Solar Industries India Limited
5,652words
96turns
12analyst exchanges
7executives
Management on call
Prasheel Gandhi
NIRMAL BANG INSTITUTIONAL EQUITIES
Manish Nuwal
MANAGING DIRECTOR &
Suresh Menon
EXECUTIVE DIRECTOR – SOLAR INDUSTRIES INDIA LIMITED
Milind Deshmukh
EXECUTIVE DIRECTOR
Moneesh Agarwal
JOINT CHIEF
Shalinee Mandhana
JOINT CHIEF
Aanchal
INVESTOR RELATIONS – SOLAR INDUSTRIES INDIA LIMITED
Key numbers — 40 extracted
Rs.1347
o you Sir! Manish Nuwal: A very good morning to everyone. The revenue for the quarter stands at Rs.1347 and for the half year it stands at Rs.3030 Crores. In this quarter we have achieved an all time hi
Rs.3030 Crore
ing to everyone. The revenue for the quarter stands at Rs.1347 and for the half year it stands at Rs.3030 Crores. In this quarter we have achieved an all time high EBITDA and PBT margin at 25.52% and 21.12% re
25.52%
nds at Rs.3030 Crores. In this quarter we have achieved an all time high EBITDA and PBT margin at 25.52% and 21.12% respectively mainly on account of fall in commodity prices and stable currency movemen
21.12%
030 Crores. In this quarter we have achieved an all time high EBITDA and PBT margin at 25.52% and 21.12% respectively mainly on account of fall in commodity prices and stable currency movement in the qu
Rs.1800 Crore
aided by continuous efforts and operational efficiencies. The company has received orders worth Rs.1800 Crores plus from its prestigious customer Coal India Limited with a strong order book of Rs.3
Rs.3912 Crore
rores plus from its prestigious customer Coal India Limited with a strong order book of Rs.3912 Crores we are expecting a higher volume growth of around 20% in the FY2024 as against 13% achieved in t
20%
a strong order book of Rs.3912 Crores we are expecting a higher volume growth of around 20% in the FY2024 as against 13% achieved in the first half of this financial year. Given the gover
13%
of Rs.3912 Crores we are expecting a higher volume growth of around 20% in the FY2024 as against 13% achieved in the first half of this financial year. Given the government’s focus on infrastructure
Rs.1050 Crore
gest milestones for our company. Looking at the geopolitical situations and healthy order book of Rs.1050 Crores we believe the defence revenue should go up substantially now onwards. In our international bu
rs,
th expected increased volumes from mining, housing infrastructure and defence in the coming quarters, we are expecting EBITDA margin to increase further from the earlier guided EBITDA margins of 20% t
22%
are expecting EBITDA margin to increase further from the earlier guided EBITDA margins of 20% to 22%. With this I would like to thank you everyone and wish you a Happy Deepavali in advance. Now I ha
Rs.1347 Crore
he quarter and half yearly results to make it faster. The consolidated revenue for the quarter is Rs.1347 Crores against Rs.1567 Crores and for half year it is Rs.3030 Crores against Rs.3182 Crores. Our explos
Guidance — 20 items
“Before we begin the call I would like to remind that will be a hard stop at 10:45 due to time constraints.”
“Please remember that such statements are only predictions, actual events or results may differ materially and our website will be updated with all relevant information kindly.”
“These orders will be one of the biggest milestones for our company.”
“Key highlights for Q2 and half year are: This time we will be consolidating the quarter and half yearly results to make it faster.”
“The volume guidance is for the Indian market which is 20% growth for this financial year.”
“As far as international markets are concerned we are expecting a volume growth of 15% but going forward we also are looking at increasing the volumes in the tune of 20%.”
“So you are saying 20% for business as a whole next year in terms of volumes, 20% for India business this year and 15% for international business this year that is the guidance?”
“Would we assume the EBITDA will be stabilized with realization now stabilizing should we look at that?”
“We expect that there has to be some stabilization in realizations but we cannot say with 100% guarantee that it will be remaining like that because commodity prices are keep fluctuating and we are expecting that prices should bottom out in this quarter.”
