Tinna Rubber & Infrastructure Ltd Q4 FY23 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 2
Margin
Category 1
Fundraise
Yes
Order
N/A
Capex
Yes
3 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 2- The company expects a revenue growth CAGR of approximately 20-25% over the next 3 to 5 years (Page 15, 14, 7).
- First quarter of the current fiscal year is on track with a confidence of over 20% revenue growth for FY24 (Page 20, 11).
- Confidence in margins improving northward of 15% alongside revenue growth (Page 20, 11, 7).
- Exponential growth anticipated from new opportunities, including exports and infrastructure sectors (Page 14, 7, 6).
- Export revenues have doubled from FY22 to FY23 with substantial growth expected, aided by breakthroughs with multinational tire companies (Page 6).
- Infrastructure sector expected to contribute significantly to growth, already showing benefits in Q1 FY24 (Page 11).
- The company is optimistic about scaling production and capturing new markets including Oman, Middle East, and possibly Africa (Pages 14, 7).
See what Tinna Rubber & Infrastructure Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
Yes- Current planned CAPEX of Rs.30 crores for FY24 will be mostly funded through internal accruals.
- There is consideration for taking some additional debt as the company is comfortable with its current debt profile.
- Total debt currently about Rs.58 crores, with a cost of funds around 10% and a credit rating of BB, with an expected upgrade to BBB.
- No explicit mention of upcoming equity fundraising in the provided conversation.
- Management shows no hesitation for future CAPEX, but prioritizing and crystallizing opportunities before proceeding further with expansions.
- They are open to raising debt given balance sheet capacity but taking a cautious and calculated approach.
See what Tinna Rubber & Infrastructure Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- Company plans a CAPEX of Rs. 30 crores in the current financial year.
- The CAPEX is primarily funded from internal accruals, with some possibility of additional debt.
- The investment is aimed at setting up a new facility in India focused on tire recycling and downstream value-added products.
- Oman facility setup required roughly $1 million; no further CAPEX anticipated there this financial year.
- Expected revenue contribution from the Oman plant at full capacity is around Rs. 20 crores with about 10% EBITDA margin.
- TP Buildtech, an associate company (50% owned), received Rs. 2 crores growth capital for aggressive expansion.
- The company is cautious and selective about future investments, prioritizing leveraging competitive advantages and scaling existing operations.
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Margin guidance
Category 1- The company expects a revenue growth of over 20% for FY24, with confidence in achieving this as Q1 progresses.
- EBITDA margins are anticipated to improve, moving northward to 15%+ in the near term, recovering from recent pressure.
- Over the next 3-5 years, management projects a CAGR of 20-25% in revenues, driven by sustainable growth opportunities and new market expansions like the Oman plant.
- EPS growth aligns with revenue and margin targets, reflecting a consistent uptrend supported by operational efficiencies.
- Export business is expected to grow exponentially, with recent breakthroughs in multinational contracts enhancing growth prospects.
- Management is optimistic about consumer and infrastructure sector contributions increasing, helping sustain long-term profitability.
- Dividend payout policy targets distributing 20-25% of profits to shareholders.
Order book
- The company has ongoing orders including a significant IOC order valued at approximately Rs.100 crores, to be executed over 2 years, categorized under the infrastructure segment.
- There are multiple highway projects with top layer work underway at several NHAI sites; these projects have revenues that remain consistent but vary as new projects begin and others complete.
- The crumb rubber modifier business supplies to IOC, contractors, and companies like HINCOL, representing rolling orders that continue to trickle in.
- Overall, the infrastructure sector forms about 50% of revenue with continuous orders and engagements.
- The company is optimistic about order inflows and growth from infrastructure projects with a strong market share of 65%-70% in the crumb rubber modified space.
- No specific total value of the current order book disclosed, but the focus on repeat and sizable orders indicates a healthy pipeline.
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