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20 Microns LtdQ4 FY19

20 Microns Ltd Q4 FY19 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹208P/E: 11.5Market Cap: ₹785 CrSector: Minerals & Mining

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

No

Order

N/A

Capex

No

0 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3
  • Specialty chemicals expected to nearly double in the next 2-3 years, aiming to increase their share to about 20% of total sales.
  • Calcium carbonate projected to have steady growth of around 10% year-on-year.
  • Kaolin growth expected at approximately 20% to 25% annually.
  • Talc anticipated to grow modestly at about 5% year-on-year.
  • Focus on exports, especially for talc and kaolin, which are expected to eventually double current export volumes.
  • Shift towards high-value specialty chemicals contributing progressively to revenue and improved EBITDA margins.
  • Overall sales growth to be gradual and sustainable, supported by market opportunities domestically and internationally.
  • Continuous product innovation and expansion into new markets to drive long-term growth.
  • Capacity utilization can meet increased demand as and when it arises, ensuring potential volume growth.

See what 20 Microns Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

No
  • The company is currently working on a philosophy of not borrowing much further for business growth.
  • Growth is planned to be funded through internal cash accruals rather than new debt.
  • They have sufficient capacities for production and are focusing more on marketing and advertising.
  • No major CAPEX is lined up for the next few years, only minor maintenance and installation works.
  • There will not be further high borrowings or investments; the focus is on managing with existing assets.
  • Promoters are working towards increasing shareholding above 50% and plans to unpledge shares soon.
  • So, no current or immediate plans for new fundraising through debt or equity were mentioned.

See what 20 Microns Ltd management said on order book — free account, 30 seconds.

Capex plans

No
- Currently, the company is reallocating and testing some unutilized assets. - No major CAPEX is planned for the next couple of years. - Only minor maintenance CAPEX or small installations related to process improvements are anticipated. - Maintenance CAPEX is expected to be in the range of Rs 3 crores to Rs 4 crores. - The company aims to manage future growth through existing assets without significant new capital investments. (Source: Page 8 of the transcript)

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Margin guidance

Category 2
- The company expects to nearly double specialty chemicals sales, increasing their portion to about 20% of total sales within the next 2-3 years, contributing to profitable growth. - Specialty chemicals offer higher EBITDA margins; margin expansion of 50 to 100 basis points per year is anticipated gradually over the next few years. - Calcium carbonate is expected to grow steadily at around 10% annually, with kaolin growing 20-25% regularly. - Talc and kaolin growth will be driven primarily by increased exports. - EBITDA margin expansion will be gradual, supported mainly by higher specialty chemicals sales. - Overall revenue growth is to be driven by broadening product portfolio and expanding exports. - The company is focusing on operational efficiencies and cost control to support profitability. - No major CAPEX is planned; growth will be managed through existing asset utilization and internal accruals. Summary: Sustainable gradual growth with increasing focus on high-margin specialty chemicals and export markets aiming for steady margin improvement and higher profitability.

Order book

The transcript does not explicitly mention the current or expected order book or pending orders in specific figures. However, some relevant points related to market demand and product evaluation cycles are as follows: - Evaluation periods for new products can take 5 to 12 months depending on customers and industries. - The company is working on expanding specialty chemicals sales, expecting to double them in the next couple of years. - They have seen good market opportunities domestically and internationally. - Ability to fulfill increased demand is affirmed, subject to evaluation and product modifications. - No direct data provided on current order book or pending orders. - The company focuses on long-term sustainable growth, with incremental and steady market share gains anticipated. For precise order book numbers, it is suggested to contact Investor Relations as the net operating cash flow figure was also to be provided later.

How does 20 Microns Ltd rank vs peers in Minerals & Mining?

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