Conference Call - from Capital markets
Expects to grow at 18-20% in FY16
Creation of Real Estate Regulatory Authority (RERA) bring in enormous investments to the sector and boosts demand for Buildings Material
The company has conducted a conference call on 19th May 2015to discuss the financial performance for the fourth quarter ended March 2015 and FY 2015 and way forward. Mr. Abhishek Somany, Joint Managing Director of the Company, addressed the conference call.
The net profit of the company zoomed 32% YoY to Rs 14.8 crore in Q4FY15 on the back of 12% increase in net sales to Rs 455.6 crore. PBT grew by 7.2% to Rs 19.9 crore with margin at 4.4%. For FY15, the Company net profit jumped 59% to Rs 44.49 crore on net sales raising 22% to Rs 1531.3 crore. PBT margin recorded at 4.3%for FY15.
The Company gross revenue grew 11% YoY to Rs 475.3 crore in Q4FY15. The revenue mix was Rs 178.7 crore from own manufacturing, Rs 188.8 crore from JVs, and Rs 107.8 crore from outsourcings. For FY15, the Company gross sales revenue grew 21% YoY to Rs 1598.3 crore. The revenue mix was Rs 623.5 crore from own manufacturing, Rs 611.3 crore from JVs and Rs 363.6 crore from outsourcings.
Geographical Sales for FY15– North (39%), South (29%), West (12%), East (16%), and Exports (4%). Sanitaryware and bath fittings sales at Rs 25.4 crore for Q4FY15 and Rs 79.3 crore for FY15.
Exports stood at Rs 13.9 crore for Q4FY15 and Rs 64.3 crore for FY15.
The Company working capital cycle (excluding current investment) increased to 39 days in FY15 from 37 days in FY14. Meanwhile, leverage ratio declined to 0.7% in FY15 from 0.8 in FY14.
The Company board has recommended a 100% Dividend of Rs. 2/- per equity Share representing a payout of 21%
The Company tiles business sales volume achieved growth of 6.1% YoY to12.6million sqm in Q4FY15. The sales volume mix was 5.6 mn sqm from own manufacturing, 4.4 mn sqm from JVs and 2.6 mn sqm from others. For FY15, the Company tiles business sales volume grew by 11.8% YoY to 42.4 million sqm. The sales volume mix in FY15 was 18.6 mn sqm from own manufacturing, 14.5 mn sqm from JVs and 9.2 mn sqm from others. The sales volume mix in FY15 was 39% from own manufacturing, 38% from JVs and 23% from others.
The Company plans to increase capacity to increase to ~56 msm p.a. in FY16 from current capacity at ~52 msm p.a.
The Company expansion of 2.40 msm p.a. of ceramic tiles at Kadi plant, Gujarat was completed and production started in February, 2015. The Board has given approval for expansion of capacities at Kasar, Haryana by 4 msm p.a.
Real Estate Bill –Instilling Confidence
Creation of Real Estate Regulatory Authority (RERA) will help co-ordinate the development of the sector and promote efficiency and level playing ground for all stakeholders. Mandatory public disclosure of registered properties, disclosure of pro-forma agreements, reduction in diversion of funds paid by buyers, consent for alteration of plans are key provisions that will bring increased trust & faith in the sector. RERA aims to bring clarity on a sector marred with opaqueness, a move that will boost domestic & foreign investment in the sector helping Government to achieve its vision of Housing for All by 2022. RERA provides for fast-track dispute resolutions through adjudicating officers (district judge) and through creation of Appellate Tribunal, providing immense comfort to common buyers.
The Company expects clearances of large infrastructure projects,setting up large warehouses by E-commerce companies-and a cautious positive mood to give a fillip to Buildings Material sector.
The Company expects stable Currency & Gas price, decline in cost of borrowing below 10% p.a. for Real Estate home buyers, and increase focus on better quality and R&D investment will also bode well for Buildings Material Industry.
The Company expects RERA (cleared by Union Cabinet) will boost the confidence of buyers, bring in enormous investments back to the sector ultimately creating a ‘Game Changing Moment’ for Buildings Material Players.
The Company expects Buildings Material sector to grow 11-12% in H1FY16 and 12-13% in H2FY16 and the company (Somany Ceramics) to grow 5-6% above the industry growth.
The Company plans a capex of around Rs 130-140 crore for next two years (FY16 to FY17).
The Company expects PBT margin to increase going ahead due to rise in joint venture (JV). The company expects JV manufacturing will rise from 58% in FY15 to 61% in FY16 and to 63% in FY17.