Call add by Mr. Mithun Chittilappilly , MD of the Co. Key highlights by Capital Mkt;
- Net sales for Q2 FY15 were up by 29% to Rs 431.3 crore while net profit inclined by 32% to Rs 19.2 crore. OPM inclined by 17 bps to 8.1%.A strong growth recorded in the digital UPS, electric water heater and stabilizer.Digit UPS jumped up by 138% from a low base and stabilizer grew by 25% as power issues in southern states continued
- The mgmt said that inverter segment is under huge pressure since last few years however with demand for power increasing long term prospects remains positive.The launch of new brand called âPebble' in electric water heater on pan-India basis has given lift to its water heater sales
- OPM was impacted due to one-off expenses which includes warranty cost, related to change in after sales service model and new call center services worth Rs4.5 crore in this quarter.The advertising expenses was around 3.3% of sales in this quarter and going forward the mgmt will keep advertisement spend around 3.5-4% for the full year.The south market witnessed a 21% growth on a high base in Q2 FY2015. Growth in South markets was driven by old Andhra Pradesh which has grown by 40-45%, as last year there was disturbance in market which impacted the growth.
- The non-south market registered a robust growth of 47% on a low base and the share of revenue from non-south market touched 33%. Stabilizer, wire, electric water heater, pumps and inverters are main products which are marketed in non-south market.Net working capital days were up from around 70/71 days to 81 days largely due to inventory pile up for winter and festive season ahead. The mgmt said that October saw better offtake and inventory days should stabilize by end Q3 FY15.
- The mgmt said that presently the fall in copper prices may affect negatively due to mark-to-market hit but for long term it is positive as it will bring down the cost.The Company is working with external consultant to improve its supply chain issues like procurement, planning and distribution which will reduce its working capital significantly.The mgmt said that the consumer sentiments are still low and construction activity has not picked up as expected, which has impacted its growth. However mgmt expects both to pick up.The mgmt retained its guidance of 20% revenue growth and EBITDA margin of 8.5-9% for the full year.
Product wise sales break up is as under: -
|Contribution of major products to Top line|
|Products||Q2FY2015 Net sales in Rs crore||YoY Var %||Contribution % to sales|
|House wiring cable||140.2||19.6%||32.5%|
|Electric water heater||60.4||43.1%||14.0%|
|Solar water heater||12||42.3%||2.8%|