20 Microns LtdQ1 FY25Minerals & Mining

20 Microns Ltd

Q1 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→The company targets a revenue growth of 15-18% year-on-year, continuing its historical trend.
→For the value-added niche segment, a growth rate of 18-20% is expected over the next 2-3 years.
→Expansion plans include significant CapEx investments in capacity enhancement and new product development, especially in 20 Microns Nano Minerals Limited.
→Focus areas include growth in plastics and rubber industries, paint sector, and construction chemicals.
→Market conditions are currently uncertain, but post-industry conditioning, significant growth in the paint segment is anticipated due to increased urbanization and repainting demand.
→The company emphasizes strengthening revenue by investing in CapEx rather than working capital to add value and secure future demand.
→Overall, management is optimistic but cautious due to external economic and global supply chain factors.

Margin guidance

Category 3

→The management aims for a consistent revenue growth of 15-18% year-on-year, including FY 25-26, reflecting market trends and operational plans.
→Earnings growth is expected to align with revenue growth, maintaining EBITDA margins around 12.7-12.8% without compromising quality and innovation.
→Internal accruals and strategic borrowing mainly fund working capital and CapEx focused on capacity expansion and product diversification.
→CapEx investments, especially in the nano minerals segment and new plant acquisitions (e.g., Malaysian subsidiary), are expected to drive future profit growth.
→The company targets value-added niche segment growth at approximately 18-20% over the next 2-3 years.
→Margin expansion through self-mining in Malaysia is anticipated but details are pending operational insights.
→Overall, steady profit and EPS growth is projected, supported by product portfolio expansion, client stickiness, and market development.

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Fundraise plans

Yes

→The company plans to strengthen revenues by cultivating futuristic demand, which requires certain cash on hand, partly through borrowings.
→Borrowings have increased mainly for working capital needs due to additional inventory build-up.
→Management is vigilant and calculated in their investment and borrowing strategy, with clear plans for CapEx and working capital.
→From this year onwards, substantial investments will be made in CapEx for capacity expansion and mine acquisitions.
→The share acquisition process is ongoing for subsidiaries but involves no significant additional fundraising.
→No specific mention of new equity fundraising was made in the call.
→Long-term borrowings have not significantly increased; the rise in borrowings is mainly short-term for operational purposes.

Order book

The provided transcript does not explicitly mention the current or expected order book or pending orders for 20 Microns Limited. However, insights related to demand and operations include: - The company is focused on strengthening revenues by anticipating futuristic demand, which requires maintaining cash in hand and certain borrowings for working capital and CapEx. - Investments are planned heavily in CapEx for expanding capacities and acquiring more mines to add value to the overall product chain. - The management is vigilant and calculated in investment and borrowing strategies to support upcoming years' CapEx and working capital needs. - Supply chain dependencies and inventory buildup indicate preparation for future orders and production scale-up. No specific figures or detailed status regarding the order book or pending orders were disclosed during the call.

Capex plans

Yes

→20 Microns plans significant CapEx investments starting this year to enhance capacities and acquire more mines, aiming to add value to the overall product value chain.
→For 20 Microns Nano Minerals Limited, a CapEx of approximately ₹15 to ₹18 crores has been invested to set up a calcination facility for the rubber industry and develop specialized paint-grade Kaolins using new technology.
→The company is calculating and strategizing CapEx as well as working capital needs for the coming years, balancing borrowings to maintain cash for growth.
→Recent investments include commissioning a new JV plant with Sievert focused on construction chemicals (starting with tile adhesives and moving to liquid chemicals).
→The company is cautious with investments, ensuring reinvestment prioritizes high-return opportunities while maintaining financial discipline.

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120 Microns Ltd

Rev 3Mar 3

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