ESTERNSEQ4FY238 June 2023

Ester Industries Limited

7,449words
81turns
5analyst exchanges
0executives
Key numbers — 40 extracted
14%
mely US. On an overall basis, during FY23, we have achieved higher revenue by 14% from Rs. 173 crores to Rs. 198 crores with profitability in absolute terms almost in line with FY
Rs. 173 crore
On an overall basis, during FY23, we have achieved higher revenue by 14% from Rs. 173 crores to Rs. 198 crores with profitability in absolute terms almost in line with FY22. It is pertinent
Rs. 198 crore
overall basis, during FY23, we have achieved higher revenue by 14% from Rs. 173 crores to Rs. 198 crores with profitability in absolute terms almost in line with FY22. It is pertinent to mention that F
Rs. 81 crore
FY22. While H1FY23 turned out to be very good as compared to H1FY22 with revenues improving from Rs. 81 crores to Rs. 130 crores (up by 60%), H2FY23 was impacted by headwinds caused by recessionary trends in
Rs. 130 crore
23 turned out to be very good as compared to H1FY22 with revenues improving from Rs. 81 crores to Rs. 130 crores (up by 60%), H2FY23 was impacted by headwinds caused by recessionary trends in US and other geo-
60%
ry good as compared to H1FY22 with revenues improving from Rs. 81 crores to Rs. 130 crores (up by 60%), H2FY23 was impacted by headwinds caused by recessionary trends in US and other geo-political is
285 MT
ch helped improve our revenues and profitability. Sales of our lead and established MB03 stood at 285 MT as against 143 MT in Q3FY23 and 299 MT in Q4FY22. Sales of innovative PBT as well improved to 468
143 MT
our revenues and profitability. Sales of our lead and established MB03 stood at 285 MT as against 143 MT in Q3FY23 and 299 MT in Q4FY22. Sales of innovative PBT as well improved to 468 MT as against 74
299 MT
itability. Sales of our lead and established MB03 stood at 285 MT as against 143 MT in Q3FY23 and 299 MT in Q4FY22. Sales of innovative PBT as well improved to 468 MT as against 74 MT in Q3FY23 and 398
468 MT
MT as against 143 MT in Q3FY23 and 299 MT in Q4FY22. Sales of innovative PBT as well improved to 468 MT as against 74 MT in Q3FY23 and 398 MT in Q4FY22. On an annual basis, while our top-line has seen
74 MT
MT in Q3FY23 and 299 MT in Q4FY22. Sales of innovative PBT as well improved to 468 MT as against 74 MT in Q3FY23 and 398 MT in Q4FY22. On an annual basis, while our top-line has seen a good growth of
398 MT
9 MT in Q4FY22. Sales of innovative PBT as well improved to 468 MT as against 74 MT in Q3FY23 and 398 MT in Q4FY22. On an annual basis, while our top-line has seen a good growth of 14%, EBIT in absolute
Guidance — 20 items
Suraj Digawalekar
opening
“We expect rapid expansion in both volume and value of sales post economic revival in US.”
Suraj Digawalekar
opening
“We expect business to deliver steady growth over long term given its innate nature i.e.”
Suraj Digawalekar
opening
“The slowdown in the US and Europe and demand supply imbalance in India is expected to see the industry continuing to experience challenges in the near to medium term.”
Suraj Digawalekar
opening
“While near to medium term outlook is expected to be challenging due to excess supply and benign realizations & margins, we are working towards improving our product mix by increasing proportion of Value Added & Specialty portfolio, ramping up the utilization levels of the new plant and cost rationalization to help us offset the headwinds and improve margins & profitability.”
Suraj Digawalekar
opening
“Build-up of volume from new coater will be achieved gradually and continuously.”
Suraj Digawalekar
opening
“Furthermore, given that it is IP protected, margins as well will sustain going forward.”
Suraj Digawalekar
opening
“As mentioned earlier, the pricing & margin environment for Films continue to remain challenging and is expected to remain so in the near to medium term owing to excess supply in the market, though some recovery in pricing & margins is being witnessed during Q1FY24 over Q4FY23.”
Tejas Sonawane
qa
“We have started to see some improvement in the month of May, and we expect, therefore, the June quarter to be better than March.”
Tejas Sonawane
qa
“And overall, we expect Films business to be positive, better than, let's say, second half of FY '23 during March '24 and '25.”
Tejas Sonawane
qa
“We had recently made a small investment in the offline coater, which would help us enable to achieve higher volumes of value added products going forward.”
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Risks & concerns — 11 flagged
As expected & indicated in earlier calls, the overall pricing / margin environment for the Film business continues to remain weak due to over-supply situation caused by bunching of new capacities and inflationary pressure on costs.
— Suraj Digawalekar
On an annual basis, while our top-line has seen a good growth of 14%, EBIT in absolute terms has been relatively steady due to challenging external environment and inflationary pressure on costs.
— Suraj Digawalekar
We don’t foresee any major risk to the business barring global uncertainties which may impact its growth momentum.
— Suraj Digawalekar
Addition of new capacities in India in a bunched manner has resulted in an increase in overall supply, which in turn has resulted in pressure on margins.
— Suraj Digawalekar
The slowdown in the US and Europe and demand supply imbalance in India is expected to see the industry continuing to experience challenges in the near to medium term.
— Suraj Digawalekar
In addition to excess supply and recessionary slowdown, we are also witnessing higher prices of inputs including power and fuel which in turn are exerting further pressure on profitability.
— Suraj Digawalekar
It is difficult to assign a number, but if you were to go by, we should be seeing the repeat of the FY '23 in terms of margins.
— Pradeep Kumar Rustagi
And as you mentioned in your opening remarks that because of the bunching of capacity, there is a pressure on the margin.
