AksharChem (I)Q1 FY20

AksharChem (I) Q1 FY20 Earnings Call Analysis

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

Price: ₹414.7P/E: 26.9Market Cap: ₹333 CrSector: Chemicals & Petrochemicals

Management growth scorecard

Revenue

Category 3

Margin

N/A

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 2 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3
  • The textile industry in India is projected to grow at over 10% CAGR over the next 5 years (Page 26).
  • Exports, a key focus area, are expected to grow at a CAGR of approximately 15% over the next 5 years (Page 26).
  • The company plans to widen its product portfolio with value-added products and expand its presence geographically in Southeast Asia, NAFTA, and India to provide a geographic hedge (Page 24).
  • Focus on developing strong business relationships and maintaining an extensive supply chain network worldwide supports growth (Page 24).
  • The company achieved 85% capacity utilization through better planning, indicating potential for higher volumes with further efficiency (Page 23).
  • Expansion plans include increasing capacity in key segments like organic pigments (CPC Green), dyes & intermediates, and specialty chemicals (Page 10).

See what AksharChem (I) management said on margin guidance — free account, 30 seconds.

Fundraise plans

  • The document does not explicitly mention any current or planned new fundraising through debt or equity.
  • As of March 2019, the company is a net cash company with zero borrowings (Debt to Equity ratios are very low: 0.0 to 0.4 across FY15-FY19).
  • The company has a strong debt rating (CARE A1+ for short-term and CARE A+/CARE A1+ for long/short term bank facilities), indicating good access to debt markets if needed.
  • The IPO was historically used to fund plant capacity expansion (mentioned on page 13), but no recent or future equity fundraising is stated.
  • Overall, the company focuses on financial prudence and has faced no bad debt till now, suggesting no immediate need for raising funds through debt or equity based on the available data.

See what AksharChem (I) management said on order book — free account, 30 seconds.

Capex plans

Yes
  • CAPEX plan announced for expansion in:
  • - CPC Green capacity: from 1,920 TPA to 2,400 TPA (additional 480 TPA)
  • - H Acid: new capacity of 1,200 TPA
  • - Precipitated Silica: new capacity of 10,000 TPA
  • Recent expansions include addition of 480 TPA of CPC Green and 1,200 TPA of H Acid during H1 FY19.
  • Focus on investments in quality certifications and process automation technologies aiming at superior technology-driven products.
  • Emphasis on modernizing technologies to improve quality, reduce human error, and enhance productivity.
  • Long-term growth strategies include widening the product portfolio with value-added products and extending geographic presence in South East Asia, NAFTA, and India for geographic hedge.

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