Ranvir's Portfolio

[ranvir]

Marico Ltd -

Q3 FY 25 results and concall highlights -

Revenues - 2794 vs 2422 cr, up 15 pc ( very strong topline growth for FMCG company )

EBITDA - 533 vs 513, up 4 pc ( margins @ 19.1 vs 21.2 pc - margin contraction due to steep RM inflation )

PAT - 399 vs 383, up 4 pc

India volume growth @ 6 pc, revenue growth @ 17 pc
International constant currency growth @ 16 pc

A&P spends are up 19 pc YoY in Q3 ( company continues to spend aggressively behind A&P despite facing a tough demand and RM situation - a key positive for long term )

Brand wise performance -

Parachute ( 33 pc of domestic business ) - volume growth @ 3 pc, value growth @ 15 pc

Saffola Oils ( 18 pc of domestic business ) - low single digit volume growth, value growth @ 24 pc

VAHO ( 19 pc of domestic revenues ) - negative volume growth, value growth @ (-) 2 pc

India Foods business ( Saffola oats, Muesli, True Elements etc have now reached an annualised run rate of aprox 1000 cr ) - value growth in Q3 @ 31 pc !!!

Premium personal care ( like - LIVON, SET WET ) - has reached annualised run rate of > 300 cr

Digital first brands ( like - PLIX, Beardo ) - have reached annualised run rate of > 600 cr

International business ( constant currency growth ) -

Bangladesh - 20 pc
Vietnam - flat
MENA - 35 pc
RSA - 17 pc

Aim to take foods portfolio to annual sales > 2000 cr by FY 28. Foods business is witnessing steady GM expansions - as its scale expands, it should only get better

Aim to double the annual business of Digital First brands by FY 28 with double digit EBITDA margins

Aim to have a direct reach @ 15 lakh outlets by FY 27 vs 10 lakh outlets in FY 24

Aim to take foods business share in India business to > 25 pc by FY 27 from 20 pc in FY 24

Aim to reduce Bangladesh business as a percentage of International business to < 40 pc by FY 27 from 44 pc currently

Key commodity prices in Q3 -

Copra - up 38 pc YoY
Rice Bran Oil - up 19 pc YoY
LLP - down 8 pc YoY
HDPE - down 5 pc YoY

Urban demand continues to be soft. Rural demand is witnessing a strong recovery

Bangladesh business continues to grow strongly despite challenging macro environment ( very strange - imho )

Successfully diversifying the business towards Foods + Digital first and Premium brands has been a key success at Marico in the last 3-4 yrs

PLIX has started to break even. Burn rate in True elements has now reached manageable levels

True elements is placed above Saffola in the healthy foods segments

Company is not pushing its Digital first businesses to go for very high growth rates ( like > 50 pc CAGR ) and simultaneously burn cash. Company would rather not burn cash and maintain a 25-30 pc kind of growth rates - applying this strategy for brands like - Berardo, PLIX

Saffola Oats ( Plain + Masala ) generates EBITDA margins near company average

Saffola Honey is also doing well - both on volumes and margins. Saffola Soya chunks is also scaling up well

In the next 3-5 yrs, company believes - all their new initiatives like brands in Foods, premium personal care and digital first categories - should reach the company level EBITDA margins of around 20 pc

PLIX addresses 2 of Indian Youth’s 2 primary requirements - Staying young + Looking young. Basically - the brand has huge tail winds

Growth in VAHO ( value added hair oils ) is being impacted ( for quite some time now ) because of unreasonable competition in the market place. Company is reluctant to indulge in undue price cuts / discounts just to crank up volumes. Once the price war is over ( in next 12-18 months ) and marginal players r out of the mkt, company expects the growth to resume in the VAHO category

Disc : hold a small tracking position, have bought a few FMCG stocks because of overall mkt weakness, not SEBI registered, not a buy / sell recommendation

[ranvir]

Mankind Pharma -

Q3 FY 25 results and Concall highlights -

Revenues - 3230 vs 2607 cr, up 23 pc ( organic growth was @ 11.2 pc )

Gross margins @ 71 vs 68.3 pc ( due increase in selling prices favourable sales mix, favourable input costs )

EBITDA - 833 vs 611 cr, up 36 pc ( margins @ 25.8 vs 23.4 pc ). Adjusted EBITDA margins were even higher @ 27.8 pc - adjusted for costs related to the merger

PAT - 385 vs 460 cr, down 16 pc ( lower PAT due to far higher interest cost @ 199 vs 4 cr YoY - against the debt taken on books to fund the BSV acquisition )

Segment wise performance -

Domestic formulations - 2580 vs 2251 cr, up 14 pc ( organic growth was @ 8 pc )
Consumer Healthcare - 193 vs 149 cr, up 29 pc
Exports - 457 vs 207 cr, up 120 pc ( led by growth in base business + BSV’s acquisition. Organic growth was 43 pc )

Debt on books @ 6739 cr

BSV acquisition helped the company to gain no 1 spot in Gynae therapy in India

Company adopted some corrective measures to improve field force productivity which caused a slowdown in domestic formulation sales. Same is likely to be reversed going forward

Mankind’s share of chronic business @ 37.6 pc. BSV’s share of chronic business @ 15.2 pc

In Q4, company grew its chronic business @ 1.2X the IPM’s chronic growth. This was aided by - 95 pc growth in Nobeglar ( Insulin Glargine - InLicensed from Biocon ) + 24 pc combined growth in Combihale ( acquired from Dr Reddy’s ) + Symbicort ( InLicensed from Astra Zeneca )

