Zeal Aqua
Q4 FY19 Earnings Call Analysis
Food Products
fundraise: Nocapex: Yesrevenue: Category 2margin: Category 1orderbook: No information
๐ฐfundraise
Any current/future new fundraising through debt or equity?
- Zeal Aqua Limited plans capacity expansion primarily through internal accruals, not through new debt.
- No mention of current or immediate future fundraising through equity.
- Regarding main board listing and related share capital requirements, the company has not decided on any specific plans for issuing bonus shares, rights issues, or other equity fundraising methods but will comply with necessary regulations if required.
- Existing debt as of March 2018 has a debt-equity ratio of around 0.60.
- Overall, no confirmed plans for new debt or equity fundraising were disclosed in the call.
๐๏ธcapex
Any current/future capex/capital investment/strategic investment?
- Zeal Aqua is increasing processing capacity from 3,500 MT to about 5,500-6,000 MT by FY 2019-20.
- The expansion will be funded through internal accruals, no additional debt planned.
- Capital outlay of approx. โน42 crores was made for setting up a 6,000 MTPA processing facility at Olpad, Surat, started in 2016-17.
- Factory started trial production in Q3 FY 17-18; fully functional from Q1 FY 18-19.
- Plans to further reduce production costs through backward integration.
- Applied for various certifications (ISO, HACCP, US FDA, BRC) to strengthen market presence and access.
- Targeted turnover of around โน270-350 crores in FY 18-19, with margin improvement expected from current 7% to 10-11% post capacity expansion by FY 19-20.
๐revenue
Future growth expectations in sales/revenue/volumes?
- Zeal Aqua plans to increase processing capacity from 3,500 MT to 5,500-6,000 MT by FY 2019-20.
- Expected turnover for FY 2018-19 is approximately โน250-270 crores.
- Average selling price of frozen shrimps is about $9 per kg, subject to market fluctuations.
- Target to achieve production volume of around 3,000 MT in FY 2018-19 and 5,500 MT by FY 2019-20.
- Management anticipates increasing net margins from the current ~7% to 10%-11% within 2 years as capacity expands.
- Expects to capitalize on growing aquaculture markets, including US, China, and EU.
- Plans to grow exports post USFDA certification by March 2020, aiming to penetrate the US market.
- Growth to be supported primarily through internal accruals, with no immediate plans for additional debt.
๐margin
Future growth expectations in earnings/operating earnings/profits/EPS?
- Zeal Aqua aims to increase processing capacity from 3,500 MT to 5,500-6,000 MT by FY 19-20.
- Expected turnover for FY 18-19 is around โน250-270 crores.
- Current margin guidance is around 7%; management targets achieving 10%-11% margins within 2 years.
- Earnings growth is anticipated through capacity expansion funded entirely by internal accruals, without additional debt.
- The company expects to improve profitability and margins similar to peers like Apex Frozen in the medium term.
- EPS growth is expected to accompany margin improvement and turnover expansion but no specific EPS figures given.
- Expansion and export market diversification (US, China, EU) are key growth drivers.
- Zeal Aqua plans to leverage backward integration to reduce production costs, boosting operating profits.
๐orderbook
Current/ Expected Orderbook/ Pending Orders?
The provided transcript from Zeal Aqua Limitedโs March 13, 2018 conference call does not specifically mention current or expected order book or pending orders details. However, relevant insights include:
- The company is focusing on increasing capacity from 3,500 MT to 5,500-6,000 MT by FY 19-20 to meet export demand.
- They are targeting exports primarily to US, China, South East Asia, and the European Union.
- Expected sales turnover is around โน250-270 crores for FY 18-19, with processing unit reaching full functionality by FY 18-19 Q1.
- Average selling price of frozen shrimps is about $9, subject to market fluctuations.
- Management is actively pursuing marketing efforts globally (example: meeting buyers in Brussels).
- They aim to gradually improve margins to 10%-11% by capacity expansion and operational scaling.
No explicit figures or status on pending orders or order book size are disclosed in the transcript.
