significant price drop observed from April to June, but stability since mid-July.
Conclusion • The call concluded without further inquiries after addressing various investor questions.
Supreme Petrochem Ltd Earnings Conference Call Summary (October 31, 2023)
Financial Performance • Q2 and H1 FY24 Results: • Operating income increased by 3.5% to ₹1,278 crores. • EBITDA rose approximately 35% to ₹106 crores. • Net profit after tax increased by 31% to ₹78 crores. • Domestic sales volumes grew by 23% year-on-year. • The company remains debt-free with an investable surplus of ₹840 crores.
CAPEX and Projects • Ongoing Projects: • Progressing on CAPEX projects, including the Mass AB5 project.
Market Dynamics • Competition and Margins: • Concerns about potential declines in margins due to increased competition. • Emphasis on product quality and customer service to maintain price premiums. • Overall demand in India expected to grow, allowing market space for all players.
Export Performance • Export Targets: • Target of over 50,000 tons for FY24, primarily in Europe, Africa, and Asia. • No specific breakdown of polystyrene exports provided.
Market Demand Insights • EPS and Polystyrene Demand: • EPS market growth at 12.5%. • Weaker polystyrene demand with expectations of 6-7% growth in H2 FY24.
Raw Material Pricing • Pricing Insights: • Current styrene monomer prices discussed. • ASS project expected to be operational by the end of the next calendar year.
Trading Revenue and Margins • Trading Revenue: • Constitutes about 23% of the top line; specific profitability figures not disclosed. • Decline in EBITDA margins from 15% in Q1 to 8.3% in Q2 due to inventory hit and decrease in global debtors.
Conclusion • Further Inquiries: • Invitation for additional questions through the Investor Relations Manager.
Supreme Petrochem Ltd Earnings Conference Call Summary (July 31, 2023)
Overview • Led by Anuj Sonpal (Valorem Advisors) with key management present. • Discussed Q1 FY24 financial performance.
Financial Performance • Market Leadership: Over 50% market share in polystyrene; largest exporter from India. • Q1 FY24 Results: • Operational Income: Rs. 1,225 crores • EBITDA: Rs. 91 crores (7.39% margin) • Net Profit: Rs. 69 crores (5.66% margin) • Challenges: • Significant drop in styrene monomer prices (over 22%). • Total sales volumes increased by 9% year-on-year; domestic sales down by 4%.
Strategic Projects • Mass ABS Project: Expected commissioning by Q3 FY25. • New Facilities: Recent launch of Polystyrene and EPS facility; current utilization at 75%.
Market Dynamics • Raw Material Import Complexities: 45 to 60 days from purchase to sale. • Value Added Grades: 40% of volume; margins 25% to 100% higher than commodity grades. • Volume Growth Adjustment: Initial target of 15% reduced to 12% due to lower appliance sector demand.
Export and Product Focus • Exports: Increased to 15-20% of overall volumes; target of 50,000 tons for FY24. • SPC Product Growth: Expected 20% growth driven by new compound approvals.
Capital Expenditure and Future Outlook • CAPEX: Rs. 1,250 crores for expansions in Polystyrene and EPS, completion by March 2025. • Margin Profile: Declined due to falling raw material prices; Polystyrene accounts for two-thirds of revenue.
Conclusion • Value Added Grades: Aim to increase share; dependent on acceptance by appliance manufacturers. • Inventory Losses: Challenges due to fluctuating raw material prices. • Investor Relations: Invitation for further inquiries through Valorem Advisors.
Supreme Petrochem Q4 FY23 Earnings Conference Call Summary
Overview • Date: April 27, 2023 • First earnings conference call for Supreme Petrochem Ltd. • Moderated by Anuj Sonpal from Valorem Advisors. • Key management included Executive Director and CFO Rakesh Nayyar.
Company Highlights • Market Leadership: 60% market share in polystyrene, zero debt. • Capital Expenditure: INR 1,200 crores funded from internal resources.
Financial Performance • Q4 FY23: • Operational income: INR 1,317 crores (7% decline YoY, 17.5% increase QoQ). • EBITDA: INR 209 crores (32% decline YoY, 76% increase QoQ). • FY23: • Operational income: INR 5,287 crores (5% increase). • Net profit: INR 498 crores (25% decline). • Capacity Utilization: Over 92% for polystyrene and expandable polystyrene.
Dividend and Future Projects • Final Dividend: INR 7 per share. • New Projects: Development of a mass ABS plant.
Market Insights • Seasonal Demand: Peak season for consumer durables (January to March) with a 17% sales increase. • Future Demand: Expected normalization in April to June, with gradual decline until festival season.
Growth Projections • Anticipated volume growth of 15% to 16% for FY24. • CapEx for FY24: INR 430 crores for maintenance and new production lines.
Market Dynamics • China's Production: Increased styrene production, but Indian market growth expected to align with GDP. • Mass ABS Production: Advantages include lower carbon footprint and reduced operational costs.
Margin Profile • Commodity Spreads: Declining, but company outperforms due to focus on value-added products (37-40% of revenues). • Raw Material Sourcing: No imports from China; sourced from Korea, Singapore, and the Gulf.
Capital Allocation and Export Activities • Building cash reserves for planned CapEx. • Reviving export activities targeting Africa, Europe, Gulf, and Americas.
Analyst Inquiries • Contribution Differentials: Value-added products yield 25-30% higher margins than commodity grades. • EPS Consumption: Low in construction compared to global standards, indicating growth potential. • Import Duties: No antidumping duties on ABS; polystyrene duties pending.
Conclusion • The call highlighted product margin complexities, growth opportunities in construction, and stable demand dynamics in the polystyrene and ABS markets.