Conference Calls and Earnings Call Transcripts for NSE and BSE Stocks - Q1FY20

Conference Call with Magma Fincorp Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript.

Call Participants: Mr. Sanjay Chamria - Vice Chairman And Managing Director, Mr. Manish Jaiswal - Managing Director & Chief Executive Officer, Mr. Deepak Patkar – Group CRP, Rajive Kumaraswami - Managing Director, Kailash Baheti - Group CFO

Key Highlights from the Management

It's a pleasure to welcome all of you on this investor call today to discuss our fourth quarter results. Before that, I am sorry and apologise for the delay which happened due to the technical reasons uploading our investor presentation and I hope you all have been able to download as we speak on the call. So gentlemen and ladies, we have been going through a once in a century event in the form of COVID-19 and its ripple effect is beyond anyone's comprehension with raging debates of lives versus livelihood. 

Jury is still out on whether and how as a country we have handled it and when we will return to normalcy in our lives and livelihood. India has experienced Covid-19 as well differently in cities and rural towns. And the top 13 cities accounted for more than 65% of the total positive cases. And therefore, response to Unlock 1.0 has also been quite different in rural markets versus urban cities, metros and has been the mindset of the populous living in these markets.

Coming to financial sector and more particularly NBFCs, we have suffered the longest and the harshest times since September 2018 ever since the collapse of IL&FS, followed by DHFL and Yes Bank and many middle, small NBFCs during the 2019, resulting in confidence crisis amongst the lenders and rating agencies. And before the sector could recover from the same, COVID struck a fatal blow to the entire humanity and caused irreparable damage to the entire economy. With limited fiscal measures in its hands, the government has been juggling various challenges of providing food and other welfare measures for migrant labor and poor, as also economic stimulus to the ever reliable MSME segment and also doing some balancing act of fiscal deficit containment and inflation control.

While we have witnessed multi-year low GDP of 4.2 during FY20 and 41 quarter low of 3.1% during Q4 and projected minus 3.2% to 5% for FY21 and the negative outlook on the lowest investment-grade rating, there are distinct positives in the form of forex reserves at more than $500 billion, record harvest of rabi crop and the normal monsoon predicted for the calendar year 2020, and most importantly, negligible impact of Covid-19 in the hinterland of our country. In times like this, we all have to fend for ourselves and our survival instincts have to assume center stage and the entire corporate sector across industry groups has tightened its belt to ride over this most difficult periods in our lives through survive, revive and thrive mode.

At Magma too, we have adopted key principles of this motto of survive, revive and thrive along the following objectives - first and foremost is the employee safety and the welfare programs, followed by customer engagement and support in these times of crisis, third is capital preservation, followed by prudent liquidity management, strict OpEx control, followed by portfolio quality and finally digitized platform for contactless lending and collections. Coming to the first one, employee safety and welfare. We have been providing 24/7 support through an emergency response team of 85 persons to 9,000 plus people for any health-related issues as well as for their families and moved in to work from homes during the lockdown period. Now with Unlock 1.0 underway and more than 70% of our branches being located in the rural and the semi-rural markets, more than 95% of our over 7,500 field staff are in the field interacting with the customers and supervisory staff and managers have been operating from their homes and going to office as required and using the secured networks to access the data and reports, which are available throughout 24/7.

Coming to customer engagement and support, we have established personal contact with more than 3 lakh live customers during April and May to inquire about their own and family health, impact of lockdown on deployment of assets, cash flow situation and how we can support them. Our field executives and call center executives reached out to these customers across phone calls, SMS, Whatsapp, email, etc. and tabulated the feedback through the questionnaire and assisted the customers to avail benefit from the various supportive schemes of moratorium, interest subvention and providing further financial support, its cost implications and the collecting installments where the customers have started operations during the last 4 weeks.