Some of the speciality brands launched by the company in last 2 yrs -

Neptaz ( heart failure ) - in-licensed from Novartis

Crenzlo ( high LDL ) - in-licensed from Novartis

Nobeglar ( type 1 Diabetes ) - in - licensed from Biocon

Combinable ( Obstructive pulmonary disease ) - acquired from DRL

Symbicort ( Obstructive pulmonary disease ) - exclusive distribution arrangement with AstraZeneca

Daffy ( Pediatric skin and hair care ) - acquired from DRL

Vonatime + Vonalong ( Gastroesophageal reflux disease ) - in - licensed from Takeda

Company’s rank in IPM in their strong therapies -

Gynae - 1
Cardio - 3
Anti-Diabetic - 5
Anti-Infectives - 4
GI - 4
Respiratory - 5

Overall - the company is ranked no 4 in IPM

Company’s popular OTC brands include -

Manforce, GasOFast, HealthOK brands, AcneStar, PregaNews, Unwanted72, Nimulid, OvaNews

Company had acquired Bharat Serum and Vaccines ( BSV Ltd ) in Q2. Their high entry barrier, difficult to make, speciality products in Women’s healthcare and Critical care are expected to drive a lot of growth for Mankind Pharma in India and EMs

BSV’s brands mainly consist of difficult to make and niche - Recombinants, Biologics, Novel Delivery drugs and Immunoglobulins

InLicensed Sintilimab from Innocent Biologics. Its an advanced immunotherapy drug used in cancer treatment

Company’s 4 growth engines include -

Steady base business
Fast growing super speciality + chronic business
Promising OTC business
High entry barrier business acquired from BSV

R&D expenses were @ 71 cr ie 2.2 pc of sales - well within the guided range

Reported EPS @ 9.4 vs Cash EPS for Q3 stands @ 14.2 ( adjusted for depreciation and amortisation )

The on time actions initiated by the company in Q3 wrt its field force include steps to boost - sales force optimisation, productivity improvement, efficiency improvement. These steps have resulted in one time slowdown in the business on the acute side. Should reverse in Q4 / Q1 next yr

Company is confident of growing BSV’s business @ > 15 CAGR rates in medium term with scope of upside from their exports business

Cost of debt ( sitting on the balance sheet - taken up for BSV acquisition ) is sub 8 pc

Over medium term, company aspires to reach 30 pc kind of EBITDA margins for the BSV part of the business

Company has made a lot of new appointments ( at senior levels ) in each of its 15 business divisions. These new leaders should infuse new energy and new ways of doing business into the company. Company hopes that the effect of these changes should start to become visible wef next FY ( hoping for double digit growths in most of these divisions )

Disc: holding, biased, inclined to ad more on dips, not SEBI registered, not a buy/sell recommendation

[ranvir]

JB Chemicals -

Q3 FY 25 results and concall highlights -

Revenues - 963 vs 845 cr, up 14 pc
Gross margins @ 67.1 vs 67.6 pc
EBITDA - 255 vs 223 cr, up 14 pc ( margins @ 26.4 vs 26.4 pc )
PAT - 162 vs 134 cr, up 22 pc

Cash on Books - 516 cr

Segmental performance -

Domestic formulations - 566 cr, up 22 pc. Sales of acquired ophthalmology portfolio stood at 60 cr, up 30 pc YoY. Company has deployed a field force of 120 MRs for the Opthal portfolio. Excluding the Opthal portfolio, the domestic business grew @ 12 pc YoY ( volume growth @ 7 pc )

International formulations - 254 cr, down 4 pc. Branded generic exports to RSA and other EMs grew, exports to US, Russia de-grew

CMO - 118 cr, up 33 pc - order book remains robust for Q4. Company is among the top 5 lozenges manufacturer in the world

APIs - 25 cr, down 15 pc

JB Chemicals is currently ranked 22nd in the IPM vs 27th in Dec 2020 ( a massive 5 - rank improvement )

Company’s 5 brands feature in India’s top 150 brands. These are - Cilacar, Rantac, Cilacar-T, Metrogyl, Rantac

Other brands gaining significant traction include - Sporolac, Azmarda, Razel, Lobun, Cilacar-M, Cilacar-TC

Company’s share of domestic revenues now stands @ 60 pc vs 46 pc in Dec 20

Company’s share of Chronic : Acute currently stands @ 48:52 vs 37:63 in 2018. Aim to take the chronic share to 60 pc in medium - long term

Fileld force productivity @ 70 lakhs. Aim to keep growing it @ 12-14 pc rates in near future

At present, 25 of company’s brands clock an annual revenue of > 25 cr / yr

ESOP costs for FY 25, 26, 27 estimated @ 58 cr, 40 cr, 24 cr ( have already incurred 40 cr in 9M FY 25, rest will be incurred in Q4 )

Expecting a strong export business outcome ( specially US ) in Q4

Company’s CMO business should continue to grow in Mid Teens on an annual basis in short to medium term

Company has booked 4 cr of exceptional losses in Q3 on account of currency depreciation - Ruble

India business + CMO businesses have the highest gross margins. Together, they contribute to 70 pc of company’s sales at present. In next 2-3 yrs, company aims to ramp up these two businesses to 80 pc of company’s total business

Azmarda ( Valsartan + Sacubitril ) continues to grow strongly. Has already clocked 70 cr in sales in 9M FY 25. Expect this brand to keep clocking double digit growths in near future

