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GFL LtdQ2 FY18

GFL Ltd Q2 FY18 Earnings Call Analysis

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

Price: ₹55.2P/E: 10.4Market Cap: ₹629 CrSector: Finance

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3
  • Growth expected every year for the next 2-3 years, especially in value-added products.
  • Value-added products' revenues have grown threefold in value terms and expected to strengthen further.
  • PTFE business volumes grew 34% quarter-on-quarter, near full capacity utilization with ongoing optimization for increased capacity.
  • Specialty polymer products commercialization underway with ramp-up expected over next 4-6 quarters; full capacity utilization anticipated by March 31, 2019.
  • Caustic soda prices and demand expected to remain strong for the next couple of quarters.
  • New products from the Ranjitnagar plant expected to contribute from January 2018, with ongoing environmental clearance processes.
  • Overall margin profile improved owing to increased proportion of value-added products, with EBITDA margins rising from ~20% to ~33%.

See what GFL Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

  • The company has a pending capex of around Rs 250 Crores for the current financial year.
  • Gujarat Fluorochemicals Limited intends to fund capex plans primarily through internal accruals; as confirmed, they are generating enough cash from operations.
  • There is no current specific decision on additional debt or equity fundraising; the management will take an appropriate call, especially after the public holding reaches 25% by the end of March.
  • No numeric guidance or detailed fundraising plan has been shared at this time.
  • The management stated they will decide on fresh debt or equity only after Board approval and relevant conditions are met.

See what GFL Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes
  • Most of the capex for the value-added fluoropolymer business has already been done, and product development is almost complete. Commercial sales have started, with ramp-up expected over the next 4-6 quarters, aiming for full capacity utilization by March 31, 2019.
  • Manufacturing of some new products at the Ranjitnagar plant began in January 2018; environmental clearance for full capacity is in process but may face delays.
  • Several more projects in polymer specialty fluorochemicals are planned for commercial production starting January 2018.
  • Capacity optimization efforts are ongoing for the PTFE plant to increase value realization in the next 2-3 months.
  • Mining operations for fluorspar commissioned in early November 2017; plans to augment capacity with some capex underway.
  • Capex plans are funded primarily through internal accruals; no immediate fresh debt anticipated.
  • Future decisions on investments will be made post Board approvals.

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