AksharChem (I) Q2 FY19 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
N/A
Order
N/A
Capex
Yes
1 of 3 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 2- Expansion completed for CPC Green (480 MTPA added) and H Acid (1200 MTPA added), increasing total capacity from 9,720 to 11,400 metric tons.
- Commercial production for H Acid started; expected significant volume contribution from Q4 FY19.
- CPC Green expanded capacity utilization expected to begin mainly from Q4 FY19; 50%-60% volume addition expected initially.
- Precipitated Silica plant commissioning expected by FY20 with anticipated revenue of around Rs. 80 crores.
- Sales volume growth: 15% year-on-year volume growth in CPC Green; continued annual volume growth expected.
- Two to three years forward, potential top-line addition of Rs. 160-180 crores from new and expanded products.
- Margin improvement expected to be moderate, with some efficiency gains from shared utilities.
- Sales largely export-driven (90%) with focus on maintaining stable realizations and entering new markets without price undercutting.
See what AksharChem (I) management said on margin guidance — free account, 30 seconds.
Fundraise plans
- The transcript does not mention any current or planned fundraising through debt or equity.
- The company has zero debt as of September 2018, with debt-to-equity ratio at 0.0x.
- Finance costs mentioned are related to LC discounting and bank charges, not interest on loans.
- CAPEX plans for capacity expansion are ongoing, with environmental clearances mostly in place.
- No indication of raising funds via equity or additional debt during the discussed period.
- Expansion is being funded through internal accruals or existing resources.
- Management has not commented on any future fundraising intentions in this call.
See what AksharChem (I) management said on order book — free account, 30 seconds.
Capex plans
Yes- AksharChem has completed capacity expansion for CPC Green (480 MTPA) and H Acid (1200 MTPA), increasing total capacity to 11,400 MTPA (9,000 MTPA Dye Intermediates, 2,400 MTPA CPC Green).
- Precipitated Silica Greenfield project is underway at Dahej, expected to be completed by end of FY19 and start commercial production in FY20, with expected revenues of around Rs. 80 crore and EBITDA margin of ~15%.
- Pigment Violet facility: a small commercial plant operational with samples under approval; full-scale production expected after customer approval, potentially contributing from FY20 onwards.
- Environmental clearances for most products related to CAPEX have been received; some clearances (EC, NOC) are in process as required.
- The company is focusing on gradual ramp-up of new capacities rather than pushing full volumes immediately to maintain margins and customer relationships.
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Margin guidance
Category 3- Revenue growth expected from newly expanded capacities in CPC Green (480 MTPA) and H Acid (1200 MTPA).
- Commercial production of H Acid started; full utilization expected from Q4 FY19 with 70-80% capacity utilization.
- CPC Green expanded capacity utilization to begin largely from Q4 FY19 with 50%-60% capacity addition expected then.
- Precipitated Silica plant commissioning expected by end FY19 with commercial production from FY20, adding estimated Rs. 80 crores revenue with ~15% EBITDA margins.
- In 2-3 years, incremental top line of Rs. 160-180 crores expected from expansions in pigment, H Acid, and silica segments.
- EBITDA margins likely to improve modestly due to scale benefits and cost efficiencies but expected to remain in 15%-17% range near-term.
- Currency benefits and passing on raw material cost changes might impact margins.
- Overall, focussed steady top-line growth with moderate margin improvement over next 2-3 years; volatile commodity markets may affect exact profitability.
Order book
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