Yasho Industries LtdQ2 FY23Chemicals & Petrochemicals

Yasho Industries Ltd

Q2 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 1

Fundraise

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 3

→Yasho Industries expects volume growth, aiming to improve from current 17%-18% utilization to over 20% in near term.
→Q1 FY24 saw 6% volume growth sequentially compared to Q4 FY23, though volumes were down YoY versus Q1 FY23 due to robust demand and higher prices then.
→For FY24, management targets over 95% utilization of the current 12,500 metric ton capacity in Vapi.
→New facility at Pakhajan (expansion) is expected to start commercial production by early FY25, with full ramp-up by FY26 targeting at least 90% utilization.
→New facility’s sales contribution is not expected in FY24 but will support growth from FY25 onwards.
→Long-term volume growth aims to leverage "Make in India" opportunities and increased demand from North/South America and Middle East markets.
→Management expects sustainable growth in revenue with expansion and improved product mix post new capacity commissioning.

Category 1

→Yasho Industries expects volume growth this year, aiming for above 95% capacity utilization at their Vapi facility in FY24, up from ~90% last year.
→New Pakhajan facility to commence production in early FY25; full ramp-up expected over 2 years, targeting 90% utilization by FY26.
→Margins currently under pressure due to raw material price declines and competitive pricing; expected improvement in H2 FY24 and beyond with better product mix and new industrial segment capacity.
→EBITDA per ton is variable; management focuses on percentage margins rather than per-ton absolute numbers, aiming for margin improvement as volumes rise.
→The new capacity in FY24 is not expected to contribute significantly to topline this fiscal, but will drive future growth.
→Long-term growth supported by "Make in India" initiative and increasing demand from domestic and overseas markets.
→No major CAPEX planned until FY26 after achieving optimum utilization of current expansion.

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→The company expects a total debt level of about Rs. 500 crores by FY24, including working capital requirements.
→There was no mention of any new equity fundraising in the call.
→Management indicated no further CAPEX plans in the next 2-3 years beyond the ongoing Phase-1 expansion.
→Future CAPEX discussions will likely start in early FY26, after achieving optimum utilization of the current expansions.
→No specific mention of incremental debt beyond the Rs. 500 crore figure related to FY24 was provided.

→The management did not provide explicit figures for the current or expected order book during the call.
→However, there are indications of strong demand from large customers waiting for the new facility to start production, suggesting a healthy pipeline.
→Trials for the new facility are expected to start by October-November, and commercialization is anticipated by early FY25.
→The company is engaging actively with customers, with some already showing strong commitment and willingness to increase future business.
→Increased enquiries and business inquiries stemming from the "Make in India" initiative indicate potential growth in orders.
→Overall, Yasho Industries is confident of achieving above 95% capacity utilization on existing capacity this year and aims for 90% utilization in the new facility by FY26, implying an improving order trajectory.

Yes

→Ongoing CAPEX: A Greenfield project at Pakhajan is underway, expected to start production in early FY25, focusing on industrial segment products.
→Capacity: Current capacity at Vapi is 12,500 metric tons; post expansion, total capacity will be around 30,000 metric tons per annum.
→Utilization: Targeting above 95% utilization at Vapi in FY24; new facility expected to reach optimum utilization (90%) by FY26.
→Expansion Timeline: New facility commercialization expected by early FY25; optimum utilization anticipated within 2 years.
→Future CAPEX: No additional CAPEX plans for next 2-3 years beyond ongoing; further CAPEX will be considered after achieving 70%+ utilization by FY26.
→Investment: Approximately Rs. 400 crores invested in Phase-1, largely in land development and infrastructure; Phase-2 CAPEX expected to be lower due to prior investments.

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