Company remains open to inorganic acquisition opportunities ( at right valuations and complimentary synergies - obviously )

Expect to end the year with a cash surplus of aprox 650 cr

Sporolac brand should cross 100 cr / yr sales mark in near term

Have lined up a few liquid pro-biotic launches in the near future. Should materialise - early next yr

Not planning to meaningfully add MRs in next 12-18 months. Current strength of MRs is enough to carry forward company’s growth in near term

Company is extremely bullish wrt their CMO business for next 1-2 yrs. Expecting 3-4 new projects to start kicking off wef next FY. Company will even have to incur capex in order to service these projects (although the quantum of capex is not heavy )

Expect EBITDA margins to improve further in Q4

Disc: holding, biased, inclined to add more on dips, not SEBI registered, not a buy/sell recommendation

[ranvir]

RPG Lifesciences -

Q3 FY 25 results highlights -

Revenues - 172 vs 153 cr, up 12 pc
EBITDA - 52 vs 40 cr, up 32 pc ( margins @ 30.4 vs 25.9 pc YoY - massive margin expansion )
PAT - 35 vs 27 cr, up 30 pc

Segmental sales breakup -

Domestic formulations - 330 vs 294 cr, up 12 pc. New product ( launched after FY 19 ) contribution improving consistently, now accounting for > 25 pc of domestic sales. Sales force productivity now @ > 6 lakhs / month

International formulations - 98 vs 86 cr, up 15 pc. New products + New mkts ( launched / entered after FY 19 contribution now at 30 pc of international sales )

APIs - 77 vs 71 cr, up 8 pc

Company’s biggest brand - Naprosyn ( includes Naprosyn + Naprosyn Gel, Naprosyn SR, Naprosyn Gel, Naprosyn M, Naprosyn D ) - is likely to become a 100 cr / yr brand in near future ( by next FY )

Popular brands from company’s stable include -

Naprosyn - Painkiller
Azoran - Immunosupressant
Lomotil - used to treat diarrhoea
Immunotac - Immunosuppressant
Arpimune - Immunosupressant
Mofetyl - Immunosupressant

In FY 27, new API and International formulations plant will be operational with new product launches. That should lead of accelerated growth in these business segments

Cash on books @ 159. Once the company receives the cash against the land parcel sold by them, cash balance should rise to around 250 cr. This money will be used to fund acquisition of formulation brands / API facilities in the domestic mkts

Disc: holding, biased, not SEBI registered, not a buy / sell recommendation, posted for educational purposes

[ranvir]

Some broad brush highlights from the Q3 FY 25 concall of Electronics Mart India Ltd -

Revenues - 1885 vs 1775 cr, up 6 pc
Gross Margins @ 13.5 vs 14.3 pc
EBITDA - 99 vs 115cr, down 14 pc
PAT - 32 vs 46 cr

Geography wise revenues -

Hyderabad City - 1079 vs 1095 cr, down 1 pc. SSSG @ (-) 6 pc

Telangana - 272 vs 235 cr, up 16 pc. SSSG @ 4 pc

AP - 247 vs 206 cr, up 20 pc. SSSG @ 1 pc

Delhi NCR - 128 vs 81 cr, up 57 pc. SSSG @ 9 pc

No of stores added in Q3 @ 14

Breakdown of new store additions - Telangana- 2 stores, AP - 10 stores , NCR - 2 stores

Aim to add another 10-12 stores in Q4, taking the total store count beyond 200. Current total strength of stores @ 191 ( have added 31 stores in 9M FY 25 )

AP+ Telangana + Hyderabad - EBITDA margins @ 7.4 pc

DELHI NCR EBITDA margins @ 0.1 pc

Avg ticket size in Q3 @ 23.4 k vs 24.5 k in Q3 LY

Looking forward to a strong summer season + demand recovery due recent tax cuts

Company’s heavy dependence on Hyderabad city cluster is a key risk. As this dependence reduces in next 2-3 yrs, company may be back to a high growth path again. As the new stores ( specially in non HYD mkt ) gain momentum, company should be in for some good times

Should add another 30-35 stores in FY 26 - in the existing clusters. Total store count by end of FY 26 should be > 230

Seeing strong topline growth in Jan + Feb. Should report strong Q4 results

Even the sales for mobile phones + Kitchen appliances is also picking up ( in Jan/Feb )

65 pc of company’s sales happen via financing channels ( banks + NBFCs )

Out of the 35 stores slated to be opened next yr, 06 stores should come up in Delhi NCR and the rest in Telangana ( 11 stores ) + AP ( 15 stores ) + Hyderabad ( 03 stores ) region

Current store count in Hyderabad stands @ 69 stores. Added 05 stores in Hyderabad in FY 25 ( till date )

Company aspires Hyderabad cluster should keep clocking 1-3 pc kind of SSSG in medium term. New stores and geographies should take care of growth. In Q4, Hyderabad cluster is showing descent SSSG growth

Company generates highest EBITDA margins in Telangana followed by AP followed by Hyderabad city mkts

Maintaining 15 pc growth guidance for FY 26

Disc: holding, added more recently, not SEBI registered, not a buy/sell recommendation, posted for educational purposes only

[ranvir]

Jagsonpal Pharma

Q3 FY 25 concall highlights -

Revenues - 74 vs 47 cr, up 57 pc ( organic growth @ 27 pc )
EBITDA - 17 vs 6 cr ( before ESOP ), up 183 pc. Margins now @ 23 pc vs 12 pc in Dec 23 !!!
PAT - 11 vs 4 cr ( not counting post tax exceptional gain accrued via sale Faridabad facility )

