White Organic
Q4 FY19 Earnings Call Analysis
Agricultural Food & other Products
revenue: Category 1margin: Category 3orderbook: Yesfundraise: Yescapex: Yes
💰fundraise
Any current/future new fundraising through debt or equity?
- The company is considering a preliminary thought of raising funds for expansion, specifically for installing a freeze drying setup for Aloe Vera powder costing around Rs. 40-45 crores.
- No concrete plans for raising equity or debt capital at the moment; it remains a preliminary idea.
- Despite having substantial cash and bank balance (~Rs. 31 crores), the company plans significant investment in leasing additional farmland (1,000-1,800 acres), which will require substantial funds (~Rs. 18 crores initially).
- The company is evaluating various options for raising capital to support expansion, including potential future fundraising.
- Promoters may increase their stake by about 5% per year via creeping acquisition as SEBI permits, but this is separate from formal fundraising.
- Listing a subsidiary on SME platforms is under early consideration but no immediate plans.
Overall, fundraising discussions are at a very early stage with no definitive initiatives underway.
🏗️capex
Any current/future capex/capital investment/strategic investment?
- Preliminary thoughts to raise funds for expansion projects, specifically for setting up freeze drying powder units for Aloe Vera estimated around Rs. 40-45 crores (Page 4).
- Expansion of leased organic farmland targeted to reach 3,000 acres by acquiring additional 1,800 acres during Holi and Diwali, with initial investment about Rs. 18 crores for new lease lands (Pages 9 and 12).
- Potential future setup of operations or facilities in Europe, indicating additional funding needs (Page 12).
- No concrete plans for immediate equity or debt raising; fund raising is in very early/preliminary stages (Page 4).
- Possible promoter stake increase by 5% annually through creeping acquisition as per SEBI guidelines (Page 8).
Overall, capex is focused on agricultural land expansion and processing infrastructure, with strategic investments possibly overseas but still at early planning stages.
📊revenue
Future growth expectations in sales/revenue/volumes?
- Targeting topline of about Rs. 250+ crores in FY19 (Page 8)
- Revenue growth driven by increasing demand and awareness for organic products (Page 3)
- Expansion of organic farm land to 3,000 acres within 12-14 months to support volume growth (Page 9)
- Majority of land organically certified by November 2018, opening export opportunities, especially in Europe (Page 4)
- Continuous orders from key clients like Patanjali, maintaining supply volumes of 500 tonnes every 40 days (Page 12)
- Focus on expanding in western India (Gujarat, Maharashtra, Mumbai suburbs) with personal management presence (Page 9)
- Growing contribution of Dubai subsidiary adding to revenues (Page 5, 12)
📈margin
Future growth expectations in earnings/operating earnings/profits/EPS?
- Q3 FY18 EPS stood at Rs. 2.88, a 4000% growth YoY; 9 months FY18 EPS at Rs. 5.69, a 3456% growth YoY (Page 4).
- For FY18, expected EPS to surpass Rs. 12 by March 2018 considering equity and earnings trends (Page 7).
- Target topline for FY19: over Rs. 250 crores; targeted bottomline: Rs. 20+ crores (Page 7).
- EBITDA margins expected to improve as ICS status and premiums increase (Page 10).
- Continuous order fulfillment with bulk buyers like Patanjali indicates stable revenue streams (Page 12).
- Expansion plans to increase leased organic farmland from current ~1,200 acres to 3,000 acres within 12-14 months, supporting revenue growth (Page 9).
- Potential capital raise for freeze-drying setup and international presence may further boost profits (Pages 6 and 7).
📋orderbook
Current/ Expected Orderbook/ Pending Orders?
- The company has a continuous supply relationship with Patanjali, fulfilling 500 tonnes every 40 days.
- Orders from Patanjali are ongoing monthly, with new purchase orders issued regularly (e.g., the third order issued on Feb 19, 2018).
- There are no specific figures given for a formal order book, but the supply to Patanjali is described as a smooth, ongoing process.
- The company is targeting expansion to about 3,000 acres of organic leased land by the next Holi and Diwali seasons to support growing demand.
- They have proposals for acquiring 8,000-10,000 acres but will select the most suitable lands.
- Overall, the order situation is stable and growing with regular procurement from partners like Patanjali and plans for increased production capacity through land acquisition.
