HIMADRI SPECIALITY CHEMICAL LIMITED FY 2018 EARNINGS CONFERENCE CALL JUNE,01,2018

HIMADRI SPECIALITY CHEMICAL LIMITED FY 2018

EARNINGS CONFERENCE CALL JUNE,01,2018

Ø MR.ANURAG CHOUDHARY is the CEO :Management quality has been generally very good, ambitious and efficient. But, they must show themselves more as Pro Retail Investor or Investor friendly, by declaring better dividends in future.

Ø Total Revenue in FY 18 is Rs. 1,971 crores, against Rs.1318 cr in FY 17 with a growth of 49% YoY. 

Ø EBITDA increased from Rs. 247 crores in FY 2017 to Rs. 450 crores in FY 2018 – due to higher capacity utilization, better product mix, operational efficiencies, focused marketing and increase in high-value-added products.

Ø NET PROFIT :- Tripled to Rs. 243 crores in FY 2018 from Rs. 81 crores in FY 2017.

Ø EQUITY : stands at Rs.41.84 cr

Ø DIVIDEND RATE : 10% (FV:RS.1)

Ø DILUTED EPS : at Rs. 5.8 against Rs.1.94 in FY 17

Ø NET DEBT has come down to Rs. 629 crores now, from Rs. 717 crores in FY 2017. 

Ø NET DEBT-TO-EQUITY RATIO is 0.43x. Repaid Rs. 500 crores of debt over last 5 years. Will continue with efforts to bring down the debt level. 

Ø NET DEBT-TO-EBITDA has come down to 1.4 times.

Ø NET WORKING CAPITAL is 31% of net sales from a level of 36% in FY 2017 and 55% in FY 2014 – due to various strategies in supply chain management and operational excellence.

Ø PRICE TREND : Himadri MP rose by nearly 100% from 70 to 142  over a one year period but has now fallen to 138. The volume of transactions on NSE is quite good at over 1 lakh generally, ensuring BUYs and SELLs easily.

Ø Company focus is clearly SPECIALITY CARBON BLACK and that is the niche area with high profitability.

Ø ADVANCE CARBON MATERIAL : 50 metric tonne capacity per month and COMPANY is running on full capacity.

Ø COAL TAR PITCH : end-user industries like aluminium and graphite electrode industries did well during FY 2018.

Ø ALUMINUM PRODUCTION in India is being ramped up through operationalization of existing capacity. Aluminium majors expect the strong ramping up of products and volumes to continue in FY 2019.

Ø GRAPHITE ELECTRODE INDUSTRY saw high capacity utilization of 80% during FY 2018, with an estimated utilization in high 80’s in FY 2019. 

Ø ANTI-DUMPING DUTY on SNF imports from China - with a positive impact on both volume and prices. Not on Naphthalene.

Ø REFINED NAPHTHALENE :Doubled capacity during the year, leading to high-value addition. volume is already 1,400 tonnes at full capacity currently. Over a period of time, we will be increasing this capacity further. 

Ø COAL TAR DISTILLATION : capacity will increase from 400,000 metric tonnes per annum to 500,000 metric tonnes per annum from Q3 FY 2019. It will come online after the annual shutdown in Q2.

Ø CARBON BLACK : due to focused marketing, led to sustainable volumes, better product mix, and better profitability for us, with the optimum capacity utilization of around 88%. 

Ø on the carbon black business, pricing is high in China also. So there is no chance of any dumping coming from China to India.

Ø ADVANCE CARBON MATERIAL : is operating at full capacity of 50 metric tonnes per month. Clearly 600 metric tonnes is achievable. But next full year, we will be having 5,000 metric tonnes capacity. We are supplying to 5 customers currently in different countries and in different segments. We will increase the number of customers, depending on the availability of material from our end.

Ø And Setting up capacity of 20,000 metric tonnes of ADVANCE CARBON MATERIAL over the next 2 years. 

Ø LITHIUM-ION BATTERIES : Current global demand is in excess of 200,000 tonnes for anode material per annum, which is growing at a CAGR of 30% to 40% per year.

Ø Here also additional capacities are being built up.

Ø SPECIALITY CARBON BLACK : Global market is in excess of 1 million tonnes per annum, primarily used in high-end rubber and non-rubber applications like plastics, fibers, inks, coatings, wires, and cables.

Ø NEW SPECIALITY CARBON BLACK : launched 10 new grades so far.

Ø Setting up a capacity of 60,000 metric tonnes in our facility at Mahistikry in West Bengal for non-rubber uses and tire speciality – to be ready by March 2019. Plan to launch 40 new grades of speciality carbon black in next 2 to 3 years.

Ø It wants to be among TOP 5 PRODUCERS of speciality carbon black globally in next 5 years. 

Ø For new product lines, capital expenditure is Rs. 600 crores in next 2 years funded through internal accruals with No equity dilution.

Ø Himadri,is creating multiple value-added products serving diverse industries like aluminum, graphite electrodes, tire, steel, rubber, construction chemical, agrochemical, infrastructure, power, plastics, inks, lithium-ion batteries, electric vehicles, etc. both in core and sunrise sectors of the economy. It is a one of its kind integration globally and Himadri has carved a unique speciality carbon play.

Ø It is confident of product quality, demand, prices and sustainability and very few competitors.

Ø Management is a visionary Management with lots of ambition and great plans and Great Execution capabilities.

Ø So will it be Potential Multibagger? It could be. Make your own calculations further. Make your decisions. A long term Investor must study facts and take his own decisions always. I wish you all the Best.