Release Date: January 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bigbloc Construction Ltd (BOM:540061, Financial) achieved its highest ever quarterly sales, EBITDA, and PAT in Q3 FY24.
- The company reported a 24% year-on-year growth in operating revenues for the quarter, reaching INR62 crores.
- EBITDA grew by 22% year-on-year to INR16 crores, with EBITDA margins at 26.34%.
- The Wada plant's utilization improved to approximately 90%, exceeding expectations.
- The company has initiated expansion plans to double the capacity at the Wada plant from 250,000 m3 to 500,000 m3.
Negative Points
- Profit after tax (PAT) for the nine months declined by 11% year-on-year, with PAT margins at 12.55%.
- The Umargaon plant's capacity utilization was around 60% for the quarter, indicating room for improvement.
- The company faces challenges from new construction technologies like Mivan, which could impact the AAC industry.
- The adoption of AAC blocks is growing but not at a 'humongous pace,' indicating potential market resistance.
- Running the AAC block industry is complex, with high rejection rates and variable raw material quality posing operational challenges.
Q & A Highlights
Q: Have you started aiming for Wada after 250,000 capacity?
A: We have already started construction work and placed orders for machinery to increase the capacity from 250,000 to 500,000 cubic meters. - Manish Saboo, Marketing and Strategy Head
Q: What was the revenue from Wada itself in the 9 months?
A: The Wada plant was at approximately 90% capacity utilization, and the revenue from Wada plant was around INR18 crores to INR20 crores. - Mohit Saboo, Chief Financial Officer
Q: How does the precast technology affect your business?
A: Mivan technology is more expensive and less flexible compared to AAC blocks. The share of AAC blocks in India is still growing, and we expect the conversion from red bricks to AAC blocks to continue. - Manish Saboo, Marketing and Strategy Head
Q: What volumes are you estimating for FY'25 for AAC blocks and other products?
A: Our current installed capacity is around 825,000 cubic meters per annum with an average utilization of 80%. The added capacity of 500,000 cubic meters per annum from the Wada plant and JV plant will gradually scale up. - Mohit Saboo, Chief Financial Officer
Q: What is the realization trajectory for AAC blocks and panels?
A: The selling price for blocks is around INR4,000 per cubic meter, while panels are higher at INR7,500 to INR8,000 per cubic meter. - Mohit Saboo, Chief Financial Officer
Q: What margins are you expecting over the next one to two years?
A: We are currently running at good margins and expect to maintain margins between 20% to 25%. - Manish Saboo, Marketing and Strategy Head
Q: How is the competitive intensity in other parts of the country?
A: The acceptability of blocks is increasing in all regions, and we are studying two markets for potential expansion. - Manish Saboo, Marketing and Strategy Head
Q: How sustainable are your high margins compared to large cement players?
A: Our margins are supported by better buying power, carbon trade ownership, and an efficient fleet of trucks. - Mohit Saboo, Chief Financial Officer
Q: What is your marketing and promotion budget for next year?
A: The promotional expenses will be higher next year, but it will be below 1% of this year's sales. - Manish Saboo, Marketing and Strategy Head
Q: What are the entry barriers in this business?
A: Running this industry is not easy due to the variability in raw material quality and high rejection rates. - Manish Saboo, Marketing and Strategy Head
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
