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

Ongoing greenfield capex with civil construction about 60% complete as of November 2022; expected to reach 90-95% by June 2023. Machinery ordering to start between January and February 2023, aiming for plant operational by Q4 FY '24 if schedule holds. Project temporarily slowed due to spare capacity and commodity price inflation; cost review and vendor renegotiations underway, updated capex estimate to be shared later. Current capex focused on adding capacity for new products (expanding product basket from 20 to 30 over next two years). Permission from environmental clearance department needed

Future growth expectations in sales/revenue/volumes?

Company aims for 20% revenue growth in FY '24 over FY '23 numbers. Volumes fell by 20% in first half FY '23 but expected to revive gradually from Q3 FY '23 onwards. Top 5 products are in a mature life cycle with expected volume growth of 8% to 12% over the next 2-3 years. Overall volume growth to normalize back to at least last year's levels within a couple of years. Majority of incremental growth expected from newer products (aiming to expand product basket from 20 to 30 products in next 2 years). New products have potential combined sales of INR 40 crores in first full year; market

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

The company aims for a 20% revenue growth in FY 2024 over FY 2023 numbers. Margins are expected to improve, targeting a return to the 18-20% level in FY 2024. Early signs of demand recovery are visible starting Q4 FY 2023, which is expected to aid margin improvement going forward. Volume growth for top products is expected to normalize with 8-12% growth over the next 2-3 years after recent de-growth. Incremental growth and revenue are expected primarily from new products, with an expanded product basket moving from 20 to 30 products over two years. Commercial sales from new products

NGL Fine ChemQ2 FY23

NGL Fine Chem Q2 FY23 Earnings Call Analysis

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

Price: ₹2,772.9P/E: 34.0Market Cap: ₹1.7K Cr

Management growth scorecard

Revenue

Category 2

Margin

Category 1

Fundraise

N/A

Order

N/A

Capex

Yes

2 of 3 growth signals are positive.

Full analysis

Revenue guidance

Category 2

Company aims for 20% revenue growth in FY '24 over FY '23 numbers.
Volumes fell by 20% in first half FY '23 but expected to revive gradually from Q3 FY '23 onwards.
Top 5 products are in a mature life cycle with expected volume growth of 8% to 12% over the next 2-3 years.
Overall volume growth to normalize back to at least last year's levels within a couple of years.
Majority of incremental growth expected from newer products (aiming to expand product basket from 20 to 30 products in next 2 years).
New products have potential combined sales of INR 40 crores in first full year; market potential around INR 400 - 500 crores.
Company confident of regaining margin levels of 18%-20% in FY '24 with improving pricing and lower raw material costs.
Demand is seeing early signs of revival, but customers are currently destocking, expected to normalize by end of FY '23 or early FY '24.

Margin guidance

Category 1

The company aims for a 20% revenue growth in FY 2024 over FY 2023 numbers.
Margins are expected to improve, targeting a return to the 18-20% level in FY 2024.
Early signs of demand recovery are visible starting Q4 FY 2023, which is expected to aid margin improvement going forward.
Volume growth for top products is expected to normalize with 8-12% growth over the next 2-3 years after recent de-growth.
Incremental growth and revenue are expected primarily from new products, with an expanded product basket moving from 20 to 30 products over two years.
Commercial sales from new products are projected to start in Q3/Q4 FY 2024, with potential incremental sales of around INR 40 crores in FY 2025 from these new products.
Operating leverage is expected once the new capex and increased capacity utilization come online, potentially boosting profits and EPS.

See what NGL Fine Chem management said on margin guidance — free account, 30 seconds.

Fundraise plans

- There is no explicit mention of any ongoing or planned fundraising through debt or equity in the call. - The company is currently reviewing and re-estimating its ongoing capex costs due to commodity price fluctuations but has not indicated raising new funds as of now. - Civil construction for the new plant is underway and equipment procurement is planned to start shortly, implying use of internal accruals or existing financing. - Rahul Nachane mentioned that the capex project has been slowed down due to market conditions, with no indication of fresh capital raising. - Any updates on revised capex estimates or funding plans are expected to be communicated in future calls. In summary, no current or future debt or equity fundraising has been announced or indicated during this discussion.

Order book

The transcript provided does not explicitly mention the current or expected order book or pending orders for NGL Fine-Chem Limited as of the Q2 FY 2023 earnings call. However, some related points on demand and order status are noted: - Demand has been subdued due to uncertainty in Europe, inflation, and China lockdowns. - Early signs of demand recovery are seen, with customers expressing renewed interest and making inquiries. - Most destocking is expected to complete by late Q4 FY '23 or mid next quarter. - Orders have not yet fully materialized despite inquiries indicating potential future bookings. - The company expects demand to improve starting Q4 FY '23. No specific numeric details on order book or pending orders were disclosed in the available transcript.

See what NGL Fine Chem management said on order book — free account, 30 seconds.

Capex plans

Yes

Ongoing greenfield capex with civil construction about 60% complete as of November 2022; expected to reach 90-95% by June 2023.
Machinery ordering to start between January and February 2023, aiming for plant operational by Q4 FY '24 if schedule holds.
Project temporarily slowed due to spare capacity and commodity price inflation; cost review and vendor renegotiations underway, updated capex estimate to be shared later.
Current capex focused on adding capacity for new products (expanding product basket from 20 to 30 over next two years).
Permission from environmental clearance department needed for product mix change (additional 10 products); approval expected to take 6 months to 1 year post filing, which will be done after pilot commercialization stage.
No additional investment planned for top 5 products as existing capacity is sufficient; capex targets growth from newer products showing demand.

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