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

The company plans to modernize all its plants to upgrade to industry standard technology, spending around Rs. 70 to Rs. 100 Crores over the next couple of years. This capex is aimed at enhancing capacity and technology but not adopting very state-of-the-art technology. Capex funding approach is still being worked out; the company hopes to minimize borrowings and leverage generated cash flow. Infrastructure expansion includes creating 5 to 6 new depots in the next quarter to support distribution and expanding market footprint. No specific mention of strategic investments beyond capacity and dis

Future growth expectations in sales/revenue/volumes?

The company targets a consistent year-on-year growth of 30% to 35% in sales/revenue for the current and next two years. (Page 5) Volume growth in Q2 was 12% year-on-year, and on an annualized basis it is at 18-22%. (Page 6, 11) Market share gains have been observed across both industrial and decorative segments at rates higher than industry growth by 8-10%. (Page 8, 9) Growth is expected from both decorative (65% of business) and industrial (35%) paint segments. (Page 5) Expansion in dealer network and painter engagement is driving growth. Current active dealers are around 3300-3500 with 6

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

Shalimar Paints targets a consistent revenue growth of 30% to 35% year-on-year for the current and next two years. This growth is expected across both decorative (65% of sales) and industrial (35%) segments. Capacity utilization is currently 55%-60% and planned upgrades may increase it to 70%-75%, supporting growth without immediate constraints. Margins have been impacted by commodity price hikes but are improving; gross margins have risen from 23%-25% to approximately 27%-28%. EBITDA margins, affected in previous years, are stabilizing and expected to improve as commodity prices softe

Shalimar PaintsQ2 FY23Consumer Durables

Shalimar Paints Q2 FY23 Earnings Call Analysis

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

Price: ₹95.93Market Cap: ₹802 CrSector: Consumer Durables

Management growth scorecard

Revenue

Category 2

Margin

Category 1

Fundraise

Yes

Order

N/A

Capex

Yes

3 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

The company targets a consistent year-on-year growth of 30% to 35% in sales/revenue for the current and next two years. (Page 5)
Volume growth in Q2 was 12% year-on-year, and on an annualized basis it is at 18-22%. (Page 6, 11)
Market share gains have been observed across both industrial and decorative segments at rates higher than industry growth by 8-10%. (Page 8, 9)
Growth is expected from both decorative (65% of business) and industrial (35%) paint segments. (Page 5)
Expansion in dealer network and painter engagement is driving growth. Current active dealers are around 3300-3500 with 6000-6300 total dealers. Painters active have nearly doubled to 4000-4500. (Page 9, 10)
Infra market involvement and government infrastructure projects present additional growth opportunities. (Page 12)
Capacity utilization is currently 55-60%, with plans to modernize plants and increase capacity to 70-75%. (Page 5)

Margin guidance

Category 1

Shalimar Paints targets a consistent revenue growth of 30% to 35% year-on-year for the current and next two years.
This growth is expected across both decorative (65% of sales) and industrial (35%) segments.
Capacity utilization is currently 55%-60% and planned upgrades may increase it to 70%-75%, supporting growth without immediate constraints.
Margins have been impacted by commodity price hikes but are improving; gross margins have risen from 23%-25% to approximately 27%-28%.
EBITDA margins, affected in previous years, are stabilizing and expected to improve as commodity prices soften.
Cash burn is expected to cease, and the company anticipates positive free cash flows as margins improve and revenue grows.
Infrastructure and government-driven industrial projects present additional growth avenues going forward.
Overall, operating profits and EPS are projected to grow aligned with the robust revenue and margin improvements.

See what Shalimar Paints management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes

- The company has raised around Rs.300 Crores recently, utilizing Rs.140 Crores so far for term loan repayment, creditor payments, and working capital. - They do not currently anticipate constraints on sales growth due to lack of funds thanks to this recent funding. - For future capex (Rs.70 to Rs.100 Crores over next 2 years for plant modernisation), the company is still finalizing plans on how much will be funded via debt or internal accruals. - Management hopes to minimize new debt by generating positive cash flows going forward and will finalize the borrowing plan in the next few months. - No explicit mention of planned equity fundraising; prior multiple equity rounds helped fund capex and working capital earlier. - Convertible debenture (OCD) interest will stop once converted to equity, reducing financial costs. In summary, while no immediate new fundraising is finalized, some limited borrowing for capex remains possible, with emphasis on minimizing new debt.

Order book

The transcript provided does not explicitly mention the current or expected order book or pending orders for Shalimar Paints Limited. However, some relevant insights related to sales and growth outlook include: - Company is experiencing increased demand with growth in both decorative and industrial paint segments. - Sales growth outpaces industry, with 8-12% growth in certain quarters. - Market share is slowly increasing, indicating higher order inflows. - Expansion of dealer network and painter engagement is driving order acquisition. - Infrastructure push from government expected to benefit industrial segment orders. - Management highlighted capacity utilization at 55-60%, aiming to increase to 70-75% to meet expected growth. - No specific order book or backlog figures were disclosed. Therefore, while there is indication of strengthened sales pipeline and growth, no exact data on current or expected orderbook or pending orders is provided in the transcript.

See what Shalimar Paints management said on order book — free account, 30 seconds.

Capex plans

Yes

The company plans to modernize all its plants to upgrade to industry standard technology, spending around Rs. 70 to Rs. 100 Crores over the next couple of years.
This capex is aimed at enhancing capacity and technology but not adopting very state-of-the-art technology.
Capex funding approach is still being worked out; the company hopes to minimize borrowings and leverage generated cash flow.
Infrastructure expansion includes creating 5 to 6 new depots in the next quarter to support distribution and expanding market footprint.
No specific mention of strategic investments beyond capacity and distribution expansion in the provided text.

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What Shalimar Paints's management said in earlier quarters

Earlier calls (6)

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