“That is why we believe that the volume guidance which we have given that we are expecting a 20% volume growth and EBITDA margins are going up so that should suffice our overall purpose for which company is working.”
Risks & concerns — 6 flagged
We reported an EBITDA of Rs.344 Crores against Rs.303 Crores showing a massive rise in the margin from 19.36% to 25.52% in the seasonally weak quarter.
— Aanchal
It has been taken in other expenses on account of hyperinflation so around 2% has been hit on the margins with regards to EBITDA and also forex volatility continues because we have been operating in so many geographies and looking at the current geopolitical tensions so currently for the short term the volatility continues but how the same will face out it is very difficult to speak at that moment.
— Shalinee Mandhana
Just to clarify we are not expecting to see any kind of slowdown in terms of volumetric?
— Noel Vaz
Firstly year-on-year basis the ammonium nitrite prices have gone down by around 50% and with respect to that our realizations are down by 29% so currently we see the raw material prices are stable at this level; however, it is very difficult as ManishJi had spoken earlier to speak on the volatility because we see that from the current quarter onwards the prices may start going up so difficult to predict where the same will be.
— Shalinee Mandhana
It is very difficult at this stage to give that.
— Shalinee Mandhana
In these volatile times you and your team have handled everything quite well.
— Pratik Mukasdar
Q&A — 12 exchanges
Q
Manish congratulations on great margin performance. What I am keen to know is while we are talking of a 20% volume growth just wanted to understand this 20% volume growth is for the explosives business in India or for company as a whole?
Manish Nuwal
The volume guidance is for the Indian market which is 20% growth for this financial year. As far as international markets are concerned we are expecting a volume growth of 15% but going forward we also are looking at increasing the volumes in the tune of 20%. So you are saying 20% for business as a whole next year in terms of volumes, 20% for India business this year and 15% for international business this year that is the guidance? Yes. This 20% in India includes initiating systems as well? Yes 20% for both. So how much would have been the volume growth this year including initiating systems?
Q
Congratulations Sir on a very good set of numbers. Would we assume the EBITDA will be stabilized with realization now stabilizing should we look at that?
Manish Nuwal
We expect that there has to be some stabilization in realizations but we cannot say with 100% guarantee that it will be remaining like that because commodity prices are keep fluctuating and we are expecting that prices should bottom out in this quarter. Now onwards prices can go up but there is no surety on that front. That is why we believe that the volume guidance which we have given that we are expecting a 20% volume growth and EBITDA margins are going up so that should suffice our overall purpose for which company is working. Sir in terms of markets we have obviously received a very large
Q
Thank you for the opportunity. My question was regarding the press release there was a statement regarding overseas segment and there was a statement towards some kind of volatility and FX related issues so I just wanted to get some idea about are we seeing some problems in specific geographies or do we expect the second half for the overseas segment to be relatively subdued compared to first half so I just wanted to get an idea about that? Thank you.
Shalinee Mandhana
Firstly we have been seeing hyperinflation is there, continuous hyperinflation is around Rs.31 Crores. It has been taken in other expenses on account of hyperinflation so around 2% has been hit on the margins with regards to EBITDA and also forex volatility continues because we have been operating in so many geographies and looking at the current geopolitical tensions so currently for the short term the volatility continues but how the same will face out it is very difficult to speak at that moment. Just to clarify we are not expecting to see any kind of slowdown in terms of volumetric? No, no
Q
Good morning everyone and thanks for taking my question. First of all congratulations for a splendid set of numbers. I have two questions the first one is going back to again volume growth guidance it is very reassuring that you have guided for 20% volume growth; however, that implies that in H2 volume growth should be around 27% to make 20% growth essentially, so I just wanted to understand the key drivers for the growth with what all sectors you expect the growth to come from?
Manish Nuwal
Yes for this year we have revised our volume growth guidance from 15% to 20% that is for the whole year and positivity for issuing such statement is that we have received a big order from Coal India and if you look at the coal mining growth it is going at a very fast pace and they are increasing overburden removal in much larger quantities so that is the key reason and another reason is that the thing which we were saying from last couple of quarters that because of the high commodity prices definitely our finished goods prices were also high and now since prices are bottoming out or at a much
Q
Thank you for taking my question Sir. Sir my first question is on our realization. You mentioned that the raw material prices have gone down and similarly the rates have also gone down to almost 14% so can you help us with how much are the raw material prices gone down and what can be expected in say at least one quarter going ahead with respect to the commodity prices?
