Somany to expand in Tier II cities in AP
Target revenue growth of 12% for FY16 and 15% for FY17
The company has conducted a conference call on 4 February 2016 to discuss the financial performance for the third quarter December 2015 and nine month of FY 2016 and way forward. Mr. Abhishek Somany, Joint Managing Director of the Company, addressed the conference call.
Net sales of the Company grew 10.7% YoY to Rs 413.08 crore in Q3FY 2016 and rose 12.3% to Rs 1207.87 crore in M9FY 2016. Q3FY 2016 PBT grew by 25.3% to Rs. 21.32 crore with margin of 5.2% M9FY16 PBT before exceptional item grew by 26.6% to Rs 57.68 crore with a margin of 4.8%. Q3FY16 PAT grew by 25.8% to Rs 13.86 crore and 18.3% to Rs 35.00 crore for M9FY16.
The Company gross revenue grew 10.7% YoY to Rs 429.86 crore in Q3FY16. The revenue mix was Rs 152.57 crore from own manufacturing, Rs 195.23 crore from JVs, and Rs 82.06 crore from outsourcings. For M9FY 2016, gross revenue grew 12% YoY to Rs 1257.34 crore, with revenue mix was Rs 447.38 crore from own manufacturing, Rs 532.89 crore from JVs, and Rs 277.07 crore from outsourcings.
Sales mix in Q3FY16 - Own manufacturing (35%), JV (45%) and Others (20%) while for M9FY16 sales mix - Own manufacturing (36%), JV (42%) and Others (22%).
The Company tiles business sales volume grew 8.4% YoY to 11.04 million square meters (msm) in Q3FY 2016, while it rose 9.3% to 32.53 msm in M9FY 2016. For Q3FY 2016, sales volume mix was 4.77 msm from own manufacturing, 4.61 msm from JVs and 1.66 msm from others. For M9FY 2016, sales volume mix was 13.90 msm from own manufacturing, 12.43 msm from JVs and 6.20 msm from others.
The Company plans to increase capacity to ~60 msm p.a. by end of Q1FY 2017 from current capacity of ~56 msm p.a. Capacity Expansion for 4.0 msm p.a. of Glazed Vitrified Tiles at Kassar Plant at Haryana is on course for completion by Q1FY17.
The Company remains optimistic about its future growth prospects in general and building and construction material industry in particular especially in the background of various initiatives being taken by the incumbent government which would fructify in near future. Implementation of Government Policies remains the single largest catalyst to Boost Sentiment and Demand across categories of buyers. Investing in branding activities to create a stronger brand recall amongst buyers.
The Company guides tiles industry would benefit in coming quarter after invitation for anti-dumping duty on vitrified tiles on China commenced. Also, expects recent revision in long term gas prices is positive for the company.
The Company has raised Rs. 120 crores via QIP to strengthen Balance Sheet; Interest of Marquee Investors in QIP reinforces confidence.
The Company guides topline growth of around 12% for FY 2016 with 9% volume growth and 15% growth for FY17 with volume growth of around 12%.
CONFERENCE CALL - from Capital Markets
Expects growth in range of 10-12% in FY17
The company has conducted a conference call on 6 June 2016 to discuss the financial performance for the fourth quarter March 2016 and FY16 and way forward. Mr. Abhishek Somany, Joint Managing Director of the Company, addressed the conference call.
- Net sales of the Company grew 12.7% to Rs. 514 crore in Q4FY16 and rose 12.4% to Rs. 1721 crore in FY16. Q4FY16 PBT grew by 85.7% YoYto Rs. 37 crore and 38.7% to Rs. 91 crore in FY16. PBTmarginsbeforeexceptionalitemat7.3%forQ4FY16and5.5%forFY16.
- The Company gross revenue grew 12% YoY to Rs 533 crore in Q4FY16. The revenue mix was Rs 91 crore from own manufacturing, Rs 265 crore from JVs, and Rs 177 crore from outsourcings. For FY16, gross revenue grew 12% YoY to Rs 1790 crore, with revenue mix was Rs 368 crore from own manufacturing, Rs 798 crore from JVs, and Rs 624 crore from outsourcings.
- Sales mix in Q4FY16 - Own manufacturing (35%), JV (50%) and Others (17%) while for FY16 sales mix - Own manufacturing (35%), JV (45%) and Others (20%).
- The Company tiles business sales volume grew 9.9% YoY to 13.82 million square meters (msm) in Q4FY16, while it rose 9.4% to 46.35 msm in FY16. For Q4FY 2016, sales volume mix was 1.63 msm from own manufacturing, 6.35 msm from JVs and 5.84 msm from others. For FY16, sales volume mix was 7.83 msm from own manufacturing, 18.78 msm from JVs and 19.74 msm from others.
- The correction in gas prices and Anti-Dumping duty on Chinese vitrified tiles has increased competitive edge for tiles manufacturers especially the branded tiles players.
- The Company expansion of Kassar plant(Haryana) for 4 MSM of Glazed Vitrified Tiles(GVT) was successfully completed and commercial production was commenced from March 28, 2016. With this total access to tiles manufacturing capacity increases to ~60 MSM.
- Low gas prices, energy conservation practices as well as a value-added mix aided margin expansion in the Q4FY16.
- The Company expects maintaining 0.5-1% increase on PBT margins in FY17 and to maintain PBT growth between 10-12%. A healthy value-added mix will continue to aid margins this year.
- The Company guides 10-12% revenue growth in FY17. The manufacturing unit at Kassar will help topline and bottomlines both this year. Growth in FY17 will also be aided by strengthening demand, especially post monsoon. The focus will also be on expanding sanitaryware manufacturing, which has already begun.
- The Company guides total capex of 40-45 crore for FY17.
Disc: Not invested any more.
Sold off during Feb correction to cash in on the LTCG and reallocate to higher conviction picks.
It posted back to back disappointing results and now keeps on falling. Any idea of the management future plans ?