NAVINFLUORNSEMay 17, 2023

Navin Fluorine International Limited

9,317words
104turns
11analyst exchanges
3executives
Management on call
Radhesh Welling
MANAGING DIRECTOR – NAVIN FLUORINE INTERNATIONAL LIMITED
Anish Ganatra
CHIEF FINANCIAL OFFICER – NAVIN FLUORINE INTERNATIONAL LIMITED
Bhavya Shah
ORIENT CAPITAL
Key numbers — 40 extracted
INR2,000 crore
es. For full year FY '23, we achieved a key milestone of revenues from the operations exceeding INR2,000 crores. Operating EBITDA crossed INR550 crores and Operating PBT crossed INR460 crores. For Q4 FY '23,
INR550 crore
key milestone of revenues from the operations exceeding INR2,000 crores. Operating EBITDA crossed INR550 crores and Operating PBT crossed INR460 crores. For Q4 FY '23, we have reported quarterly revenue of IN
INR460 crore
ons exceeding INR2,000 crores. Operating EBITDA crossed INR550 crores and Operating PBT crossed INR460 crores. For Q4 FY '23, we have reported quarterly revenue of INR697 crores. Operating EBITDA has more t
INR697 crore
res and Operating PBT crossed INR460 crores. For Q4 FY '23, we have reported quarterly revenue of INR697 crores. Operating EBITDA has more than doubled at INR202 crores on Y-o-Y basis. EBITDA margin stood at
INR202 crore
3, we have reported quarterly revenue of INR697 crores. Operating EBITDA has more than doubled at INR202 crores on Y-o-Y basis. EBITDA margin stood at 28.9%, an expansion of 586 basis points.
28.9%
Operating EBITDA has more than doubled at INR202 crores on Y-o-Y basis. EBITDA margin stood at 28.9%, an expansion of 586 basis points. Commercial production at 3 of our new plants,
586 basis point
more than doubled at INR202 crores on Y-o-Y basis. EBITDA margin stood at 28.9%, an expansion of 586 basis points. Commercial production at 3 of our new plants, HPP, MPP and Agro-Intermediate pl
INR80 crore
t our MPP plant in Q4 FY '23 and expect to launch at least 1 new molecule in FY '24. R32 capex of INR80 crores in Surat will be commissioned as per schedule, and the sales should start from Q2 FY '24. This d
INR450 crore
uorine Advanced Sciences Limited, our wholly owned subsidiary, announced a capital expenditure of INR450 crores of setting up a new 40,000 metric tons per annum hydrochloric acid plant at Dahej. The new capac
INR7
April. We are pleased to inform you the Board of Directors have recommended a final dividend of INR7 per equity share of face value of INR2 each, subject to approval of shareholders. With this, the t
INR2
he Board of Directors have recommended a final dividend of INR7 per equity share of face value of INR2 each, subject to approval of shareholders. With this, the total dividend for the last year will be
INR12
ach, subject to approval of shareholders. With this, the total dividend for the last year will be INR12 for the face value of INR2 each. I would now like to discuss the operating performance of each bus
Advertisement
Guidance — 20 items
Radhesh Welling
opening
“We have begun commercial production of two new molecules at our MPP plant in Q4 FY '23 and expect to launch at least 1 new molecule in FY '24.”
Radhesh Welling
opening
“R32 capex of INR80 crores in Surat will be commissioned as per schedule, and the sales should start from Q2 FY '24.”
Radhesh Welling
opening
“With this capacity, we will be prepared to address rising demand in the pharmaceutical and agrochemical sector as well as in the emerging areas like EV battery chemicals, solar, etcetera.”
Radhesh Welling
opening
“These two projects are CDMO and cGMP4 and another project we have been working on the specialty sector, the specialty business unit.”
Radhesh Welling
opening
“With this, the total dividend for the last year will be INR12 for the face value of INR2 each.”
Radhesh Welling
opening
“Furthermore, we are excited to announce that the commissioning of R32 project in Surat is progressing as scheduled, and we anticipate commencing production from beginning of Q2 FY '24.”
Radhesh Welling
opening
“Our revenue in Q4 FY '23 has doubled surpassing our stated guidance of approximately $10 million quarterly run rate on an annualized basis.”
Radhesh Welling
qa
“Having said that, we have seen some impact, and we expect that for the rest of the year, that is calendar year '23, we will see some impact on one of the molecules.”