Cash on books @ 132 cr

Company’s 4 focus therapies include -

Gynaecology
Orthopaedics
Pediatrics
Dermatology

Jagsonpal Pharma acquired the operations of Yash Pharma for 92 cr in May 24 and got access to their Derma and Paediatric brands

Aim to launch 4-6 products every year - to sustain organic growth. Aim to keep boosting sales force productivity through various initiatives. Aim to keep clocking 10-12 pc organic growth wef FY 26

Company’s biggest brands include -

Indocap - pain killer used for mensural, dental pains

Maintane Injection - prevents premature labour pain

Metadec - to treat post menopausal osteoporosis

Divatrone - Dydrogestrone ( used to treat infertility )

Lycored - Dietary supplement

Indocap and Divatrone were facing issues wrt counterfeit products being available in the mkt in early part of FY 25. Most of those issues are now behind

Yash Pharma’s business is now clocking margins very close to consol corporate avg. There has been a massive turnaround in the margins of the acquired business

Should reach a cash balance of 150 cr by end of Mar 25. Will be used for inorganic acquisitions ( Pharma brands in India ) - if not possible, then dividends

MR productivity @ 2.6 lakh / month - have a huge headroom for growth. Not likely to increase MR strength in near term

Going fwd - Aim to keep expanding Gross margins by 120-150 bps / yr

Company launched a new branded product - MemUp in Q1. It’s a hormone replacement therapy for management of menopause symptoms. Haven’t achieved much financial success with the product as yet. But its a promising product - going fwd

As the Divatrone sales come back ( after the resolution of counterfeit issues ), it should help company boost its growth rates wef Q4

Company is ranked no 8 in the Gynae mkt in India. Ortho, Pedia, Derma account for 20 pc, 12 pc and 13 pc of company sales. 55 pc of sales come from the Gynae division

Disc: holding, biased, added recently, not SEBI registered, not a buy/sell recommendation

[ranvir]

Eveready Industries -

Q3 FY 25 results and concall highlights -

Revenues - 333 vs 304 cr, up 9 pc
Gross profits @ 145 vs 135 cr, up 8 pc
EBITDA - 29 vs 24 cr, up 18 pc ( margins @ 8.8 vs 8.1 pc )
PAT - 13 vs 8.4 cr, up 56 pc

Revenue growth led by robust performance in batteries + flashlights. Carbon Zinc batteries witnessed healthy recovery ( sales up 7 pc YoY ), Alkaline battery volumes surged 100 pc YoY - achieving a mkt share of 12 pc

Flashlights sales grew 19 pc YoY. Rechargeable flash lights grew 55 pc. Decline in non-rechargeable batteries has slowed down

Consumer lighting grew by 4 pc YoY despite healthier volume growths ( due pricing pressures )

A&P @ 11 pc of sales - very healthy levels of spending !!!

Company has acquired land @ Jammu for the greenfield manufacturing facility for Alkaline Batteries. Expect commencement of manufacturing wef Dec 26

Continuously expanding their electrical outlets by appointing new dealers - specially for consumer luminaries

Recently launched mosquito rackets are doing well

Company’s sharp gain in Mkt share in Alkaline batteries is because of company’s focus on those products helped by company’s vast distribution network

Once the company’s Alkaline battery plant goes live, their margins in the Alkaline segment can potentially improve by 8-10 pc !!!

Additionally they ll get some fiscal benefits since they are putting up a new plant in Jammu

By year end, company’s gross debt should be down to 225 cr or so

The Jammu plant should have the capability to clock 400 cr of peak sales

Current FMEG distributors count that the company is working with is @ 250. Company aspires to double this in medium term

Company aspires to achieve 20 pc mkt share in Alkaline Battery mkt in short to medium term and 50 pc mkt share in long term ( just like their mkt share in Carbon-Zinc mkt )

Alkaline battery segment in itself is growing in healthy double digits

Segment wise Revenues, EBITDA margins -

Batteries - 65 pc , 16 pc
Flashlights - 11 pc, 10 pc
LED lighting - 23 pc, flat

Even when the company’s Jammu plant comes online and the margins in the Alkaline segment improve, they will still continue to be below the margins earned by the company in the Carbon-Zinc battery segment

Peak debt levels that company expects should be around 325 cr ( because of the upcoming Greenfield capex )

Disc: holding, biased, not SEBI registered, added recently, not a buy/sell recommendation

[ranvir]

Dhanuka Agritech -

Q3 results and concall highlights -

Revenues - 445 vs 403 cr, up 10 pc
Gross margins @ 39.9 vs 38.5 pc
EBITDA - 75 vs 62 cr, up 21 pc ( margins @ 17 vs 15.4 pc )
PAT - 55 vs 45 cr, up 21 pc

Company’s Infra - 4 manufacturing facilities, 6500 distributors, 80k retailers, 01 R&D center, International collaborations with 10 leading global agrochemical companies across EU,US, Japan

Received excellent response in Q3 for 2 of its newly launched products - Lanevo and Myco Super. Have introduced another 9(4) product - Roxa in Q3 - a wheat crop herbicide

Have acquired international rights to manufacture 02 AIs - Iprovalicrab and Triademenol ( invented by Bayer AG ). Plan to export it to 20+ countries - including LatAm, EU, ME, Africa

