Indo Amines Ltd Q2 FY19 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 2
Margin
Category 2
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 2- The company expects sales growth of about 30% to 35% in the next six months compared to the current levels (Page 4).
- Focus on increasing market share of existing products and creating new business with new products in both domestic and export markets (Page 4).
- With REACH registrations and increased presence in Europe, export sales in the region are expected to grow significantly over the next two quarters and into next year (Page 9).
- Plans to grow Core Chemicals acquisition's business in 50 countries where the company already exports, targeting expansion to 100 countries within 2-3 years (Page 12).
- Emphasis on specialty segments like pharma intermediates and water treatment chemicals, which are expected to drive higher margins and growth (Pages 6 and 11).
- Steady Capex driving production enhancement and new capacity, including Rs 100 crore investment over 4 years for a new plant in Dhule (Page 10).
See what Indo Amines Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
YesSee what Indo Amines Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- New plant in Dhule with a planned capex of Rs. 100 crore over four years.
- First-year investment in Dhule unit to be around Rs. 30 crore.
- Regular annual capex of Rs. 10 to 20 crore for existing plants focusing on technological improvements and debottlenecking.
- Capex aimed at increasing production capacity by over 25% with the same manpower through process improvements.
- Funding for capex planned via 75% bank finance (term loan) and 25% internal accruals.
- The company intends to maintain a stable debt-to-equity ratio while funding these investments.
- Strategic acquisition of Core Chemicals to strengthen business, expand export markets, and increase profitability; plans to grow business in 50+ countries and target 100 countries in 2-3 years.
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Margin guidance
Category 2- EBITDA margins are slowly increasing and expected to improve gradually through focus on specialty products like pharma intermediates and water treatment chemicals, which have higher margins than agrochemicals.
- Management expects EBITDA margins to improve in the next six months as crude prices stabilize and some cost increases are passed on to customers.
- Sales growth targeted at 30-35% more than current levels in the next six months, driven by increased market share, new business, and export growth.
- Capacity utilization currently around 60%, with ongoing capex (Rs 100 crore over 4 years) aimed at new plant at Dhule and debottlenecking existing plants for increased production by 25%.
- Acquisition of Core Chemicals expected to boost revenue and profitability through operational synergies and expanded market reach.
- REACH investments are anticipated to increase sales in European markets over the next two quarters to one year.
- Overall, profits and EPS are expected to see a steady upward trend supported by margin improvement, enhanced capacities, and growth in new and export markets.
Order book
- The current order book for Indo Amines Limited is stable, remaining in the range of Rs 125 crore to Rs 130 crore for the next quarter.
- This figure has been consistent since the last quarter, where it was Rs 125 crore plus.
- The company anticipates maintaining this order book volume in the near term.
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What Indo Amines Ltd's management said in earlier quarters
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