Any current/future new fundraising through debt or equity?

The company raised Rs.69 crores through Qualified Institutional Placement (QIP) to fund its Rs.175 crores CAPEX. The funding plan for the expansion is primarily through: - Utilization of the QIP proceeds first, - Then internal accruals, - Debt if needed in the last stage of expansion. Currently, the company's total debt as of September 2017 is Rs.1 crore with a debt-to-equity ratio of 0x. No changes have been made to the above funding program. The company may maintain a financial "war chest" for potential future expansion plans if current funds are unutilized. No explicit

Any current/future capex/capital investment/strategic investment?

AksharChem is undertaking a CAPEX of Rs.175 crores focused on Specialty Chemicals, Dyes Intermediates, and Organic Pigments. Expansion includes a 10,000 tons annual capacity for Specialty Grade Precipitated Silica targeting the tire industry, expected to generate ~Rs.80 crores turnover at full utilization. Incremental turnovers expected: Rs.50 crores from H Acid expansion, Rs.20 crores from Brownfield Pigment Green expansion, Rs.70-80 crores from Silica expansion, and ~Rs.60 crores from Greenfield Pigment Green project, totaling Rs.200-250 crores. CAPEX funded by Rs.69 crores QIP proceeds, int

Future growth expectations in sales/revenue/volumes?

Revenue expected to remain flat in FY’18 due to market conditions and dollar/rupee rate. Anticipated revenue growth of 15-20% in FY’19 with expanded capacities coming into play. Expanded capacity turnover expected approximately: - Rs.50 crores from H Acid - Rs.20 crores from Brownfield Pigment Green expansion (from Q4 FY’18) - Rs.70-80 crores from Precipitated Silica (specialty inorganic product) - Rs.60 crores from Greenfield Pigment Green expansion (Dahej) Total incremental turnover post expansions around Rs.200-250 crores. Vinyl Sulphone volume growth 9% YoY; CPC Green volumes exp

Future growth expectations in earnings/operating earnings/profits/EPS?

Revenue growth of 15-20% expected in FY’19 due to improved market conditions and expanded capacities (Page 2). Expanded capacities (H Acid, Precipitated Silica, CPC Green) expected to add ~Rs. 200-250 crores in revenue over next 2-3 years (Pages 4, 8). EBITDA margins expected to sustain at 18-20% over the next 3-5 years, supported by higher Chinese costs and differentiated specialty grades (Page 11). Profit after tax margins around 19-20% EBITDA level anticipated in second half of FY’18 and beyond (Pages 6,10). New product revenues: Violet 23 expected to generate Rs. 20-25 crores in FY’19 (Pag

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AksharChem (India) LtdQ3 FY17Chemicals & Petrochemicals

AksharChem (India) Ltd Q3 FY17 Earnings Call Analysis

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

Price: ₹253Market Cap: ₹160 CrSector: Chemicals & Petrochemicals

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

→Revenue expected to remain flat in FY’18 due to market conditions and dollar/rupee rate.
→Anticipated revenue growth of 15-20% in FY’19 with expanded capacities coming into play.
→Expanded capacity turnover expected approximately:
→ - Rs.50 crores from H Acid
→ - Rs.20 crores from Brownfield Pigment Green expansion (from Q4 FY’18)
→ - Rs.70-80 crores from Precipitated Silica (specialty inorganic product)
→ - Rs.60 crores from Greenfield Pigment Green expansion (Dahej)
→Total incremental turnover post expansions around Rs.200-250 crores.
→Vinyl Sulphone volume growth 9% YoY; CPC Green volumes expected to rise with expansions.
→Vinyl Sulphone capacity utilization can improve from current ~83-84% to ~87-88%.
→Pigment (Green) capacity utilization expected to improve from 91% towards 95%.

Margin guidance

Category 3

→Revenue growth of 15-20% expected in FY’19 due to improved market conditions and expanded capacities (Page 2).
→Expanded capacities (H Acid, Precipitated Silica, CPC Green) expected to add ~Rs. 200-250 crores in revenue over next 2-3 years (Pages 4, 8).
→EBITDA margins expected to sustain at 18-20% over the next 3-5 years, supported by higher Chinese costs and differentiated specialty grades (Page 11).
→Profit after tax margins around 19-20% EBITDA level anticipated in second half of FY’18 and beyond (Pages 6,10).
→New product revenues: Violet 23 expected to generate Rs. 20-25 crores in FY’19 (Page 5).
→The company anticipates stable PAT margin improvement given pricing power and cost pass-through ability (Page 3, 11).

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Fundraise plans

Yes

→The company raised Rs.69 crores through Qualified Institutional Placement (QIP) to fund its Rs.175 crores CAPEX.
→The funding plan for the expansion is primarily through:
→ - Utilization of the QIP proceeds first,
→ - Then internal accruals,
→ - Debt if needed in the last stage of expansion.
→Currently, the company's total debt as of September 2017 is Rs.1 crore with a debt-to-equity ratio of 0x.
→No changes have been made to the above funding program.
→The company may maintain a financial "war chest" for potential future expansion plans if current funds are unutilized.
→No explicit mention of upcoming new fundraising through additional debt or equity beyond the above plans was made.

Order book

The transcript from AksharChem India Ltd.'s Q2 & H1 FY18 Earnings Conference Call does not provide specific details on the current or expected order book or pending orders. However, relevant points related to business outlook include: - The company expects revenue growth of 15-20% in FY19 driven by expanded capacities. - There is ongoing capital expenditure of Rs.175 crores in Specialty Chemicals, Dyes, Intermediates, and Organic Pigments with completion expected within 12 months. - Brownfield expanded capacity of CPC Green is expected to contribute revenue starting Q4 FY18. - The company is confident of margin sustainability (18-20%) for the next 3-5 years based on cost advantages and pricing power. - Discussions mention steady or increasing demand in key markets (South Korea, Taiwan, Japan, Europe). No explicit numbers or timeline details on the current order book or pending orders are disclosed.

Capex plans

Yes

→AksharChem is undertaking a CAPEX of Rs.175 crores focused on Specialty Chemicals, Dyes Intermediates, and Organic Pigments.
→Expansion includes a 10,000 tons annual capacity for Specialty Grade Precipitated Silica targeting the tire industry, expected to generate ~Rs.80 crores turnover at full utilization.
→Incremental turnovers expected: Rs.50 crores from H Acid expansion, Rs.20 crores from Brownfield Pigment Green expansion, Rs.70-80 crores from Silica expansion, and ~Rs.60 crores from Greenfield Pigment Green project, totaling Rs.200-250 crores.
→CAPEX funded by Rs.69 crores QIP proceeds, internal accruals, and possible debt at the last stage.
→Expansion benefits: Rs.70 crores turnover from H Acid and Pigment Green expansions by FY19; Rs.130-140 crores from Silica by FY20.
→Pigment Greenfield expansion at Dahej planned.
→Possible long-term consideration of forward integration into Dyestuffs; no current plan, estimated ~3 years for capacity setup if initiated.
→Effluent treatment plants included for polluting products like H Acid; environment expenses expected to stay around 4-5% of revenue.

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