Aim to launch - margin accretive 8 new 9(3) products in next 2 yrs

Three of company’s newly launched products - Purge ( Japanese herbicide for Groundnut and Soybean ), Lanevo ( insecticide for horticulture crops ) and Myco Super ( biologic - for soil health - used across a wide range of crops ) - are doing exceedingly well in the marketplace and exceeding even the company’s expectations. Both Purge and Lanevo are in-licensed from Nissan ( Japan ) - as reported in Q2 concall

The patented products ( that the company in-licesnces ) from Innovators - contribute to > 600 cr of company’s topline at present ( out of an annual topline of aprox 1950 cr )

Zanet ( another in-licensed product launched LY - fungicide used on Potato, Tomato crops ) is also doing very well - as reported in Q2 concall

All 4 products - Zanet, Lanevo, Myco Super and Purge are exclusively with Dhanuka. The same is likely to continue for medium term

At present - company derives 33 pc of its revenues from In-Licensed products

Company makes 10-15 pc extra gross margins on these exclusive - inlicensed products. Generally, company starts with 3-5 yrs exclusivity agreements with the innovators. The same is extendable after that

Geography wise sales break up for Q3 -

North - 22 pc
East - 12 pc
West - 28 pc
South - 38 pc

Product wise sales break up for Q3 -

Insecticides - 30 pc
Fungicides - 20 pc
Herbicides - 34 pc
PGRs + Biologics - 16 pc

10 pc topline growth has come from - Volume growth @ 11 pc, Pricing growth @ (-) 1 pc. Company expects price growth to be back wef Q4

Dahej facility’s topline @ 26 cr, EBITDA loss @ 12 cr ( for 9M FY 25 )

Going to launch 02 X 9(3) products in FY 26 + around 3 to 4 X 9(4) (me too) kind of products

Looking to clock 60 - 70 cr of revenues from Dahej AI facility in FY 26

Company has reported best ever gross margins in 9M FY 25 vs last 5 yrs. Company maintains that it may see mild correction in Gross Margins going forward

The 02 Bayer’s products - that company is going to make are generic in nature. Have paid 160 cr in order to acquire these 2 products ( includes product registrations and marketing rights across 20 + countries ). These 2 products should have a peak revenue potential of 250 cr / yr for the company ( likely to be achieved over next 3-4 yrs ). Should achieve 175 cr sales in FY 27 for these 2 molecules

Expecting a topline growth of 15 pc for FY 26 ( backed by 10 pc + kind of volume growth )

Company strategy of introducing innovative in-licensed products, educating the farmers and quickly scaling them up is working well and is keeping the company’s volume growth @ healthy levels. Their generic products aren’t doing well ( similar is the story for the entire Industry wrt generic products )

GMs in 38-39 pc kind of band should be sustainable in medium to long term

Company is working really hard wrt investments towards - educating farmers, educating the channel, keeping the channel healthy etc - the same is working out really well - and is a key differentiator between the company and its competitors

Maintaining a full year revenue growth guidance of 14 pc for full FY 25

Both the acquired Bayer molecules should generate current company level EBITDA margins. Company expects to shift manufacturing of one of the molecules in India in the near term. Will keep sourcing the second molecule from 3rd party sources for the time being

In North India, sugarcane farmers are battling Red-Rot disease. This disease is affecting the highest yielding variety of sugarcane in North India. Normally, farmers are advised to never grow > 25 pc of one particular type of variety. However, this particular variety is covering 75 pc of sugarcane acreage and hence it is becoming very difficult to control the stress that is being caused by this disease. It has now become a pandemic. Hence Farmer education is paramount

Disc: holding, biased, added recently, not a buy/sell recommendation, not SEBI registered

[Mayank.mail]

Hi Ranvir, How has been your experience of using this MTF mode at ICICIDIRECT? I mean if the share fall continues, is there a fear of the pledged share being sold by them to recover? And with every fall, do they keep asking for more shares to be pledged? pls guide, i have been contemplating this route for some years, but these questions have kept me out… Thanks! Mayank

[ranvir]

Cera Sanitaryware -

Q3 FY 25 results and Concall highlights -

Revenues - 452 vs 439 cr
EBITDA - 62 vs 61 cr ( margins @ 14 vs 14 pc - flat YoY )
PAT - 46 vs 52 cr

Company sells its products under 3 prominent brand names - CERA, SENATOR, LUXE. Company is investing aggressively behind the - Senator, Luxe, Lustre brands - basically to build a stronger presence in the Luxury space

LY, company increased its faucets ware capacity from 3 lakh pieces / month to 4 lakh pieces / month

Company has acquired a land parcel for a new Greenfield sanitaryware facility. Not likely to commence construction in current FY - looking at the current mkt situation. Complete build up of the facility should take 18 months from day Zero. Company can take up the capacity of sanitary ware segment to 120-125 pc. Hence, they are currently waiting before commencing the Greenfield expansion. Plus they can also outsource a proportion of production

Company intends to set up a total of 75 stores selling only their Luxury brands ( 25 stores in this FY and another 50 in next FY ). They intend to take Luxury segment sales of their brands to around 10 pc in next 3-5 yrs. It should be a long drawn affair. In the meantime, they ll keep focussing more on the Premium segment

Did not see the expected demand pick up in Q3. B2B demand was good, retail demand remained tepid

Q3 revenue breakup -

Sanitaryware - 50 pc
Faucetware - 37 pc
Tiles - 11 pc
Welness products - 2 pc

Have been aggressively developing high-tech, luxury products under the Senator / Luxe brand - to increase their mkt share in the luxury segment

Capacity utilisation levels @ faucet ware, sanitary ware segments remain @ around 90 pc

