Company came out with flattish results, with sales declining by 13% and EPS being flat YOY. While results were subdued, if compared with peers (likes of Astec, Sharda, Rallis, NACL, etc.) they were quite good as the industry is going through a massive destocking cycle with Chinese driving down the technical prices. My concall notes below
FY24Q2
- Witnessed drop in volumes (due to inventory overstocking) and prices (due to entry of Chinese peers)
- Margins were higher due to focus on better product mix, better cost management, process efficiencies, R&D focus on new products leading to improved process efficiencies, and better customer support leading to better demand and pricing
- There was a one-time 2 cr. interest cost in this quarter (due to some Supreme Court judgement). This wont repeat
- Australia product has huge inventory in market
- 4 new product registrations: 2 secured + 2 under process. Full potential for approved products will be realized in 12-18 months
- Efforts on LATAM has yielded good results in last year, main problem with that market is that registrations require 3-6 years
- Receivables: generally 50-60 days. In this quarter, percentage of sales in domestic market was higher where credit period is higher
- Lalru: pharma + specialty chemicals products (no agchem products).
- Derabassi: Debottlenecking to improve capacity, will migrate towards higher realization products. Capacity will not be a challenge for growth
- The pharma intermediate products are still under approval, its generally longer cycle compared to agchem
Disclosure: Invested (position size here)