Jindal Poly Films LtdQ1 FY16Industrial Products

Jindal Poly Films Ltd

Q1 FY16 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→The demand growth for Packaging Films and BOPP Films is robust, estimated at about 12-14% annually.
→With the economy recovering, further growth in demand is expected.
→New capacity expansions in India and overseas (Europe and America) are planned, including a 41,000 Tpa BOPP line in India and two 60,000 Tpa BOPP lines overseas by mid-2017.
→Demand growth is anticipated to justify the capacity increases, with new lines coming online in gaps of about 8 months to a year.
→The global market is growing steadily, and the company expects new capacity additions to be absorbed within two years.
→Overseas operations focus on value-added specialty films, expected to maintain or improve operating margins with new efficient machines and debottlenecking CAPEX.
→India operations capacity utilization is more than 80%, with expectations to grow further with new capacity.
→No plans currently for BOPET capacity expansion; focus remains mostly on BOPP capacity.

Margin guidance

Category 3

→New capacity in India (41,000 Tpa) to be operational within two months, adding 20% to existing capacity, supporting volume growth.
→Overseas capacity expansion (120,000 Tpa) by mid-2017 expected to enhance operating margins due to higher efficiency and specialty product mix.
→Demand growth for packaging and BOPP films remains robust at 12-14% in India; overseas growth around 6.5%, indicating strong volume and revenue prospects.
→EBITDA improvement seen overseas with current margins expected to be maintained or improved with new CAPEX and debottlenecking efforts.
→One-off maintenance costs in Q4 FY16 affected standalone margins; normalization expected.
→No firm guidance on FY17 EBITDA, but incremental capacity expansion and operational efficiencies are expected to drive earnings growth.
→The company targets payback on major projects within 3-5 years, indicating anticipated profitability improvements post-CAPEX.
→Dividend payout remains conservative, focusing on reinvestment for growth potential and share price appreciation.

Get access to all 5 sections — revenue, margin, fundraise, orderbook, and capex — for Jindal Poly Films Ltd and 1,400+ other companies.

Fundraise plans

Yes

→No firm plans for raising equity through QIP currently; only an enabling resolution for QIP is in place.
→For the Rs.1,000 crore expansion, the funding breakup is expected to be 70% debt and 30% equity.
→Debt funding will be through ECA loans (costing ~2% per annum) and long-term project loans.
→ECA loans have long repayment tenures (8.5 to 10 years) and come at a low cost.
→Equity portion will be funded through operational surplus flows.
→There is no mention of any immediate plans for additional fundraising beyond these.

Order book

The transcript provided from the Jindal Poly Films Q4 FY16 Earnings Call does not explicitly mention details about the current or expected orderbook or pending orders for the company. However, some related insights can be summarized: - Demand growth for Packaging Films and BOPP Films is robust at about 12-14%. - Capacity expansions are planned with new lines coming online with a gap of 8 months to 1 year, expected to be matched by demand growth. - For the international Jindal Films business, there are long-term supply agreements in place with most customers, providing a stable order book. - The hygiene and medical segment with Global Nonwovens is progressing with major customers and rigorous qualification processes suggesting a growing order intake. - Exports from Indian operations form approximately 25% of capacity, indicating a diversified customer base. No explicit quantitative figures on orderbook or pending orders were disclosed.

Capex plans

Yes

→Jindal Poly Films has announced a total CAPEX plan of Rs. 1,000 crores.
→In FY'16, Rs. 150 crores was spent in India and Rs. 65 crores advances paid overseas.
→Approximately Rs. 600 crores is expected to be spent in FY'17.
→The remaining Rs. 285 crores will be spent subsequently, with a debt-equity mix of 70:30 (equity from operation surplus).
→New BOPP capacity additions include:
→ - 41,000 Tpa capacity in India, expected operational within two months.
→ - 120,000 Tpa (two lines of 60,000 Tpa each) capacity overseas (Europe and America), targeted for mid-2017.
→Additional metallizing and coating capacities have also been commissioned in Q4FY'16.
→No current plans for BOPET capacity expansion.
→Continuous efficiency improvements and small debottlenecking CAPEX are planned.
→The company aims to replace inefficient equipment with newer lines to improve margins and capacity.

How does Jindal Poly Films Ltd rank vs peers in Industrial Products?

Pro feature

1Jindal Poly Films Ltd

Rev 3Mar 3

See full Industrial Products sector rankings

Unlock with Pro

Want more stocks like Jindal Poly Films Ltd?

Build an AI portfolio filtered by sector, market cap, and growth rank. Takes 2 minutes.

Build my portfolio