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Supreme Industries Limited Q1 FY'25 Earnings Conference Call Summary
Call Overview • Date: July 22, 2024 • Moderator: Aasim Bharde, DAM Capital Advisors • Key Executives: • M.P. Taparia (Managing Director) • P.C. Somani (CFO) • R.J. Saboo (Company Secretary) • Format: Listen-only mode, recorded session
Financial Performance Highlights • Sales and Revenue: • Sold 173,835 MT of plastic goods • Net turnover: Rs. 2,612 crores (17% volume increase, 12% value increase) • Consolidated income: Rs. 2,658 crores • Operating profit: Rs. 425 crores (24% increase) • Profit before tax: 26% increase; Profit after tax: 27% increase
• Product Segment Performance: • Plastic piping system: 20% volume growth • Consumer products: 7% decline
• Cash Position: • Cash surplus: Rs. 1,245 crores • Stable polymer prices with slight PVC resin price increase
Future Outlook and Expansion Plans • Positive demand outlook in housing and infrastructure • Planned capital expenditures: Rs. 1,500 crores funded by internal accruals • Expansion initiatives include new manufacturing units and product offerings
Market Insights and Challenges • Inventory gain noted; June growth decline due to rising PVC prices • Anticipated further price declines; maintaining guidance for 25% volume growth in plastic piping • Concerns about aggressive price cuts affecting industry margins
Q&A Highlights • Infrastructure Activity: Limited activity reported • CPVC Prices: Rising alongside PVC prices; no issues in price increases • Competitive Landscape: Low competition in PVC-O pipes market • Inventory Levels: No inventory gains; demand expected to rise post-August • Value-Added Sales: Projected to stabilize between 40% to 44% of total sales • Utilization Rates: Expected 75% utilization this year; 80% needed for growth targets
Packaging Segment Performance • Strong performance in cross-laminated film and protective packaging • Sustainable margins in packaging segment; EBITDA margins expected to exceed 15% • Significant volume growth of over 40% in CPVC pipe segment
Capacity Expansion and Strategic Goals • Overall capacity target: over 1.25 million tons by FY '26 • Strategy to maintain 20% pre-tax ROCE while passing cost advantages to customers • No current plans for demerger of the pipe segment; satisfaction with recent acquisition
Additional Notes • Anticipated supply of products in the third quarter; expanding capacity for pipes and fittings • Recent price adjustments and their impact on overall pricing discussed • Plans to expand OPVC pipe production with new lines expected to increase capacity significantly • Business primarily operates on a B2B model for government projects; no current inorganic growth opportunities being pursued.
Call Overview • Hosted by DAM Capital Advisors. • Key management: M.P. Taparia (Managing Director), P.C. Somani (CFO), R.J. Saboo (VP). • Recorded session with a Q&A segment. • Compliance notification to National Stock Exchange of India and SSE Limited.
Financial Highlights • Q4 Results: • Volume growth: 33% • Turnover increase: 16%, reaching Rs. 2,979 crores. • Operating profit: Rs. 531 crores. • Profit after tax: Rs. 355 crores.
• Full Year Results: • Sales: 639,701 MT. • Turnover: Rs. 10,022 crores (26% volume growth, 11% value growth). • Operating profit: Rs. 1,654 crores (22% increase). • Profit after tax: Rs. 1,070 crores (24% increase).
Product Segment Growth • Significant growth in: • Plastic piping systems: 34% volume growth. • Value-added products: 13% growth. • Cash surplus: Rs. 1,178 crores. • Planned CAPEX: Rs. 1,500 crores for capacity expansion and new products.
Future Outlook • Anticipated growth: • 25% in plastic piping systems. • 20% overall volume growth. • Focus on: • Export market expansion. • Product range enhancement.
Protective Packaging Division • Achieved 15% volume growth and 12% value growth. • Emphasis on sustainability and collaboration with customers. • New plant establishment near JNPT Port for enhanced export capabilities.
Q&A Session Insights • Industry Concerns: • Overcapacity and margin improvements discussed. • Projected gross margins to stabilize at 15.5%.
• Capacity and Expansion: • Current capacity: 950,000 MT, with plans to increase to 1,050,000 MT by FY '25. • Potential demand in oil and gas segment discussed.
• Inventory and Sales: • Inventory loss of Rs. 50 crores reported. • Significant contribution from the Nal-se-Jal scheme.
Market Position and Strategy • Market share in plastic piping: 12-13%. • Focus on new product introductions and capacity expansion without price cuts. • Anticipated growth in packaging and industrial products.
Conclusion • M.P. Taparia emphasized the company's commitment to growth and investment. • The call concluded with gratitude expressed to participants for their questions.
