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Earnings Call Overview • Date: July 24, 2024 • Submitted by: Tatva Chintan Pharma Chem Limited • Key Management: Chintan Shah (Managing Director), Ashok Bothra (CFO) • Moderator: ICICI Securities
Financial Performance • Revenue: ₹1,055 million • 8% year-on-year decline • 7% quarter-on-quarter growth • EBITDA: Decreased by 41% year-on-year and 19% quarter-on-quarter • Profit After Tax (PAT): ₹52 million • Challenges: Increased logistics costs and lower sales prices, particularly in Structure-Directing Agents (SDA) segment.
Segment Performance • Growth Areas: Pharma, Agro Intermediates, Specialty Chemicals • Decline: Structure-Directing Agents
Management Insights • Challenges: High logistics costs and raw material availability • Optimism: New product introductions and expected demand growth in Electrolyte Salts • Production Capacity: New distillation plant expected to enhance productivity by end of August.
Product Development Updates • Pharmaceutical Intermediates: One approved, two nearing approval for early 2025 • Agrochemicals: Two intermediates close to approval; delays due to logistics • New Technology: Advancements in continuous flow chemistry for agro intermediates.
Future Outlook • Long-term Growth: Strong product pipeline and ongoing investments in R&D • Electrolyte Segment: Expected to contribute 20-25% of overall revenue in three years • Production Capacity for Electrolytes: Estimated at 8,000 to 10,000 tons annually.
Capital Expenditure (Capex) • Current spending: ₹35-40 crores • Potential additional capex: ₹50-70 crores, pending soil quality approvals • Focus on distillation facility, bromine recovery plant, and temporary storage plants.
Market Challenges • Price Declines: Specialty chemical products down 15-25% • Freight Costs: Significant increase from $1,600 to over $5,000 affecting margins.
Conclusion • Capacity Utilization: Currently at 77%, expected to reach 85% by Q3 • Future Revenue Potential: Estimated INR 120-130 crores at peak utilization. • Call concluded with thanks from CFO Ashok Bothra.
Financial Performance • Q4 Results: • Revenue: ₹983 million (17% QoQ increase, 21% YoY decline) • EBITDA: ₹156 million (42% QoQ increase, 4% YoY decline) • Full-Year Results: • Revenue: ₹3,935 million (7% decline YoY) • EBITDA: ₹682 million (13% increase YoY)
Segment Performance • Declines: • Phase Transfer Catalysts • Electrolyte Salts • Growth: • Specialty Chemicals • SDA segments
Management Outlook • Growth Expectations: • Moderate growth anticipated in upcoming quarters • Stable revenue for Phase Transfer Catalysts • Significant growth expected in SDAs and Electrolyte Salts • Challenges: • Declining chemical prices • High freight costs
Product Development and Validation • PASC Progress: • Validation of three pharmaceutical and two agro products • Delays in a third agro product due to transit issues • New Products: • Commercial production of first photochlorination product • Development of a third brominated flame retardant (BFR)
Future Projections • FY25 Expectations: • Topline growth of 35% to 40% • Revenue growth of 25% due to raw material price declines • Capacity and Production: • Plans for new plant to address capacity constraints • Expected reactor utilization of 85%-90% by year-end
Market Position and Customer Relations • Market Share: • Significant share in specialized chemical sector • Anticipated 50% volume growth due to new regulations • Customer Engagement: • Ongoing communication with a significant Chinese customer • New automotive customer supplies initiated
Innovations and Sustainability • New Product Launches: • Four new products for the polymer industry using innovative electrolytic technology • Sustainable Chemistry Focus: • Emphasis on environmental benefits to attract clients
Financial Clarifications • Employee Costs: • Reclassification of staff welfare expenses • CAPEX Plans: • Planned CAPEX of ₹70 crores for FY25, contingent on site selection
Conclusion • Overall Strategy: • Commitment to innovation and quality • Focus on sustainable solutions and capacity optimization • Future Engagement: • Management open to further inquiries and discussions.
Earnings Overview • Date of Call: January 20, 2024 • Q3 Performance: • Revenue declined by 30% year-over-year to Rs. 842 million. • EBITDA dropped by 39%. • Nine-Month Performance: • Marginal 1% decline in revenue compared to the previous year. • EBITDA increased by 19%.
Management Insights • Optimism for Future: • Anticipation of improved business sentiment in Phase Transfer Catalyst and Specialty Chemical segments. • Challenges in Electrolyte Salts business due to market conditions in China. • Expectation of stronger performance in FY25 driven by new customer approvals and product launches.
Product Development Updates • Pharma Intermediates: • Two out of three products approved; third in user testing. • Commercial operations expected to start in early 2025. • Agro Intermediates: • Two products fully approved; third under validation. • Growth anticipated from Q2 FY25. • Photochlorination Product: • Successful approval and installation of commercial equipment. • Commercialization planned for 2025.
