Current/ Expected Orderbook/ Pending Orders?

BCF segment: Running at full capacity with a healthy order backlog currently. Potential for productivity improvements exists. Palghar plant: Operating 20%-30% below peak capacity, with scope to increase sales by 20%-30%, which would directly improve profitability. Automotive BCF: New European customer trial container received; if successful, volumes expected to ramp up. Solution dyed nylon: Executed highest ever volumes this quarter, with ongoing sampling and prospects for new customers. Industrial segment: Order backlog present; cautious growth approach focused on value-added products and exp

Any current/future new fundraising through debt or equity?

No new CAPEX plans are anticipated in the coming few quarters, indicating limited immediate need for large fundraising. Warrants were converted by promoters during the quarter, leading to a conversion of Rs. 24 crores of ICDs into equity, which has reduced net debt. Net debt has already reduced from 274 crores in March to 258 crores in September 2019. Majority of the cash flows generated will be used to reduce net debt with only minor annual CAPEX of 5-10 crores for maintenance or plant improvements. No mention of any planned new debt or equity fundraising in the current or near future

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

No major CAPEX planned going forward; the company has completed its major CAPEX cycle. Current and near-future CAPEX is limited to minor plant improvements and maintenance, estimated at about ₹5-10 crores annually. Focus will be on maximizing productivity from existing assets rather than new capacity additions. Strategic investments involve increasing sales and EBITDA without expanding capacity. New product developments and customer acquisitions are ongoing, especially in solution dyed nylon, automotive BCF, and industrial segments but without significant capital outlay. Warrants have been con

Future growth expectations in sales/revenue/volumes?

The company expects to increase sales and volumes primarily through: - Maximizing productivity of existing assets without major CAPEX. - Growing export business further, which currently stands at 39% of revenue. - Adding new customers and increasing business from strategic customers. - Expanding exports as well as domestic business; domestic segment has negative working capital and immediate payments. - Enhancing product mix through innovations like solution dyed nylon and new carpet products. - Improving capacity utilization, especially in Palghar, where sales can increase by 20-3

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

The company expects continued quarter-on-quarter growth in EBITDA, having increased from around ₹16 crore six quarters ago to over ₹25 crore recently. Growth momentum is anticipated to continue post-Diwali, despite Q3 typically being weak due to seasonal factors. Opportunities to increase EBITDA and sales exist without additional CAPEX; focus will be on maximizing productivity of existing assets. Export growth, currently at 39%, is expected to rise further, contributing to improved margins and better quality business. Incremental sales, especially from Palghar operations, can increase 20-30% f

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AYM Syntex LtdQ3 FY19Textiles & Apparels

AYM Syntex Ltd Q3 FY19 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

Yes

Capex

1 of 5 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→The company expects to increase sales and volumes primarily through:
→ - Maximizing productivity of existing assets without major CAPEX.
→ - Growing export business further, which currently stands at 39% of revenue.
→ - Adding new customers and increasing business from strategic customers.
→ - Expanding exports as well as domestic business; domestic segment has negative working capital and immediate payments.
→ - Enhancing product mix through innovations like solution dyed nylon and new carpet products.
→ - Improving capacity utilization, especially in Palghar, where sales can increase by 20-30% from current levels with contribution directly boosting EBITDA.
→ - Recruiting and strengthening the sales team to overcome current bottlenecks.
→ - Leveraging opportunities in automotive BCF and industrial segments.
→ - Expecting growth momentum to continue post-Diwali despite December generally being a weaker quarter.
→ - Maintaining a healthy order backlog, especially in BCF segment.

Margin guidance

Category 3

→The company expects continued quarter-on-quarter growth in EBITDA, having increased from around ₹16 crore six quarters ago to over ₹25 crore recently.
→Growth momentum is anticipated to continue post-Diwali, despite Q3 typically being weak due to seasonal factors.
→Opportunities to increase EBITDA and sales exist without additional CAPEX; focus will be on maximizing productivity of existing assets.
→Export growth, currently at 39%, is expected to rise further, contributing to improved margins and better quality business.
→Incremental sales, especially from Palghar operations, can increase 20-30% from current levels, with full contribution flowing to the bottom line.
→Minor maintenance CAPEX of ₹5-10 crore annually will continue, but majority of cash flows will focus on net debt reduction, strengthening the balance sheet.
→New product innovations and market expansions, particularly in carpet and automotive segments, are expected to drive future earnings growth.

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Fundraise plans

→No new CAPEX plans are anticipated in the coming few quarters, indicating limited immediate need for large fundraising.
→Warrants were converted by promoters during the quarter, leading to a conversion of Rs. 24 crores of ICDs into equity, which has reduced net debt.
→Net debt has already reduced from 274 crores in March to 258 crores in September 2019.
→Majority of the cash flows generated will be used to reduce net debt with only minor annual CAPEX of 5-10 crores for maintenance or plant improvements.
→No mention of any planned new debt or equity fundraising in the current or near future.
→Management focus is on maximizing productivity and growing sales without additional capital infusion.

Order book

Yes

→BCF segment: Running at full capacity with a healthy order backlog currently. Potential for productivity improvements exists.
→Palghar plant: Operating 20%-30% below peak capacity, with scope to increase sales by 20%-30%, which would directly improve profitability.
→Automotive BCF: New European customer trial container received; if successful, volumes expected to ramp up.
→Solution dyed nylon: Executed highest ever volumes this quarter, with ongoing sampling and prospects for new customers.
→Industrial segment: Order backlog present; cautious growth approach focused on value-added products and export customers.
→Sampling activities: Increasing steadily across divisions, seen as indicative of future business growth.
→Overall outlook: Expectation to continue momentum post-Diwali, with new hires to expand sales capability and convert trials to strategic orders.

Capex plans

→No major CAPEX planned going forward; the company has completed its major CAPEX cycle.
→Current and near-future CAPEX is limited to minor plant improvements and maintenance, estimated at about ₹5-10 crores annually.
→Focus will be on maximizing productivity from existing assets rather than new capacity additions.
→Strategic investments involve increasing sales and EBITDA without expanding capacity.
→New product developments and customer acquisitions are ongoing, especially in solution dyed nylon, automotive BCF, and industrial segments but without significant capital outlay.
→Warrants have been converted into equity, reducing net debt and reinforcing promoter confidence.
→The company aims to grow organically through better utilization and innovation rather than through large capital investments.

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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