Tinna Rubber & Infrastructure LtdQ2 FY23
Tinna Rubber & Infrastructure Ltd Q2 FY23 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹926P/E: 26.1Market Cap: ₹1.3K CrSector: Industrial Products
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
Yes
Order
Yes
Capex
Yes
3 of 5 growth signals are positive.
Full analysisRevenue guidance
Category 2- →The company expects an approximate 20% year-on-year consolidated volume and revenue growth.
- →There is a strong pipeline of business in the infrastructure sector for at least the next 3 years, driven by 25-30 new expressway projects in phased execution.
- →Expansion plans include increasing tyre crushing capacity by 60% at the Varle plant, and adding Thermo Plastic Elastomer production to broaden the market.
- →The newly commissioned Oman plant is expected to contribute Rs. 18 to 20 crores annually, scaling up progressively.
- →The passenger car radial (PCR) processing plant at Varle is projected to generate around Rs. 100 crores in annual sales.
- →Growth is expected across all sectors: infrastructure, industrial, steel, and consumer.
- →EBITDA margins are targeted to improve to around 15% with steady operation.
- →The company aims to maintain a 20-25% CAGR over the medium term, driven by diversified product offerings and infrastructure demand.
Margin guidance
Category 3- →The company expects a topline growth of around 20% year-on-year.
- →EBITDA margins are projected to improve to approximately 15%, up from 14.5% in Q1 FY24.
- →Net profit after tax grew 16% YoY in Q1 FY24, indicating a positive earnings trend.
- →Infrastructure and industrial sectors see strong growth potential with multiple expressways and government projects lined up.
- →Expansion plans include increasing tyre crushing capacity by 60% at the new Varle plant and adding Thermo Plastic Elastomers (TPE) production, targeting new markets and applications.
- →Oman facility ramp-up expected to improve margins and contribute Rs. 18-20 crores annually to sales.
- →Overall, the company is targeting a consolidated volume growth of roughly 20% CAGR over the next 3 years.
- →Confident of recovery in Q3 and Q4 FY24 after early monsoon rains impact.
- →Focus remains on expanding core tyre recycling operations and stabilizing overseas ventures before exploring further international expansions after FY25.
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Fundraise plans
Yes- →The Company is in the process of taking a new term loan of approximately Rs. 30 crores to support ongoing capital expenditures related to expansions.
- →The remaining funding for CAPEX will come from internal accruals.
- →The Oman facility investment of about Rs. 11 crores has been fully funded through internal accruals.
- →The management aims to achieve a debt-free status by FY25, primarily through monetizing non-core land parcels and internal accruals.
- →However, due to compelling growth opportunities, the Company is comfortable with the current debt levels and intends to continue funding growth through a mix of debt and internal accruals rather than equity.
- →No explicit mention of any equity fundraising is made in the call.
Order book
Yes- →The Company has a strong order pipeline, especially in the infrastructure sector, for at least the next 2 to 3 years based on already awarded projects.
- →The order book includes contracts worth approximately Rs. 107 crores to be completed over the next 2 years, with around 80-90% expected to be consumed within the current financial year.
- →Key projects include multiple expressways, including the Ganga Expressway, targeting completion around FY24 or extended by 6 months.
- →The Company is confident about phased growth in infrastructure volumes, with a focused effort on expressway projects and other road construction activities.
- →There is no sector-wise EBITDA margin disclosure as it is considered sensitive information.
- →Continuous engagement with government and contractors ensures a healthy and growing order book for upcoming years.
Capex plans
Yes- →Ongoing CAPEX includes Rs. 38 to Rs. 40 crores for the Varle expansion (tyre crushing capacity increase by 60%).
- →Rs. 3 crores allocated for Thermo Plastic Elastomer (TPE) project at Panipat plant, capacity 6,000 tons per annum.
- →Additional Rs. 2 to 3 crores planned for plant setup in Oman, with Rs. 11 crores already invested internally.
- →Total new term loan of approx. Rs. 30 crores being taken for funding these expansions; rest funded through internal accruals.
- →New plant at Varle expected to add around 60,000 tons capacity.
- →Expansion aims to diversify products (Passenger Car Radial tyres processing, TPE products) and increase addressable market.
- →Oman facility and Varle project expected to contribute incremental sales (~Rs. 150 crores addition collectively).
- →Strategic focus remains on tyre recycling business, with no planned investments outside core rubber recycling operations.
- →Management plans to monetize non-core land and real estate investments to reduce debt and fund growth.
How does Tinna Rubber & Infrastructure Ltd rank vs peers in Industrial Products?
Pro feature1Tinna Rubber & Infrastructure Ltd
Rev 2Mar 3
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