— Saket Kapoor
I think we have already stated that because there's a bunching of capacity, which has created a demand supply situation and which has put pressure on margins.
— Girish Behal
Pradeep Kumar Rustagi: At this point in time, it is difficult to predict a number, but as the margins improve we should be entering into double-digit EBIT margins in double digits, let's say, in after 2 to 3 quarters.
— Jalaj Manocha
So there will be a margin pressure if you compare our current results with the results 2 years ago.
— Pratap Makwana
Q&A — 5 exchanges
Q
Sir, in the Films business, we have seen a marginal recovery during the quarter, so what was the key driver behind the growth for this quarter? And what is your outlook for FY '24 and '25. If you can give us some color on that? Pradeep Kumar Rustagi: So the December quarter was badly affected because there was loss of production and the margins were very low. There was some recovery in the margins in the March quarter, and therefore and the volumes were also higher. So the film plant showed some recovery in March quarter. We have started to see some improvement in the month of May, and we expe
Tejas Sonawane
Okay. Understood. Secondly, on the Speciality... Pradeep Kumar Rustagi: We are focusing a lot on value-added and Specialty portfolio within Films segment. We had recently made a small investment in the offline coater, which would help us enable to achieve higher volumes of value added products going forward. Okay. Understood, sir. Secondly, on the Specialty Polymers side. So we have seen good recovery during Q4, so what are your expectations for FY '24? And the kind of growth we have seen in Q4, will that be sustainable over FY '24? Pradeep Kumar Rustagi: So the first half of FY '23 was very g
Q
Good afternoon Sir, firstly is just there's a comment which you made about the performance of our Specialty Polymers, we will be clocking revenue closer to Rs.200 crore for FY '24. Pradeep Kumar Rustagi: That is the estimate we have going by the current market scenario.
Saket Kapoor
Okay. And what should be the margin profile from the segment? Pradeep Kumar Rustagi: Saket, we have always been telling that the margins in Specialty Polymers is not a matter of discussion with the customer because the products are patent protected and the margin is calculated over the raw material costs. So the margin profile should remain more or less in the region that we are seeing now. There could be, let's for example, plus of 30% EBIT margin that we could be seeing in future also. Because sir Q4, we did 23.5% and for the year as a whole, it was closer to 29%. So what should be the numbe
Q
I just wanted to understand by when do we expect polyester vertical division will start to contributing to the margins in the profitable manner? And what sort of margins do we see in scenario where the demand scenario gets in the right place.
Girish Behal
I think and I’m looking at clarify your question first. Are you talking about the margin scenario in Film business or Specialty Polymers. Sir, Film business. Film business. I think we have already stated that because there's a bunching of capacity, which has created a demand supply situation and which has put pressure on margins. As we go along, there will be the domestic growth is still going at a robust level, let's say, coming quarters, the demand as the demand supply gap narrows, then we would see the margin improvement coming quarter after quarter. Understood. Sir, what sort of margins do
Q
My first question is regarding, what should be the expected revenue by end of Q1 this quarter, by the end of June, as already 2 months has been passed. And as sir mentioned, so that there is an improvement seen from this quarter in terms of the demand side, so we expect some margin improvement also. Now the already 2 quarters had been passed in consolidation phase, so are we think the recovery as per last to last year, which we have seen the great year for Ester. And at the end of financial year '22, '23. So the result, which has been published, it is taken for one for the onetime profit from
Girish Behal
You have multiple questions. I think I'll try to answer. During the current quarter, the new investment that what we had done would add volumes to our total P&L on a consolidated basis. As we explained earlier that we have already seen a recovery in margins in this quarter. So those 3 would also contribute. Great. That's first question. I'm expecting answer for the remaining 2 questions also, sir. Can you please repeat your question once again? Yes, already 2 quarters has been on the consolidation phase. So are we seeing the recovery on the similar phase like we have on the last-to-last year,
Q
Sir, if we go to the presentation page slide number 19. The headline speaks for green initiatives focus on sustainability. If you could explain to us the green initiative part where in we have mentioned about bio-based fuel consumption, bio-based raw material, if you could explain how this slide is relevant to us? And what are we trying to convey through it.
Girish Behal
I think the slide conveys whatever the green initiative and the sustainability initiatives that we as a company are doing we use bio-waste or rice husk as our fuel which will help us reduce our carbon footprint. We use bio-based raw materials so that at least we move away from using less quantity of raw materials derived from fossil fuel. We promote, let's say, a reduction in usage of packing material so that there is a cost efficiency as well as optimum resource utilization. We on our product line, we work on a lot on sustainability, few are mentioned there. So let's say, in many packaging ap
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Speaking time
Saket Kapoor
39
Girish Behal
14
Moderator
7
Pratap Makwana
7
Jalaj Manocha
5
Tejas Sonawane
4
Pradeep Kumar Rustagi
4
Suraj Digawalekar
1
Opening remarks
Suraj Digawalekar
Thank you. Good day, everyone, and welcome to Ester Industries Q4 and FY '23 Analyst and Investor Conference Call. We have with us today Mr. Pradeep Kumar Rustagi, Executive Director, Corporate Affairs; and Mr. Girish Behal, Business Head. We will begin this call with opening remarks from the management, following which we'll have the floor open for interactive Q&A session. Before we begin, I would like to point out that some statements made in today's discussion may be forward- looking in nature and a note to this effect was sent to you in the invite earlier. We trust you have had a chance to go through the documents on the financial performance. I would now like to invite Mr. Pradeep Rustagi to make his opening remarks. Over to you, Pradeep. Pradeep Kumar Rustagi: Thank you, Suraj, and thank you, everyone, for joining us today. I have alongside with me Mr. Girish Behal, Business Head present and Sourabh Agarwal, CFO. We will begin the call with a brief overview of our businesses, fol
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