Release Date: November 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jai Balaji Industries Ltd (BOM:532976, Financial) has maintained a healthy performance amidst challenging market dynamics, with revenue, EBITDA, and activity increasing by 8%, 30%, and 34% respectively on a half-yearly basis.
- The company is progressing towards becoming net term debt-free within the next 12 months, with a significant reduction in net debt from INR 398 crores to INR 355 crores.
- Capacity expansion plans are underway, with the DI pipes capacity expected to increase from 3 lakh metric tons to 6.6 lakh metric tons by FY26, and the ferroalloy capacity to increase from 1.6 lakh tons to 1.9 lakh tons by Q1 FY26.
- A 35 TPH blast gas boiler has been commissioned as part of a green energy initiative, integrating waste gas utilization to reduce carbon emissions and enhance sustainability.
- The company has announced a stock split to improve liquidity, dividing each equity share into five shares with a face value of INR 2 each.
Negative Points
- The company experienced a decline in PAT due to deferred tax provisions, which are non-cash items.
- There has been a fall in revenue and profitability on a quarter-on-quarter basis due to a decrease in production and sales realization of some finished products.
- The demand for DI pipes has been reported to slow down due to government order delays and high freight rates affecting exports.
- The company faces challenges from global market conditions, particularly due to China's macroeconomic trends impacting commodity pricing.
- There is uncertainty regarding future CapEx plans beyond the current INR 1,000 crore plan, with no specific new projects announced yet.
Q & A Highlights
Q: Post our H1 performance, you have indicated a 25-30% revenue growth guidance with a margin of 17-18%. How do you see H2 FY25 panning out, and how confident are you in achieving this guidance?
A: We are sticking to our guidance as we expect an increase in the volumes of DI pipes and foils, which are major contributors to our top and bottom line. We anticipate the share of value-added products to increase substantially with each sequential quarter. (Respondent: Unidentified_3)
Q: You are expecting to be net debt-free in the next 12 months. Can you provide more details on this target?
A: The total term debt is around INR 343-350 crores currently. With strong EBITDA and pending CapEx of around INR 300 crores, we are confident of becoming net debt-free within the next 12 months. (Respondent: Unidentified_5)
Q: Could you shed some light on your expectations for the operational performance of DI pipes and foils for the next half and FY26?
A: For the second half of the year, we expect the volume of foils to remain the same, with realizations at similar levels, possibly fluctuating by 2-3% due to global market conditions. For DI pipes, we expect realizations to be stable, with a slight increase in volumes each quarter. (Respondent: Unidentified_5)
Q: Are there any CapEx plans after the current INR 1,000 crore plan is completed in the next nine months?
A: Currently, there are no announced CapEx plans beyond the existing INR 1,000 crore plan. We are exploring opportunities, but it will take 3-4 months to finalize any new plans. (Respondent: Unidentified_3)
Q: How do you expect the demand to grow for DI pipes and specialized foils segments?
A: The demand for DI pipes is expected to remain robust due to government infrastructure projects and irrigation schemes. For specialized foils, we are already exporting to around 40 countries, and while growth will be slow and steady, we expect it to continue. (Respondent: Unidentified_3)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