Radhesh Welling
qa
“So the guidance that I gave last quarter continues to remain the same.”
Abhijit Akella
qa
“So one is, with regard to the depreciation amount, if there's any indication you could give us on what the normalized depreciation and amortization number should be going forward now that we've sort of taken a fresh look at the useful life of these assets?”
Risks & concerns — 13 flagged
These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
— Bhavya Shah
We improved our performance in uncertain times, captured growth opportunities, executed multiple projects successfully and accelerated our journey towards becoming the company we want to become in the future.
— Radhesh Welling
Would it be possible to give some colour with respect to the one molecule that you mentioned where you're seeing some slowdown.
— Vivek Rajamani
And secondly, beyond that molecule, is there any area within the overall portfolio, which you're monitoring closely from a risk perspective for F '24 and F '25?
— Vivek Rajamani
But it will be difficult for me to comment on a quarter-on-quarter basis if you ask me specifically to comment on Q4.
— Radhesh Welling
And it's not -- so whatever the significance of that molecule is, we have already seen the impact of that in the last quarter.
— Radhesh Welling
Beyond this particular molecule, is there any other part of the portfolio that you've been monitoring with respect to any possible slowdown that may come through over the next couple of years?
— Vivek Rajamani
Or this is the only molecule where you see some risk?
— Vivek Rajamani
No, it's very difficult for us to really comment on it.
— Radhesh Welling
Can you help us understand what are the business erstwhile specialty, ref gas, inorganic, which is a business causing a 20% decline in the revenue on the stand-alone basis excluding NFASL?
— Sanjesh Jain
I'm talking about Q4, in the stand-alone business, if you look at the revenue, excluding the CDMO business, which again is included in the stand-alone revenue, if I take that off, this is a decline of 20% Y-o-Y in the underlying revenue.
— Sanjesh Jain
Is there any impact of that in the CDMO business of Q4?
— Sanjesh Jain
Sir, first question is on the HPP side, the Honeywell product, in the past conference call, you have mentioned that there may be possibly some slowdown depending on how the demand is in the Western markets.
— Keyur
Advertisement
Q&A — 11 exchanges
Q
Yes. Thank you very much for that question. I hope you are able to hear me properly. So we are really not seeing any impact on the pricing because as you know, these are all contracted -- most of it is contracted business and we primarily work with the innovators, on the new molecules, molecules which are just about to be launched or have just recently been launched. We don't really have much business on the generic side. Your commentary or your question is very relevant for the generic molecules. Not so much on the innovative side. Having said that, we have seen some impact, and we expect tha
Radhesh Welling
No. So the guidance that I gave last quarter continues to remain the same. Our Specialty business is actually tilting a lot more on the agrochemical side. And as you know, within the specialty chemicals, the pharma business was primarily supplying to the Indian generic pharma companies, and we have consciously taken a decision to reduce that particular business. So that quarter-on-quarter actually keeps reducing. And our industrial business and our agrochemical business keeps increasing. Sudarshan Padmanabhan: Sure, sir. Second question from my side is on the HPP side. I mean, specifically on
Q
Yes, good evening and thank you so much for taking my questions. First question is actually on two, three financial aspects of the results. So one is, with regard to the depreciation amount, if there's any indication you could give us on what the normalized depreciation and amortization number should be going forward now that we've sort of taken a fresh look at the useful life of these assets? Second was just with regard to the sharp increase in other expenses. Are there any one-off items there? Or is this a good run rate to work with going forward? And the third one was with regard to the tax
Anish Ganatra
Abhijit, thanks for the question. So on your first question regarding the normalized depreciation, this is kind of -- so you're looking for an annualized number, I suppose. I mean, if I was to give you a guidance, it would be in the range of INR80 crores to INR90 crores. But that would be sort of based on the current capitalization that we have, yes. So it's -- what you see on the financials, those financials are effectively considering the depreciation based on when the assets have been put into use. But I guess your question was more on the forward kind of -- what could be the annualized imp
Q
Thanks for the opportunity and congrats on a great set of numbers. So my first question, a little curious about the comments made in the investor presentation about the new products that we have added in HPP. So just wanted to check if this is in HFO, in organic fluorides or the ref gas unit?
