Any current/future new fundraising through debt or equity?

The company has completed its CAPEX cycle and has no plans for any new CAPEX going forward. There are some pending payments related to already committed CAPEX, but these are expected to conclude within a quarter or two. The management clearly stated there will be no further committed CAPEX, indicating no current requirement for additional fundraising. The plan for FY 2019-20 is to limit all expenditures and focus on reducing debt and improving balance sheet quality. Net debt as of September 30 is around Rs. 262 crores, expected to peak in this quarter and then ease out over the coming months.

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

The CAPEX cycle has been completed; no new CAPEX commitments from now onwards. Pending payments remain for already committed capital expenditure, such as the BCF lines, with 90% payment done and around 10% (guarantee payments) pending. The company expects to finish all pending CAPEX within 1 to 2 quarters. AYM Syntex plans no new CAPEX in FY 2019-20; focus will be on limiting expenditures. Emphasis in the near future will be on debt reduction and improving balance sheet quality. The recent BCF line expansion will increase capacity by roughly 50% and is expected to ramp up through FY20. Smaller

Future growth expectations in sales/revenue/volumes?

The company expects increased volumes as the newly installed BCF (Bulked Continuous Filament) lines start contributing, with ramp-up beginning in FY20 and full utilization by Q1 of the next year. Strategic customers in Nylon and Polyester segments have been added, with volumes stable but expected to grow gradually. Six new verticals created are showing positive progress, especially industrial yarns and automotive segments, indicating future sales growth. Ongoing product developments and increasing sampling activities with customers aim to convert more trials into business, enhancing future rev

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

Company expects EBITDA and earnings to improve if the external environment remains stable, with positive momentum seen on the horizon (Page 4). Cost reduction measures across all fronts are expected to start bearing fruit from the next quarter onwards, aiding profitability (Page 2). The CAPEX cycle is nearing completion, reducing capital expenditures and enabling focus on debt reduction and free cash flow generation (Pages 4 and 11). Net debt is currently at Rs. 262 crores with a net debt to EBITDA ratio of 3.7, expected to ease over the coming quarters, improving financial health (Page 2). Ca

Current/ Expected Orderbook/ Pending Orders?

AYM Syntex has seen consistent orders from new strategic customers, especially over the last year. Sampling activity has increased significantly in the last 12 months, particularly in six focus verticals. While the sampling conversion rate is low (about 1 in 10-20 samples converts to business), the converted businesses have shown increasing stability. Bulk orders have started flowing in new segments like carpet, and business development in automotive, industrial yarns, and denim verticals has progressed well. New bulk customer added this quarter in polyester; advance stage trials ongoing with

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AYM Syntex LtdQ3 FY18Textiles & Apparels

AYM Syntex Ltd Q3 FY18 Earnings Call Analysis

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

Price: ₹214Market Cap: ₹1.3K CrSector: Textiles & Apparels

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Order

N/A

Capex

0 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→The company expects increased volumes as the newly installed BCF (Bulked Continuous Filament) lines start contributing, with ramp-up beginning in FY20 and full utilization by Q1 of the next year.
→Strategic customers in Nylon and Polyester segments have been added, with volumes stable but expected to grow gradually.
→Six new verticals created are showing positive progress, especially industrial yarns and automotive segments, indicating future sales growth.
→Ongoing product developments and increasing sampling activities with customers aim to convert more trials into business, enhancing future revenues.
→Cost reduction measures and efficiency improvements initiated are expected to improve profitability and support sustainable growth.
→No further CAPEX planned, focusing on leveraging existing assets to increase sales and reduce debt.
→Overall, the company anticipates steady growth in sales, revenue, and volumes driven by capacity expansions, strategic customer additions, and new product segments.

Margin guidance

Category 3

→Company expects EBITDA and earnings to improve if the external environment remains stable, with positive momentum seen on the horizon (Page 4).
→Cost reduction measures across all fronts are expected to start bearing fruit from the next quarter onwards, aiding profitability (Page 2).
→The CAPEX cycle is nearing completion, reducing capital expenditures and enabling focus on debt reduction and free cash flow generation (Pages 4 and 11).
→Net debt is currently at Rs. 262 crores with a net debt to EBITDA ratio of 3.7, expected to ease over the coming quarters, improving financial health (Page 2).
→Capacity expansions, especially in BCF lines with ~50% capacity increase, are expected to ramp up by FY20, contributing positively to volumes and margins (Pages 6-7).
→Strategic customer additions and improved plant operating metrics (efficiency, reduced wastage) support operating profit growth (Pages 2, 12).
→Management aims to improve profitability without committing new CAPEX, focusing on leveraging existing assets and operational improvements (Page 11).

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Fundraise plans

→The company has completed its CAPEX cycle and has no plans for any new CAPEX going forward.
→There are some pending payments related to already committed CAPEX, but these are expected to conclude within a quarter or two.
→The management clearly stated there will be no further committed CAPEX, indicating no current requirement for additional fundraising.
→The plan for FY 2019-20 is to limit all expenditures and focus on reducing debt and improving balance sheet quality.
→Net debt as of September 30 is around Rs. 262 crores, expected to peak in this quarter and then ease out over the coming months.
→Overall, the management's strategy is to start deleveraging and improve profitability without raising fresh debt or equity in the near future.

Order book

→AYM Syntex has seen consistent orders from new strategic customers, especially over the last year.
→Sampling activity has increased significantly in the last 12 months, particularly in six focus verticals.
→While the sampling conversion rate is low (about 1 in 10-20 samples converts to business), the converted businesses have shown increasing stability.
→Bulk orders have started flowing in new segments like carpet, and business development in automotive, industrial yarns, and denim verticals has progressed well.
→New bulk customer added this quarter in polyester; advance stage trials ongoing with two more large customers.
→Solution-dyed nylon volumes in BCF are at their highest ever, comprising more than 15% of the total BCF business.
→Comfeels brand’s first bulk supply has reached partners with encouraging feedback; more sampling and trial orders expected from other geographies soon.
→Overall, order pipeline reflects gradual scaling, with better traction post-Diwali expected.

Capex plans

→The CAPEX cycle has been completed; no new CAPEX commitments from now onwards.
→Pending payments remain for already committed capital expenditure, such as the BCF lines, with 90% payment done and around 10% (guarantee payments) pending.
→The company expects to finish all pending CAPEX within 1 to 2 quarters.
→AYM Syntex plans no new CAPEX in FY 2019-20; focus will be on limiting expenditures.
→Emphasis in the near future will be on debt reduction and improving balance sheet quality.
→The recent BCF line expansion will increase capacity by roughly 50% and is expected to ramp up through FY20.
→Smaller capacity utilization increases for BCF started immediately after line commissioning, expected to be fully operational by Q1 FY20.

How does AYM Syntex Ltd rank vs peers in Textiles & Apparels?

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1AYM Syntex Ltd

Rev 3Mar 3

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