Financial Challenges and Strategies • Revenue Decline: • 30% decline in Q3 revenue; significant drops in EBITDA and PAT. • Focus on cost management and R&D to navigate industry challenges. • Future Growth Projections: • Anticipated 70% growth in FY25 despite current challenges. • New product approvals expected to boost sales in mid-2024.
Asset Management and Capital Expenditure • Asset Turnover: • Decreased to 1:1.5 for new products; previous was over 3. • Rs. 70 crore investment needed to avoid missed opportunities. • Margins: • Margins expected to remain stable despite price erosion in certain segments.
Market Adaptation • Electric Vehicles and Hydrogen: • Transition timelines discussed; EVs for passenger cars in 5-10 years, commercial vehicles in 15-20 years. • Hydrogen technology commercialization further away. • Strategic Moves: • Entering electrolyte space for batteries to adapt to market changes.
Customer and Market Performance • SDA Segment: • Customer #1 and #4 returned to pre-COVID levels; customer #2 has not purchased in over a year. • Idle capacity expected to be addressed by mid-2024. • PTC Segment: • Stable volumes but significant price erosion affecting margins.
Conclusion • Overall Outlook: • Focus on growth through automation and new product launches. • Navigating challenging market conditions while maintaining optimism for future performance.
Earnings Call Overview • Date: November 2, 2023 • Hosted by: ICICI Securities • Key Participants: • Mr. Chintan Shah (Managing Director) • Mr. Ashok Bothra (Chief Financial Officer) • Dinesh Sodani (GM Finance) • Transcript available on the company's website, compliant with SEBI regulations.
Financial Performance (Q2FY24) • Revenue: ₹967 million (7% YoY growth) • EBITDA: ₹202 million (81% increase) • EBITDA Margin: 20.9% • Other Income: Declined by 61% • Finance Costs: Increased by 72% • Exports: 69% of total revenue
Fundraising and Capital Management • Raised ₹200 crore through Qualified Institutional Placement for debt repayment and corporate purposes. • Working capital limits decreased from ₹165 crore to approximately ₹2 crore as of October 31, 2023. • Utilized 98% of IPO proceeds and 95% of Qualified Institutional Placement funds.
Segment Performance • PTCs: 25% revenue decline (26% of total revenue) • Electrolyte Salts: 79% drop (1% of total revenue) • Pharma and Agro Intermediates: 22% decline, potential for future growth • SDAs: 487% revenue increase (44% of H1 revenue)
Future Growth Prospects • Modest revenue growth expected in FY24 (5-7%). • Anticipated substantial revenue increase in FY25 (70-100%), especially in the SDA segment. • New customer onboarding and production optimization to reduce import dependency. • Strategic move to secure non-Chinese supply chain clients.
Capital Expenditure and Tax Projections • Current CAPEX: Approximately ₹250 crores. • Expected effective tax rate: 29% to 30%, projected to decrease in FY25.
Challenges and Market Conditions • Low demand in the BFR segment due to polymer sector slowdown. • Competition from Chinese products impacting PTC and other segments. • Specialty chemicals facing price declines but stable margins.
R&D and Product Development • Introduction of three new agro and three pharma products. • Anticipated revenue growth of 200% to 350% by FY26. • Investment in R&D viewed as crucial for future growth.
Additional Insights • Minor debottlenecking expenses of ₹30-40 crores expected in the next 6-8 months. • Improvement in gross profit margins to 61% due to lower-cost inventory. • Rare-earth chemical products supply expected to start in January 2024. • Revenue mix projection for FY25: 30-35% from SDA, 40-45% from PASC, and 3-4% from electrolyte salts.
Earnings Overview • Date of Call: August 4, 2023 • Revenue: ₹1,144 million (29% YoY increase) • EBITDA: ₹213 million (40% YoY increase) • Net Profit: ₹95 million (3% decline)
Challenges and Growth Prospects • Challenges: Recessionary pressures in Europe, rising interest costs. • Growth Drivers: New product developments, improved capacity utilization at Dahej facility.
Segment Performance • Specialty Derivatives and Additives (SDAs): • Revenue: ₹496 million (43% of total revenue). • Anticipated approvals for four products from a new large customer. • Demand expected to increase by end of 2023 despite challenges in the heavy-duty vehicle market in China.
• Flame Retardants: • Weak market but stabilized prices. • Gradual entry into the segment starting September 2023.
• Ultra High Purity Chemicals: • Development for electronic applications ongoing. • Environmentally friendly production initiatives implemented.
Financial Utilization • Exports: Constituted 78% of revenue. • IPO Proceeds: 97% effectively utilized. • Future Margins: Expected improvement as new capacities come online.