Radhesh Welling
No, this is basically -- the commentary that you see in the investor presentation is the sale of the new product. That's primarily we are talking about the same molecule from Dahej, the Honeywell product. There are some other new molecules that we have in the pipeline, but that has not really made any material impact to the numbers in Q4. The Q4 numbers are primarily because of the Honeywell product. Got it, sir. Sir, second question, again, on the HFC 32 bit. since competition also is adding, as the previous participant mentioned, one of the reasons could it be that we haven't had a near drop
Q
Congratulations on a very strong result. Sir, last quarter, you'd mentioned that you will see further upside to your volumes as your new projects ramp up to optimal levels. And after that, you should see better margins as you benefit from the operational efficiencies. Would it be fair to say that you started to see that in this quarter and that we should work with these margin that was to be a sort of a new normal for you going forward? And the second question was more of a clarification from some of the earlier questions that came to you. Would it be possible to give some colour with respect
Radhesh Welling
Yes. So I actually didn't get your question properly. But let me try to answer as much as I understood. The first question that you had on the margin, which specific molecule you were talking about? No, sir. It was more related to the specialty business. I think you were saying the last quarter, you should, yes... Yes. So as you know that the margin that we saw in Q4 its combination is basically because of the performance that we saw across the 3 BUs, right? And the right way to look at that, if you look -- you should look at our annualized margins and as we have said before, this annualized m
Q
A brief view from my side. First on the stand-alone business, if I see x of the CDMO business is like declined by 20% Y-o-Y. Can you help us understand what are the business erstwhile specialty, ref gas, inorganic, which is a business causing a 20% decline in the revenue on the stand-alone basis excluding NFASL? That's my first question.
Radhesh Welling
No, I'm not able to understand. You're talking about Q4 or FY '23? No. I'm talking about Q4, in the stand-alone business, if you look at the revenue, excluding the CDMO business, which again is included in the stand-alone revenue, if I take that off, this is a decline of 20% Y-o-Y in the underlying revenue. These are the non-contracted or the erstwhile before these contracts, these are the revenue from those products and lines, and it appears that, that has declined by 20% Y-o-Y? I'm not able to see that, but we just completed the board meeting. So -- but I think let me try to answer that ques
Q
Thanks for the opportunity and congrats. Sir, on the HF capacity, so last time, we had indicated that we'll be doubling the capacity and debottlenecking is going on. So effectively, our capacity after two years will get doubled. So are we currently sufficient for the next two years? And based on the new capacity that we are planning, how much time we are expecting that this new 40,000 tons capacity will be utilized after two years once it gets commissioned? Thank you.
Radhesh Welling
Yes. So first of all, as far as the capacity is concerned, we have announced 40,000 metric ton new plant that we are setting up. It's going to take us about 24 months to get that plant ready and with that coming in, our capacity would be -- we are actually significantly -- we will have significantly more than twice capacity that we have today. And to your question, will we be of deficit? We will have adequate capacity of HF for our own requirement. We probably will not have enough HF to be able to sell in the merchant market. We are actually seeing a lot more opportunities to sell in the merch
Q
Yes. Hi, Radhesh ji. Congrats on a good set of numbers. Thanks for taking my question. So I have like two. The first is on the molecule that you said there was almost zero volume in the fourth quarter. So is it the -- I mean, is it the -- is this product the one that where we face the competition from the domestic player?
Radhesh Welling
No. This has got nothing to do with the domestic -- nothing to do with domestic competition. This is basically because the same issue that we are actually seeing everywhere. There was some inventory build-up at the customer then. The demand for this molecule continues to remain extremely strong. This is actually a blockbuster molecule. And as we speak, we are actually looking at opportunities to not only expand the capacity in this particular molecule, but also do the downstream AI for this particular molecule. So the overall demand outlook for this molecule continues to be extremely robust. I
Q
Thank you, Mr. Welling. I just wanted to understand what all items apart from HPP are contributing to the difference in revenues between the consolidated line and the stand-alone line?
Radhesh Welling
No. So very simply, Dahej is under NFASL and Surat and Dewas are under NFIL. But as I mentioned earlier, I would just like to repeat that again. I think the right way to look at our business would be to look at on a consolidated basis. So basically, the new agrochem dedicated plant that has come up where you have achieved optimum utilization, where does that figure in these numbers? No, that's not in HPP. That's in Specialty, and that's in Dahej. Understood. Thank you very much, sir.