Submission Details • Date of submission: January 25, 2024 • Earnings call date: January 19, 2024 • Compliance: Submitted to National Stock Exchange of India and BSE Limited per SEBI regulations • Participants: • M.P. Taparia (Managing Director) • P.C. Somani (CFO) • R.J. Saboo (Company Secretary) • Moderated by Aasim Bharde (DAM Capital Advisors)
Financial Performance Overview • Q3 Results: • Net turnover: Rs. 2,429 crores (up from Rs. 2,284 crores YoY) • Volume increase: 14% • Product value increase: 6% • Nine-Month Results: • Turnover: Rs. 7,043 crores (24% volume growth, 8% value increase) • Operating profit: Rs. 1,123 crores (up 36%) • Profit after tax: Rs. 715 crores (up 41%)
Segment Performance • Growth in plastic piping systems • Decline in consumer products segment • Cash surplus: Rs. 586 crores • Future growth plans: • Acquisition of Parvati Agro Plast • New plant construction in Malanpur • Planned capital expenditures over Rs. 1,000 crores
Volume Growth Insights • Focus on value-added items to improve margins • Minimal volume growth in consumer segment, shift towards premium products • Piping segment expected to grow by 30% for the full year
Inventory and New Products • Inventory losses in Q3: INR 51 crores • New product lines include PVC window profile system (revenue expected by FY'26) • Majority growth from housing and agriculture sectors
Strategic Initiatives • Progress on Nal-se-Jal Scheme, completion expected by March 2025 • Transition to manufacturing pipes for natural gas • Core operating margins increased to 15.5%
Expansion Plans • New ABS plant in Maharashtra operational by March 2025 (capacity: 70,000 tons) • 30% growth in piping segment over first nine months • Focus on increasing exports and participation in global exhibitions
Sustainability Efforts • Emphasis on recycling and responsible practices in the plastic processing industry • Growing number of recyclers in the country
Future Outlook • Anticipated growth of 12% to 15% in the piping segment • Positive agricultural demand expected • Optimism regarding the upcoming budget despite pre-election context
Conclusion • M.P. Taparia thanked participants for their questions, concluding the call.
Submission Details • Date of Submission: November 3, 2023 • Event: Earnings conference call held on October 30, 2023 • Regulatory Compliance: Submitted transcript to National Stock Exchange of India and BSE Limited
Financial Performance • Q2 Results: • Volume Sold: 137,763 MT of plastic goods • Net Turnover: INR 2,274 crores (23% increase in volume, 11% in value YoY) • First Half Sales: 286,307 MT, INR 4,614 crores (30% volume growth, 9% value growth) • Operating Profit: INR 380 crores (129% YoY increase) • Profit After Tax: INR 243 crores (196% YoY increase)
Business Segment Performance • Plastic Piping System: 30% volume growth • Industrial Products: Decline in value • Cash Surplus: INR 583 crores • Acquisition: New pipe manufacturing unit to enhance capacity
Growth Projections • Full-Year Guidance: • Overall volume growth: 23% • Plastic piping growth: 28% • Expected margin: 14.5% • FY '25 Growth Expectation: Normalize around 12%
Government Contracts and Market Insights • Maharashtra Contract: INR 480 crores, completion in 30 months • Packaging Division: Strong export orders improving margins • Consumer Durables: Slow demand, potential rebound during festive season
Product Insights • CPVC Volume Growth: Slight increase anticipated in the second half • Polythene Pipe Demand: Strong growth driven by the Nal se Jal scheme • O-PVC Pipes: Cost-effective alternative to ductile iron pipes, government-approved
Inventory and Working Capital • Dealer Channel Inventory: Restocking began in the second half of the month • Working Capital: Increase in inventories and receivables due to government contracts
Future Plans and Strategies • PVC Window Profile Business: Launch expected in about a year • Export Share: Currently less than 3% of turnover, focus on growth • Raw Material Sourcing: Balanced approach between domestic and international suppliers
Conclusion • Overall Confidence: Management expressed optimism in maintaining margins despite market fluctuations and inventory challenges.
Supreme Industries Q1 FY24 Earnings Conference Call Summary
Company Performance • Sales and Revenue: • Sold 148,544 MT of plastic goods. • Net turnover of Rs. 2,340 crores (36% volume increase, 8% value increase). • Consolidated income rose to Rs. 2,383 crores; operating profit increased to Rs. 343 crores.
Key Product Segments • Plastic Piping System: • 48% volume increase driven by agriculture and infrastructure demand. • Cash Surplus: • Rs. 951 crores available for new projects and expansions.
Future Growth Plans • New Projects: • PVC window and door manufacturing facility. • Expansion in piping business. • Capex Plan: • Exceeding Rs. 750 crores for the year, funded through internal accruals.
Market Outlook • Volume Growth Projection: • Over 20% for the current year; revenue expected around Rs. 11,000 crores. • PVC and Plastic Prices: • Anticipated increases factored into revenue projections.
Margin Insights • Piping Segment Margins: • Lower year-on-year but improved compared to the previous quarter. • CPVC Market: • 12% decline due to counterfeit competition; legal actions being taken.
Competitive Landscape • Plastic Windows and Doors: • Significant growth opportunity in India compared to China. • Plans to manufacture window profiles and appoint fabricators.
Operational Updates • Production Capacity: • 150,000 tons produced against a capacity of 200,000 tons (75% utilization). • Composite Cylinder Utilization: • Recent capacity expansion; projected 70% utilization this year.