Product Pipeline Updates • Agrochemical Products: Production for customer validation started; commercial supplies expected by late December 2023. • Pharmaceutical Products: Two in validation, commercialization anticipated in early 2025.
Market Insights • Flame Retardants: Price correction of 60% noted; revenue expectations between ₹25 to ₹40 crore for the current financial year. • SDA Segment: Lower revenues attributed to sluggish demand; optimism for recovery in Q3.
Capacity and Production • Capacity Utilization: Existing facilities near full capacity; new reactor capacity nearly fully occupied. • Electrolyte Segment: Dispatching products to customers; commercial sales expected to start in December 2023.
Future Plans • Qualified Institutional Placement (QIP): Raising ₹200 crore for capital expenditures; may reduce promoters' stake below 75%. • Energy Storage Systems: Involvement in supplying electrolytes for zinc and sodium batteries; resumed supplies to a solar energy storage customer in California.
Gross Margins and Depreciation • Gross Margins: Expected to improve to around 55% by Q3 2023. • Depreciation: Increased due to recent expansions; expected to remain consistent throughout the year.
Earnings Overview • Date of Call: May 5, 2023 • Quarterly Revenue: ₹1,245 million (26% YoY increase) • Full-Year Revenue: ₹4,236 million (2% decline) • Quarterly EBITDA: ₹163 million (26% YoY decline) • Full-Year EBITDA: ₹606 million (44% YoY decline)
Segment Performance • Specialty Chemical Development Activities (SDAs): • Quarterly Revenue: ₹549 million • FY23 Total: ₹1,277 million (43% YoY decline) • Expected recovery in demand with new product approvals by late 2023.
• Flame Retardants: • Approvals from three large customers. • Anticipated low demand and falling raw material prices.
Financial Outlook • Growth Projections: 20%-30% growth expected in FY24. • Tax Rate: Expected effective tax rate of 17%-18% for FY '24 due to R&D facility completion. • EBITDA Margins: Estimated at 18%-20% for the current year, potentially improving to 20%-22% by FY '25.
Capital Expenditure • Planned investment: ₹30-35 crores for infrastructure improvements related to new Agro intermediate product.
Product Development Strategy • Focus on larger market opportunities with a minimum target revenue of ₹40 crores per product. • Anticipated significant growth in electrolyte salts and stable growth in phase transfer catalysts.
Market Dynamics • Challenges from fluctuating raw material prices affecting revenue and margins. • Conservative revenue growth guidance due to market uncertainties.
Conclusion • The company remains optimistic about future growth despite current challenges, with a strategic focus on new product commercialization and market recovery.
Earnings Call Overview • Date: January 30, 2023 • Transcript of earnings call held on January 24, 2023 • Participants: Managing Director Chintan Shah, CFO Ashok Bothra, moderated by Sanjesh Jain from ICICI Securities
Financial Performance • Quarterly Revenue: ₹1,206 million • 15% year-over-year growth • 34% quarter-over-quarter growth • EBITDA: ₹179 million • 25% year-over-year decrease • Net Profit After Tax: ₹116 million • 49% year-over-year decrease • Positive trends: Reduced power and shipping costs • Challenges: High prices of basic chemicals and currency fluctuations
Key Product Performance • PTCs: ₹325 million revenue, 55% year-over-year growth • Electrolyte Salts: 357% year-over-year increase, demand from one major customer on hold • Pharma and Agro Intermediates: ₹264 million revenue, ongoing developments in continuous flow chemistry
Future Outlook • Confidence in growth in electrolyte and specialty chemicals segments • Plans for product trials and commercial supplies • Anticipated stable SDA demand for the next two quarters • Expected rebound in demand from China by late Q2FY24 • Projected revenues of ₹800-850 crores by FY25/FY26
Capital Expenditure and R&D • Completion of capex at Dahej SEZ plant • Ongoing R&D expansions • Future capital raising plans for expansion
Margin and Revenue Guidance • Anticipated flattish growth in the next two quarters • Expected revenues exceeding ₹400 crore for FY23, with reduced profitability • Margins expected to improve slightly in Q4 FY23, normal levels by April 2023 • Conservative revenue guidance of ₹8-9 billion for FY25, gradual ramp-up in production
Challenges and Strategies • Addressing rising raw material costs and maintaining margins • Successful technology implementations for solvent recovery • Focus on long-term customer relationships without increasing prices
New Projects and Approvals • Flame retardants project: full-scale approvals received, commercialization expected in Q1 FY24 • New Greenfield project focused on safety production and continuous flow chemistries
Conclusion • Management expressed optimism about future growth and revenue potential • Encouraged participants to reach out for further queries • Call concluded with thanks to participants