Q
First of all, congratulations to the team for great results. Sir, first question is on the HPP side, the Honeywell product, in the past conference call, you have mentioned that there may be possibly some slowdown depending on how the demand is in the Western markets. So just your thoughts on how you see HPP Honeywell product ramping up the trajectory of growth and optimum utilization before you go for debottlenecking? That is the first question.
Radhesh Welling
Yes. I think I already have talked about this while answering some of the earlier questions. As I said, we continue to engage with Honeywell to understand how the demand outlook looks for the rest of the year. Currently, our expectation is that -- if you -- as I mentioned to you, in Q4, also, we were not running the plant to full capacity. There is headroom available. And we believe that for the rest of the year, that is rest of the calendar year, we'll probably run to the similar kind of a capacity. And while we do that, we will also work on the debottlenecking project. So that, that particul
Q
Sir, on working capital, that seems to have gone up in this year end. So anything specific or we have done planning for this maintenance shutdown?
Anish Ganatra
No, Bhavesh, I mean, see, the working capital, if you look at, this is the first year of NFASL operations, right? So you will see a big jump in working capital as the plants get into operations and we engage with customers for selling products as well as having inventories. So it's got nothing to do with shutdown. So, that will normalize by second or third year of the operation, how do we see that, or how should we build in enough... So Bhavesh, see, there's a lot of actions we are already taking in play to look at the working capital. Now that doesn't mean that's kind of ongoing business in s
Q
Yes. I would like to thank everyone for taking time out on Saturday evening and joining on the call. I hope we have been able to respond to your queries adequately. If you have any further queries, you may reach out to our Investor Relations partner, Orient Capital. Thank you very much and have a great weekend. Thank you.
Anish Ganatra
Thank you.
Speaking time
Radhesh Welling
36
Moderator
13
Anish Ganatra
13
Sanjesh Jain
9
Bhavesh Jain
6
Keyur
5
Abhijit Akella
4
Rohit Nagraj
4
Krishan Parwani
4
Archit Joshi
3
Advertisement
Opening remarks
Bhavya Shah
Thank you, and welcome to the Q4 and FY '23 Earnings Conference Call. Today on this call, we have Mr. Radhesh Welling, Managing Director; and Mr. Anish Ganatra, Chief Financial Officer of Navin Fluorine International Limited. This conference call may contain forward- looking statements about the company, which are based on beliefs, opinions and expectations as of today. Actual results may differ materially. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Our detailed safe harbor statement is given on Page number 2 of investor presentation of company which has been uploaded on the stock exchange and company's website as well. With this, I now hand over the call to Mr. Radhesh Welling for his opening remarks. Over to you, sir.
Radhesh Welling
Hello. Thank you very much. Good evening, and a warm welcome to all the participants. I want to take a moment to acknowledge the inconvenience of calling you all on a Saturday evening for earnings call as I had to travel for some business from tomorrow onwards. We understand that this may disrupt your weekend plan and we sincerely appreciate your flexibility and consideration in joining us on short notice. Thank you for your continued support and commitment to Navin Fluorine. On this call today, I'm joined by Mr. Anish Ganatra, Chief Financial Officer, and our Investor Relations partner, Orient Capital. I hope all of you got an opportunity to go through our financial results and investor presentation, which have been uploaded on the stock exchanges as well as on the company's website. Let me now start with key highlights for the quarter and year ending FY '23, followed by business segment-wise updates, and then we'll take you through financial highlights for the period under review. I'
Anish Ganatra
Thank you, Radhesh. Good evening to all the participants. I will share the highlights of our performance for FY '23 and Q4 FY '23, post which we'll be happy to take questions. For FY '23 on a consolidated basis, the company reported revenue from operations of INR2,077 crores, as against INR1,453 crores in FY '22, a growth of 43% year-on-year. Operating EBITDA stood at INR550 crores as against INR355 crores in FY '22, up by 55%. Operating EBITDA margin stood at 26.5% as against 24.4% in FY '22, an increase of 207 basis points. Operating PBT was up 51% at INR460 crores for FY '23 as against INR305 crores in FY '22. Operating PBT margin was at 22.2% in FY '23 as against 21% in FY '22, a jump of 116 basis points year-on-year. Profit after tax stood at INR375 crores for FY '23 as against INR263 crores in FY '22, a growth of 43% year-on-year. PAT margin was at 18.1% for FY '23 and remain constant against FY '22. Now coming to the quarter performance for Q4 FY '23. Company reported a growth o
Advertisement
← All transcriptsNAVINFLUOR stock page →