Aro Granite IndsQ1 FY17Consumer Durables

Aro Granite Inds

Q1 FY17 Earnings Call Analysis

Management growth scorecard

Revenue

Category 4

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

0 of 3 growth signals are positive — mixed outlook.

Revenue guidance

Category 4

→No significant volume growth expected in the current financial year due to currency challenges and market conditions (Page 14).
→Margins expected to be similar to last quarter levels with efforts to maintain despite currency headwinds (Page 14).
→Diversification into newer growth markets being pursued to offset declining US market share (Page 15).
→US market has dropped from 21% to 19.5% of business; newer markets are compensating for volume loss there (Page 15).
→Europe shows consistent growth, e.g., 5% growth in Poland, 36% in Germany, with new markets like Slovakia expanding (Page 11).
→Steady or stagnant markets in Japan, Australia, and New Zealand; new markets like Thailand and Singapore being developed (Page 11 & 3).
→Expansion in value-added segments such as cut-to-size slabs with growth potential from 4-5 to 25 containers per month (Page 9 & 5).
→Currency fluctuations present a key risk affecting growth and margins (Page 8 & 14).

Category 3

→Volume growth for FY2018 is not expected to increase significantly due to adverse currency conditions and challenging market environment.
→Currency depreciation (INR appreciation against USD and Euro) is a major concern that will impact topline and EBITDA margins.
→Margins for FY2018 are expected to be similar to the last quarter of FY2017, without significant improvement.
→Cost control measures, such as switching to captive power and wind energy, are expected to save Rs.10-14 Lakhs per month, aiding margin maintenance.
→Expansion into new markets (e.g., Europe, Slovakia, Thailand) aims to offset volume losses in the US market.
→No major capex or capacity expansion planned for FY2018, only regular maintenance capex.
→Tax rate expected to rise to around 34% from the current 23%, impacting net profits.
→Overall, company expects to maintain at least current profitability levels but not a significant upward trend given current challenges.

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→There are no explicit mentions of any current or planned new fundraising through debt or equity in the provided transcript.
→The management did not discuss any ongoing or future plans for raising capital via equity or debt during the Q&A.
→Capital expenditure (capex) for FY2018 is limited to regular maintenance only; no new capacity expansion or related funding plans were indicated.
→No mention of any equity dilution or debt raising to fund future operations or growth.
→The company appears to be focusing on cost control measures and operational improvements rather than seeking external fundraising at this time.

→The transcript on page 15 and surrounding pages does not provide specific details about the current or expected order book or pending orders for ARO Granite.
→The discussion primarily focuses on market conditions, competition (especially in the US market against Quartz and Brazilian granite), pricing pressures, and geographic market strategies.
→There is mention of volume growth outlook being limited due to currency fluctuations and market conditions, with no explicit mention of current order book figures.
→The company is diversifying markets and focusing on value-added products like cut-to-size slabs, though no pending order specifics are given.
→Overall, the tone indicates cautious volume growth expectations without firm order backlog numbers detailed in the provided pages.

→No new capex or capacity expansion plans are finalized for FY2018 as of now.
→Current plans relate only to earlier made plans with no new projects committed yet.
→Maintenance capex only is planned for FY2018.
→Any new developments or investments will be communicated once finalized.
→Company is focused on cost control measures like power cost savings via wind energy agreements.
→Strategic focus remains on growth through new markets and value-added products rather than mining or major new capital investments.

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