Shalinee Mandhana
Firstly year-on-year basis the ammonium nitrite prices have gone down by around 50% and with respect to that our realizations are down by 29% so currently we see the raw material prices are stable at this level; however, it is very difficult as ManishJi had spoken earlier to speak on the volatility because we see that from the current quarter onwards the prices may start going up so difficult to predict where the same will be. But has it remained at similar levels in October and November? Yes and since the falling raw material prices is also very good for our industry as well as for the infras
Q
Happy Diwali ManishJi and full team of Solar. Sir my question is we have order book of Rs.3912 Crores and approximate defence order is Rs.1050 Crores as of now what will be the order book approximate in next year?
Shalinee Mandhana
So current order book which we have for Rs.1050 Crores it has to be executed over a period of one-and-a-half years and currently as we spoke that we are expecting Pinaka orders in the next two quarters so obviously when the order comes we will update on the order book. Any percentage terms of guidance? It is very difficult at this stage to give that. This Rs.1050 Crores order book consists of hand grenade and again other material? The basket of products, various rockets and even Armenia export order also is there. Thank you.
Q
ManishJi good morning and congratulations on a strong set of numbers. Sir couple of questions so first is on our defence business outlook though you mentioned roughly Rs.700 Crores is likely to be maintained we have seen that there has still been a quarterly volatility in difference if you understand the nature, if you can give some sense with changing geopolitical tension and you rightly mentioned that the world market was already seeing Russia-Ukraine and now increasing tension between Hamas and Israel, so how the defence business in this scenario is likely to change for us more importantly
Manish Nuwal
Yes like I have already shared that in last couple of years we have seen geopolitical tensions are going up and with recent kind of conflicts in Middle East is definitely creating an environment where demand for products which we are making should go up and that should help us and another positive factor is that we have created lot of facilities to handle variety of products for different, different requirements or different applications so looking at these kind of scenarios we expect that orders from exports or orders from overseas customers for defence should also go up substantially. One of
Q
Thank you for the opportunity. Sir my first question is on the margin profile so Sir you guided that margin will be now above the originally guided band of 20% to 22% so what level of margins are we now looking at?
Manish Nuwal
So we are expecting that we should cross annualized margins above 22% so it can be 23%, it can be 24% so as of now we cannot give a one figure and that is what we have been giving guidance that normal guidance was 20% to 22% for this financial year. We are revising it upwards above 22% so it can be either 23% or maybe 24%, that depends on the kind of the market situation and demand of the products. Understood and Sir just wanted to understand on the defence front so the margins on the defence segment higher than overall company average level or they are largely in line at that 20% to 22% band?
Q
Congratulations ManishJi and everyone. I had just a couple of questions. First question I had was can you share any details around the business from private coal mines and what is the outlook for that in the next couple of years given that licenses were handed out in the last 18 months?
Manish Nuwal
Can you share all the questions first so that I can answer them properly. Yes and second was we had announced expansion in Southern India and Northern India for cartridge explosives so if there is any progress around that those are the two questions? So like we have said that we have a plan to expand our global footprints and increasing the presence within our country. Based on that last year we have announced that we have acquired a company Rajasthan Explosives and Chemicals that is being done to expand footprints in the northern part of the country and we have already applied for licenses. W
Q
ManishJi congratulations for a great set of numbers. In these volatile times you and your team have handled everything quite well. It is visible from our margin expansion. I have couple of questions so like we stated about Pinaka Rockets we were also into development of some drone-related technology can you throw some highlight on that that product how much it is developed now, my second question is as you have been mentioning in the past three concalls also that mining sector is growing very well so on your interactions with your customers both Coal India and non-Coal India what is the sentim
Manish Nuwal
So like we have said that we have started developing products based on unarmed vehicle and we have successfully developed those products and based on that we have received an order of supplying some quantity of numbers for army and we are going to start deliveries in couple of months so we are also developing plenty of UAV-based advanced solution for armed forces so that is an ongoing process and we keep investing in building those capabilities so that is going to help our company in the coming years significantly and apart from this another question which you have asked on coal production so
Q
Good morning Manish. Manish just regarding the Pinaka what could be our opportunity size or potential size of order or maybe requirement can come?