Revenue Guidance • Increased Volume Growth: • From 15% to over 20% for the year; piping segment projected growth of 23% to 25%. • EBITDA Margin Guidance: • Set at 14%.
Conclusion • Management expressed confidence in growth prospects and product quality amidst rising competition.
Compliance and Call Details • Date of Submission: May 8, 2023 • Call Date: April 28, 2023 • Regulatory Compliance: Submitted transcript to National Stock Exchange of India and BSE Limited as per SEBI regulations. • Key Participants: • M. P. Taparia (Managing Director) • P. C. Somani (CFO) • R. J. Saboo (Company Secretary) • Moderated by Aasim Bharde (DAM Capital Advisors)
Financial Performance • Q4 Results: • 15% increase in plastic goods sales volume • 2% rise in turnover, totaling Rs. 2,566 crores • Consolidated income of Rs. 2,610 crores (up 2%) • Operating profit increased by 15% to Rs. 529 crores • Annual Results: • Sales volume grew by 29% • Turnover increased by 19%, totaling Rs. 9,066 crores • Annual profit before tax decreased by 10% • Annual profit after tax decreased by 11%
Segment Performance • Growth by Product Segment: • Plastic piping systems: 37% volume growth • Industrial products: 23% increase • Consumer products: 5% increase • Packaging: Stable performance • Cash Surplus: Rs. 738 crores • Capital Expenditure Plans: Rs. 750 crores for capacity expansion and new products
Future Outlook • Growth Drivers: Government initiatives, stable commodity prices, robust housing and infrastructure demand • PVC Resin Market: Volatility noted, but overall consumption increased • Manufacturing Expansion: New products launched in piping and furniture segments
Division Highlights • Composite Cylinder Division: • Operated at 90% capacity, supplying 472,000 cylinders to IOCL • Capacity increased to 1 million cylinders per annum • Performance Films Division: • 3% volume growth, 21% value growth • Focus on sustainability through EPR registration • Protective Packaging Division: • 5% volume growth, 11% value growth
Q&A Highlights • Inventory Losses: Confirmed net loss of INR 180 crores for the year • Future Projections: 15% volume growth and margin of 13.5% to 14% expected • PVC Prices: Positive demand outlook due to lower prices • Nal Se Jal Project: Significant progress with challenges in some states • Capacity Utilization: 24% volume growth in CPVC portfolio for FY’23
Organizational Changes • HR Focus: Enhancing leadership capabilities and recruitment processes • Distributor Network Expansion: Increased from 1,250 to 1,443, with plans for 100 more
Packaging Segment Challenges • Margins: Cross-laminate film margins under pressure, target to increase back to 17% • Future Growth: Potential revenue of INR 200 crores per annum from composite cylinders if fully utilized
Conclusion • Management Confidence: Optimistic about growth across divisions despite competitive pressures and recent capacity expansions.
Submission Details • Date of submission: January 31, 2023 • Earnings call date: January 24, 2023 • Compliance: Submitted to National Stock Exchange of India and BSE Limited per SEBI regulations • Key participants: • M P Taparia (Managing Director) • P C Somani (CFO) • R J Saboo (VP of Corporate Affairs) • Moderator: Aasim Bharde (Dam Capital Advisors) • Duration: 68 minutes, including Q&A session
Financial Performance • Q3 Results: • Plastic goods sales: 138,362 MT • Turnover: Rs. 2,284 crores (51% volume growth, 21% value growth) • Consolidated income: Rs. 2,319 crores (up 19%) • Operating profit: Rs. 331 crores (down 10%)
• Nine-Month Results: • Total sales: 359,087 MT • Turnover: Rs. 6,500 crores (35% volume growth, 27% value growth) • Consolidated income: Rs. 6,622 crores (up 26%) • Operating profit: Rs. 824 crores (down 16%)
Segment Performance • Significant growth in plastic piping systems • Declines in packaging and consumer product segments • Ongoing projects: New production facilities and product launches • Cash surplus: Rs. 687 crores
Q&A Highlights • Inventory Loss: • Loss in first two months of Q3; recovery in December • Margin of 13.49%, expected around 15.5% without inventory loss
• Volume and Margin Outlook: • Projected 25% volume growth for the full year • Operating margin expected over 12.5%
• Capacity Expansion: • Increase from 725,000 MT to 815,000 MT by year-end • New capacities expected to achieve over 60% utilization in 12-18 months
Growth Prospects • Optimism for cross-laminated films segment • Competitive pressures noted, but quality remains a focus • Anticipated recovery in packaging margins in FY24 • Growth in value-added products: 24% increase in revenue year-over-year
Market Insights • Strong demand in agriculture, housing, and infrastructure sectors • Projected 35% growth in plastic piping systems for the year • CPVC volume growth: 32% over nine months • Distribution network: Approximately 4,373 distributors and over 70,000 dealers
Conclusion • Confidence in achieving over 10% volume growth in the upcoming quarter • Maintaining EBITDA margins between 15% to 16% if raw material prices stabilize • Management expressed gratitude to participants at the end of the call.