B2B sales accounted for 35 pc of company’s sales for 9M FY 25

Guiding for lower single digit topline growth for FY 25

Avg Gas prices in Q3 -

From GAIL - Avg 28.29/ mtr qube
From Sabarmati Gas - Avg 45.31 / mtr qube
Weighted Avg @ 33 / mtr qube ( as bulk of the procurement happens from GAIL )

Gas costs for the full Qtr were @ aprox 6 cr

WC days increased from 60 to 76 days in Q3

Geography wise sales for Q3 -

Tier 1 - 35 pc
Tier 2 - 21 pc
Tier 3 and below - 44 pc

Cash on books @ 662 cr, down from 774 cr ( due buy back that happened in Q2 )

Company aspires to achieve EBITDA margins @ around 16 -17 pc - but that may happen only when the demand scenario improves ( so that company doest have to offer discounts )

Recent budget announcements + rate cuts from RBI may lead to some demand recovery in 1-2 Qtrs

The sluggishness in retail demand has been in the mkt for last 4-5 Qtrs now

Company has been resorting to discount sales for last 4 Qtrs now due sluggish demand scenarios ( and hence the margin contraction )

Outsourcing : Captive manufacturing mix for 9M FY 25 -

Sanitaryware - 57:43
Faucets - 48:52

Generally company manufactures value added, hi-tech products in house and outsource the others

Historically, company’s project : retail sales were @ 30:70 which has now gone to 35:65 due faster growth in the projects side of the business and sluggishness in retail demand

Luxe and Senator brands should contribute to 10 pc of sales by end of FY 27. Margin profiles for Luxe and Senator brands should be significantly better than the Cera brand of products

Disc: holding, biased, not SEBI registered, may add if the demand scenario improves, not a buy/sell recommendation

[ranvir]

I use it extensively ( during mkt falls - to profit from them )

Its highly recommend ( IMO ) provided u keep ur leverage below 20 pc. If u over leverage, it may become difficult to handle daily interest payments

How I do it is as follows - If I have to buy shares worth X, I generally pledge shares worth 2X - so that they don’t keep asking for additional pledges ( as such pledging in itself costs nothing )

U basicaaly need to have money in ur account to service the daily interest payments = 9 pc of the total value of shares bought / 365 days

9 pc is the annual interest rate

[ranvir]

Insecticides India -

Q3 FY 25 results and concall highlights -

Revenues - 358 vs 358 cr ( flat YoY )
Gross profit - 129 vs 108 cr, up 20 pc
EBITDA - 31 vs 26 cr, up 19 pc ( margins @ 8.65 vs 7.3 pc )
PAT - 17 vs 12 cr, up 42 pc

WC ( Inventory + Recievables - Payables ) @ 673 cr vs 693 cr YoY ( WC days @ 132 vs 127 days ) - slight deterioration in WC

Sales of premium : Generic products @ 55:45 vs 56:44 LY

B2C:B2B:Export sales @ 82 : 11 : 7 vs 78 : 16 : 6 (LY)

Product wise sales breakup -

Herbicides - 33 pc
Insecticides - 45 pc
Fungicides - 19 pc
Biologics - 3 pc

Manufacturing footprint -

2 - Active ingredients plants ( @ Chopanki and Dahej )
6 - Formulation plants ( @ Chopanki, Dahej - 1, Dahej -2, Udhampur, Samba, Sotanala )
1 - Biologics plant ( Shamli )
4 - R&D centers

Company’s product basket -

Herbicides - 34 products
Insecticides - 51 products
Fungicides - 13 products
Biologics - 11 products

Some of company’s leading brands include -

Lethal - Anti-Termite ( a leading, 37 yr old brand ) Shinwa - Insecticide ( in-licensed from Nissan ) Torry - Herbicide
Hachiman - Herbicide ( in-licensed from Nissan ) Pulsor - Fungicide ( in-licensed from Nissan )
Green Label - Herbicide
Hercules - Insecticide
Mission - Insecticide

At present, company has 11 Focus Maharana products. These r high growth, high margin products ( mostly with Pan India presence ). Aim is to keep graduating more products from Maharatna to Focus Maharatna category. Maharatna products are currently smaller with regional presence. These Maharatna + Focus Maharatna products have gross margins > 40 pc vs 15 pc for plain vanilla generics - taken from Q2’s concall

For 9M FY 25, sales of premium products have reached 62 pc of total sales - this has helped the company boost its margins in last 1 yr. Company aims to take it to to 65 pc by end of next FY

9M volume growth in premium products @ 19 pc, Volume growth in B2C segment @ 12 pc - for 9Ms

Company is confident that another 4 products should be able to graduate to Focus Maharatna category in next 1-2 yrs ( products like - Stroke, Torry Super, Terrox )

Another new product ( in licensed from Nissan ) is going to be launched in the upcoming Kharif season. It will be branded as Altair - a herbicide

Another brand that’s doing really well is Green Expert ( A rice crop herbicide ). Company hopes that this product should also get in to the Focus Maharatna bracket in medium term

Company is going to launch > 6 new premium products over next 12 months

Company is optimistic about all three of its business segments for Q4 ie B2B, B2C, Exports. Govt initiatives are turning out to be really beneficial for the rural economy

Should be able to maintain double digit EBITDA margins for entire FY 25 vs 8 pc in FY 24

In next 4-5 yrs, company expects to reach the 12-13 pc kind of annual EBITDA margin trajectory

Bulk of company’s export business is export of Active Ingredients and not Technicals