Manish Nuwal
Any other question Manish? Second thing in terms of Coal India order book which we got this time Rs.1800 odd Crores and last time I think it was Rs.1470 Crores I believe so what was the volume uptake higher versus last order that was the second question, third question was on the EBITDA margin guidance what you have given 22% plus going forward next two or three years view earlier our margin guidance used to be 22% so should we take it as a 22% to maybe 24% over next two to three years? As far as EBITDA margins are concerned for this year we have revised our guidance from 2022 to EBITDA margin
Q
This is all from our side. Thank you so much everyone for participating and may you have a very fantastic Diwali ahead. Thank you.
Opening remarks
Prasheel Gandhi
Thank you Nirav and good morning to all the participants. Nirmal Bang Institutional Equities welcomes you all to 2Q FY2024 earnings conference call for Solar Industries India Limited. On the onset of the call I would like to thank the management of Solar Industries India Limited for giving us an opportunity to host the call. From the management team, we have Mr. Manish Nuwal, Managing Director & Chief Executive Officer, Mr. Suresh Menon, Executive Director, Mr. Milind Deshmukh, Executive Director, Mr. Moneesh Agarwal, Joint CFO and Ms. Shalinee Mandhana, Joint CFO. Before we begin the call I would like to remind that will be a hard stop at 10:45 due to time constraints. I now hand over the call to management for opening remarks post which we can take questions from participants. Thank you and over to you Sir!
Aanchal
A very good morning dear stakeholders and well wishers. My name is Aanchal and I would like to welcome you all to the Q2 and half yearly conference of Solar Industries India Limited. Before beginning I would like to wish my stakeholders a very Happy Diwali in advance. To be honest every shareholder of Solar is already celebrating Diwali and enjoying the explosion happening in our shares. I hope this Diwali of SIL keeps filling our stakeholders like this. To begin with I would like to remind you that during this call we might make projections or other forward-looking statements regarding future events and about the future financial performance of the company. Please remember that such statements are only predictions, actual events or results may differ materially and our website will be updated with all relevant information kindly. Now I would request Solar CEO & MD Mr. Manish Nuwal for his opening remarks. Over to you Sir!
Manish Nuwal
A very good morning to everyone. The revenue for the quarter stands at Rs.1347 and for the half year it stands at Rs.3030 Crores. In this quarter we have achieved an all time high EBITDA and PBT margin at 25.52% and 21.12% respectively mainly on account of fall in commodity prices and stable currency movement in the quarter. Overall we have recorded significant improvements in margins both sequentially and year-on-year basis aided by continuous efforts and operational efficiencies. The company has received orders worth Rs.1800 Crores plus from its prestigious customer Coal India Limited with a strong order book of Rs.3912 Crores we are expecting a higher volume growth of around 20% in the FY2024 as against 13% achieved in the first half of this financial year. Given the government’s focus on infrastructure growth and the consequent rising demand for urban housing, housing and infrastructure sector is poised for strong growth. The final trials for Pinaka are completed successfully. RFPs
Aanchal
Thank you so much Sir. Coming to the quarter results, we have shared the investor presentation carrying all the necessary information for your perusal on the website and the exchanges still giving you little key highlights. Key highlights for Q2 and half year are: This time we will be consolidating the quarter and half yearly results to make it faster. The consolidated revenue for the quarter is Rs.1347 Crores against Rs.1567 Crores and for half year it is Rs.3030 Crores against Rs.3182 Crores. Our explosive volume for the quarter and half year is increased by 13%. Initiating systems revenue increased by 6% in the quarter and 24% in the half year. The percentage of the sectors in the customer basket are as follows: CIL is up in the basket to 14% from 13%, non-CIL & institutional is at 15% from 17%, HNI is intact at 15% in the basket, exports & overseas is intact at 47% and defence has increased at 8% from 7% in the basket. In the half year the basket is more or less remains the same ex