Any current/future new fundraising through debt or equity?

No major new fundraising through debt or equity is planned in the near term. The company has adequate liquidity with unutilized bank limits and recently secured additional COVID loans as per RBI guidelines. Banks have been supportive, and the company has the ability to raise more funding if required. Most major CAPEX is complete, with only minor maintenance or small debottlenecking CAPEX expected going forward. Cash flows generated will primarily be used for debt repayment, aiding balance sheet improvement. The company took the moratorium during COVID-19 for liquidity preservation, not due to

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

Most major CAPEX is behind the company, with investments of around Rs 350-400 crore made over the last 4-5 years. Only minor maintenance CAPEX and small debottlenecking projects are expected going forward. The company aims to improve profitability through existing levers without significant new capital investment. New product development is ongoing, especially in POI textile (similar pace to BCF), with some projects having a 12-18 month gestation period. Potential to increase industrial yarn capacity without additional CAPEX by utilizing existing resources. No major further CAPEX planned in th

Future growth expectations in sales/revenue/volumes?

The company aims to increase export sales further, which have been growing annually by around 17-18% over the last five years, while domestic sales may remain flat or uncertain. New product developments, especially in POI textiles, are ongoing with projects having 12-18 months lead time expected to fill capacity and de-risk the business. Order inflow in the BCF segment improved from April to June, with expectations of further improvement from July, signaling a potential recovery in volumes. The company sees significant growth opportunities in specialized industrial yarn and automotive se

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

The company expects business profitability to improve significantly post-COVID once normalcy returns, building on initiatives from the last 3-5 years and recent cost-saving efforts during lockdown. Export sales, which have been growing and have higher margins, are a key growth driver going forward. Operational improvements and productivity initiatives are expected to increase volumes and margins without major CAPEX. New product development, especially in specialized segments, is underway and expected to contribute over 12-18 months. Cost-saving measures at plants like Palghar have perm

Current/ Expected Orderbook/ Pending Orders?

The company was running at full capacity since May due to pending order books before the lockdown. (Page 4) Order inflow at the BCF plant is about 60 to 70% of normal, while the plant is operational at full capacity since mid-May. (Page 4) Customers have not canceled or dishonored any pre-COVID orders at pre-COVID prices despite oil price crashes, indicating strong order retention. (Page 4) New inquiries and reorders have started picking up since May and June, with expectations of improved order inflow in July. (Page 14) Some customers held orders during lockdown but have now given go-ahead to

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AYM Syntex LtdQ1 FY20Textiles & Apparels

AYM Syntex Ltd Q1 FY20 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 4

Margin

Category 2

Fundraise

Order

N/A

Capex

0 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 4

→The company aims to increase export sales further, which have been growing annually by around 17-18% over the last five years, while domestic sales may remain flat or uncertain.
→New product developments, especially in POI textiles, are ongoing with projects having 12-18 months lead time expected to fill capacity and de-risk the business.
→Order inflow in the BCF segment improved from April to June, with expectations of further improvement from July, signaling a potential recovery in volumes.
→The company sees significant growth opportunities in specialized industrial yarn and automotive segments, especially in Europe, where they have started adding new global customers.
→Cost-saving initiatives and better productivity will support margin and volume growth once market demand normalizes.
→No major CAPEX expected in the next 12-18 months; cash flows will primarily be used for debt repayments, strengthening the balance sheet to support future growth.

Margin guidance

Category 2

→The company expects business profitability to improve significantly post-COVID once normalcy returns, building on initiatives from the last 3-5 years and recent cost-saving efforts during lockdown.
→Export sales, which have been growing and have higher margins, are a key growth driver going forward.
→Operational improvements and productivity initiatives are expected to increase volumes and margins without major CAPEX.
→New product development, especially in specialized segments, is underway and expected to contribute over 12-18 months.
→Cost-saving measures at plants like Palghar have permanently lowered breakeven levels, enhancing profitability even at lower utilization rates.
→EBITDA and cash flows are expected to improve, with FY22 anticipated to show better ratios and balance sheet strength compared to FY20, as generated cash flows focus on debt repayment.
→Overall, the company foresees healthier earnings and improved EPS driven by volume growth, better margins, and disciplined cost management beyond the pandemic period.

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Fundraise plans

→No major new fundraising through debt or equity is planned in the near term.
→The company has adequate liquidity with unutilized bank limits and recently secured additional COVID loans as per RBI guidelines.
→Banks have been supportive, and the company has the ability to raise more funding if required.
→Most major CAPEX is complete, with only minor maintenance or small debottlenecking CAPEX expected going forward.
→Cash flows generated will primarily be used for debt repayment, aiding balance sheet improvement.
→The company took the moratorium during COVID-19 for liquidity preservation, not due to a lack of funds.
→Overall, the focus is on leveraging existing financial resources efficiently rather than seeking new fundraising immediately.

Order book

→The company was running at full capacity since May due to pending order books before the lockdown. (Page 4)
→Order inflow at the BCF plant is about 60 to 70% of normal, while the plant is operational at full capacity since mid-May. (Page 4)
→Customers have not canceled or dishonored any pre-COVID orders at pre-COVID prices despite oil price crashes, indicating strong order retention. (Page 4)
→New inquiries and reorders have started picking up since May and June, with expectations of improved order inflow in July. (Page 14)
→Some customers held orders during lockdown but have now given go-ahead to resume manufacturing, while others have moved past old inventory and placed new orders. (Page 14)
→Overall, order inflow is recovering slowly but steadily across different customers and segments.

Capex plans

→Most major CAPEX is behind the company, with investments of around Rs 350-400 crore made over the last 4-5 years.
→Only minor maintenance CAPEX and small debottlenecking projects are expected going forward.
→The company aims to improve profitability through existing levers without significant new capital investment.
→New product development is ongoing, especially in POI textile (similar pace to BCF), with some projects having a 12-18 month gestation period.
→Potential to increase industrial yarn capacity without additional CAPEX by utilizing existing resources.
→No major further CAPEX planned in the next 12-18 months.
→The company will focus cash flow predominantly on debt repayment rather than new capital investments.

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

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1AYM Syntex Ltd

Rev 4Mar 2

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