Company believes that the prices of RMs and hence formulations have bottomed out. They r seeing gradual price increases in Q4 ( otherwise a lean season ). This reflation in prices augurs well for the Industry

Capex lined up for next 2 yrs ( to expand formulation + technicals capacity ) stands @ 125 cr

The composition of 06 products that company has lined up for launch in next 12 months is - 04 Insecticides, 01 herbicide and 01 fungicide

Company has launched a PGR named Seaweed. It’s a biologic product with excellent results. Company believes, they can scale it upto 50-60 / yr kind of sales in next 3-4 yrs

For a product to be categorised as Focus Maharatna, it has to do an annual sales of > 35 cr with > 35 pc GMs

Company is actively working on a number of Biologic products. These r for company’s future as the Mkt would have moved towards biologics by next decade. Can’t talk much about them to maintain secrecy

Company is going to spend Rs 125 cr over next 2 yrs @ Sotanala to set up the AI + Formulations facility. This facility should have a peak revenue potential of aprox 500 cr

Disc: holding, added recently, biased, not a buy/sell recommendation, not SEBI registered

[ranvir]

Cello World -

Q3 FY 24 results and concall highlights -

Revenues - 556 vs 527 cr, up 6 pc
Gross Profits - 277 vs 271 cr, up 2 pc ( GMs @ 49.7 vs 51.5 pc )
EBITDA - 140 vs 137 cr, up 2 pc ( margins @ 25.1 vs 25.9 pc )
PAT - 92 vs 90 cr, up 2 pc

Category wise breakdown of revenues -

Consumerware - 68 pc ( includes - houseware, insulated ware, cleaning aids, Opalware, Glassware )
Writing Instruments - 15 pc
Moulded furniture - 17 pc

Channel wise distribution of revenues -

General trade - 76 pc ( company operates through a network of 3.5k distributors and 1.45 lakh retailers - combined for all three verticals )
Modern trade - 5 pc
Exports - 8 pc
E-Comm - 11 pc

Company has 14 manufacturing facilities, make 77 pc of the products, in house

Company started its Glassware and Opalware under the Cello Brand and Cleaning aids business under the Kleeno brand name in 2017. Their writing instruments and Stationery business was launched in 2019 under the Unomax brand. ( previously, the writing instruments business under the Cello brand name was sold in 2015 )

Company has recently commissioned a new Glassware manufacturing facility in Rajasthan ( in Q3 FY 25 ) with annual capacity of 20k tonnes + Expanded their Opalware capacity @ Daman to 25k tonnes

Currently undertaking planned increases in installed capacities of plastic products, insulated ware, moulded furniture, writing instruments and stationery

Russia and US are two of their major export markets

The new glassware facility in Rajasthan is also an import substitution play. Company intends to substitute some of glassware imports coming from China, Thailand, Indonesia, Middle East and Turkey. The annual glassware import into India is about 2200 cr. Company intends to capture 10-12 pc of this market

At present, the only comparable manufacturing facility of glassware in India is located in Firozabad. That too produces a product which in not is Tier -1 wrt quality

The Rajasthan glassware facility has commenced commercial production on 01 Feb ( after conducting trial production for over 2 months )

Have received good export orders, to be executed over the course of Q4 - should help the company to close FY 25 on a high ( aided by the recent tax and interest rate cuts )

Rajasthan plant should start clocking 5-7 cr kind of monthly revenues from the new Rajasthan plant wef Q1 and build on this monthly run rate wef H2 FY 26. Would like to ramp up revenues from this facility to 250 cr by end of FY 27

GM contraction is due to lower sales in writing instruments business ( this segment has highest GMs ) + discounts passed on by the company due weak consumer demand scenario

Lower sales in writing instruments is due to weakish export demand ( exports are a major chunk of company’s writing instruments business )

Capex incurred in FY 25 @ 275 cr. Capex lined up for FY 26 @ 75 cr

Guiding for 12-14 pc kind of topline growth for next FY if the consumer demand remains weak ( because of additional revenues from the glassware unit - as it can add sales via import substitution ). If consumer demand picks up, can ramp up growth to 15-17 pc

Inventory in the system is at healthy ( lean ) levels - which is a good thing going forward

Last 12-15 months have seen weak consumer demand. Should reverse going forward - as Govt initiatives kick in

Feb to May is the strongest season for the company as most of the inventory filling takes place in this period in anticipation of new school and summer season. Seeing a good start to this year’s season

Current Opalware capacity utilisation is currently at 80 pc. Expected to go upto 90-95 pc in next FY

Disc: holding, biased, added recently, not SEBI registered, not a buy/sell recommendation

[Mayank.mail]

Hi Ranvir, two more followup question pls.
Under Pledged securities it shows the shares i pledged; Value of pledged securities was 1.14L with 10% haircut icicidirect has given me a limit of 1.03L. While buying shares even though i bought worth 80K but since it was giving me leverage, in allocate limit (under funds), its showing 76K is still available. The Pledged securities value has gone up during the day…
However two things i dont understand

1. Under Funds>Limits, its showing 26K payable by you… But why payable by me??
2. Have got reminders from NSDL and ICICIDirect that i should pledge the shares i bought in the day before 10pm tonight? Why should i pledge again, have’nt i already pledged the shares earlier to create this credit limit for which i am ready to pay 9% annual interest?

Not able to understand whats the limit i can buy for? am writing to icicidirect aswell, but would be good if you could help too…

[ranvir]

NSDL asks for a repeat confirmation. It’s a stupid rule. But, it is what it is

And u have to give the confirmation by 2200 hrs on the same day otherwise they sell ur shares the following morning @ 0915 hrs

Haven’t understood the first Question

[Mayank.mail]

yes, i confirmed the 2nd pledge just now, lest they sell tomorrow morning at 9:15 am
So basically there are 2 types of pledges with total of 4 pledges which have been created:
A. Shares that i pledged myself to get the initial margin of 1.03L (transaction type - Margin Pledge(INV-TMCM), initiated by INV; Pledge client name - ICICI SECURITIES LTD TM/CM CLIENT SECURITIES MARGIN PLEDGE ACCOUNT; Status: Pledged
B. 3 other pledges created “on the 3 shares i bought” (transaction type - Margin Pledge(INV-TM)), initiated by DP; Pledge client name - ICICI SECURITIES LTD TM CLIENT SECURITIES UNDER MARGIN FUNDING A/C NSE; Status - Future Dated

I feel, maybe DP has enabled a provision to pledge these shares to the Clearing Corporation at a future date if the shares value falls below and i dont pay up additional margin required…

But ICICIDirect saying Security payable worth 26K is something i dont understand; also cash payable of Rs 193.66 is high! at 9% interest, the daily cash payable on 1.03L (even though I used only 80K) should have been less than Rs. 26, right?

[ranvir]

Wonderla Holidays -

Q3 FY25 results and concall highlights -

Revenues - 121 vs 123 cr, down 2 pc
EBITDA - 42 vs 60 cr, down 30 pc ( margins @ 33 vs 46 pc YoY - steep margin decline )
PAT - 20 vs 37 cr, down 46 pc

Footfalls @ 9.18 vs 9.45 lakh ( down 3 pc )
ARPU @ Rs 1272 vs 1256, up 1 pc

Park wise footfalls -

Bengaluru - 2.9 vs 3.5 lakh, down 15 pc, ARPU @ Rs 1405 vs 1369, up 3 pc

Kochi - 2.5 vs 2.9 lakh, down 14 pc, ARPU @ Rs 1239 vs 1163, up 7 pc

Hyderabad - 3.9 vs 3.6 lakh, up 9 pc, ARPU @ Rs 1201 vs 1215, down 1 pc

Bhuvneshwar - 0.34 lakh vs Nil ( as Bhuvneshwar park opened in Q2 FY 25 ), ARPU @ Rs 1030

Revenues from Bengaluru Resort - 4.8 vs 4.8 cr, largely flat

Successfully raised Rs 540 cr via QIP in Q3

Park wise revenues -

Bengaluru - 42 vs 48 cr
Hyderabad - 32 vs 34 cr
Kochi - 39 vs 36 cr
Bhuvneshwar - 8 cr

Chennai Park is expected to open by Dec 25. Should contribute fully to Q4 revenues in next FY

Sharp drop in EBITDA margins led by - steep increase in employee cost ( up 50 pc ), other expenses ( up 18 pc ) and cost of consumables ( up 13 pc ) - both due to operationalisation of Bhuvneshwar park

Unexpected rains in Bengaluru ( also led to flooding ) in late Oct led to massive fall in footfalls in Q3

Footfalls in Bhuvneshvar were also impacted by 02 cyclone events in Q3

Opening new attractions / rides / restaurants in Kochi, Bengaluru, Hyderabad parks

Seeing flattish footfalls ( till 27 Jan ) in Q4 ( vs Q4 LY )

Hyderabad park saw a bump up in group footfalls in Q3. Company did work hard on its marketing efforts to attract them. Expect to achieve the same for Bengaluru and Kochi parks in future

Hoping for a strong Q1 FY 26 - as its the peak season + Bhuvneshwar park will contribute fully for the first time in a peak season

Most of the QIP funds will used for their Chennai park ( about 50 pc ) + for new projects that company aspires to open in future

Management estimates that they lost > 1 lakh in foot falls across its parks because of inclement weather in Q3

Company expects the Chennai Park to pick up quickly ( wrt footfalls ) as Wonderla is a very well known brand in South of India

Company manufactures half of its rides in-house

Once Bhuvneshwar park matures, company expects it to generate footfalls of > 5-6 lakh / yr. It should start to break even at footfalls > 2 lakh (should happen in FY 26)

The new park that company aspires to open in MP is slated to be located between Bhopal and Indore

Expect Chennai park to start breaking even wef first full year of operations ie FY 27 !!!

Disc: holding, biased, added recently, added recently, not SEBI registered, not a buy/sell recommendation

[kapil1301]

Hi Ranvir,

Wonderla existing park revenues have declined.
Looking at Disney and all.
I guess story will play out if they can increase their F&B revenues.
Also if by an chance they can play the merchandise game as disney did.
Otherwise their revenues will be more or less capped as park capacity and ticket prices can only be increased to a limit.
Would love to her your rationale on this.

Thanks,
Kapil

[ranvir]

U r right as far as existing parks r concerned. However in case of Wonderla, they ll end up adding 1 big park every year for say next 3-4-5 yrs. They ll take care of future growth

And … I guess, that’s the whole rationale of investing in it

[ranvir]

I think, u should wait for 1 more day. The messages that one gets / the way they calculate things is not clear to me as well

However by tomorrow, it ll start to make sense. By tomorrow, u ll be able to see the actual interest charged by them

One more input - this 9 pc / yr interest rate is applicable only for the premium brokerage plan. In case of normal plans, the RoI may be higher ( u need to check that )