Coming to the digital initiatives. As you are aware, Magma had launched this ambitious project on digitalization called Navodaya in early 2019 and timing could not have been better to launch the cloud-native LOS with this scorecard-enabled credit rule engine. And while it has been already implemented in SME business, a similar new LOS has been launched for the mortgage in March, and it will get stabilized with business resumption in June 2020. The ABF LOS rollout is underway, and all the third-party API integrations with FinTech are complete with automated data collection.

We have enhanced digital collection efforts through mobile payment gateways and can accept payments via UPI, debit cards or net banking and apps including Paytm, Google Pay, etc. Customer education on uses of digital medium to pay has helped collections during the lockdown.

As of now, over 75% of our collections are through digital modes, which has already led to gains in the field team productivity. These allowances have allowed digital processing of loans, and we have introduced robotic process automation technology for intelligent automation of back-office processes to boost efficiency and accuracy at lower customer operations. Earlier options of digitalization helped proactively manage COVID-19 situations and ensured seamless transition of business continuity planning without any productivity and security issues. 

We have offered moratorium to all our ABF customers with opt-out scheme, while offered moratorium with opt-in scheme for the mortgage and the SME customers. We have decided to offer moratorium 2.0 from June to August only to those customers whose cash flows are still impacted due to disruption in business activity. As a result, 26% of our customers have opted for a moratorium for all the 3 months, while 64% for 2 months and 73% for only 1 month. As a result, collection efficiency has been adjusted for the moratorium cases, and it has shown improvement month on month. It was 112% in March, followed by 94% in April and 112% in May. We have resumed the month of June as a normal month without any moratorium extension. And so far, our collection efficiency till June 16, on an MTD basis is 54%, and it compares favourably with the March MTD of 72%. It reaffirms our belief and conviction that the rural and the semi rural India will recover much quicker compared to the urban India and metro cities.

We have suffered on account of credit losses during the year 2019-2020 owing to the poor economic activity and vehicle industry not doing well. And our improvement in quarter 4 suffered a jolt due to the lockdown in the last 10 days of the fiscal year. We have strengthened provisioning as on March 20 and increased the Stage 1 and 2 ECL from 2% to 2.2% and also created onetime Covid-19 provisioning amounting to INR 117 crores in Q4.

We are reasonably confident that the additional provisioning created for Covid-19 scenario should be sufficient to take care of the slippages, if any, during FY21, and with rural India bouncing back to normalcy by October, we will be able to preserve the portfolio quality.

Conference Call with JK Cement Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript.

Call Participants: Mr. A K Saraogi - Executive Director and CFO, Mr. Prashant Seth - VP Commercial

Introductory Remarks from A K Saraogi

Good evening and welcome to Q4FY20 results and the annual results. The Board of Directors met on June 17 in an usual conference to review the performance of the company for the quarter ended March 2020 as well as to approve the results of the full year. Major highlights for the quarter:

• Revenue from operations was at Rs 1,477 crore as against Rs 1,492 crore, marginal drop of about 1% which was mainly due to less volumes in the month of March due to Covid-19

• The EBITDA during this quarter was Rs 346 crores as against Rs 279 crores, an increase of 24% 

• The Profit before exceptional items was Rs 258 crore as against Rs 211 crore, an increase of 22% 

• There was an impairment of Rs 178 crores for the Fujairah plant and the profit after exceptional items was Rs 80 crores as against Rs 211 crores and the profit after tax was a nominal Rs 23 lakhs against Rs 150 crores

• EPS during the quarter was at Rs 0.03 as against Rs 19.41 last year and the EBITDA margin during the quarter was 23.74% as against 19%, last year 

• The full year highlights: revenue from operations was at Rs 5,464 crores as against Rs 4,981 crores, an increase of 10%

• The EBITDA was Rs 1,181 crores as against Rs 810 crores, an increase of 46% 

• The profit before exceptional items was Rs 830 crores as against Rs 474 crores, an increase of Rs 75 crores. After touching impairment of Rs 78 crores, the profit was Rs 652 crores as against Rs 474 crores, an increase of 38% and the profit after tax Rs 400 crores as against Rs 325 crores, an increase of 23%

• EPS was Rs 51.82 as against Rs 45.28 and the EBITDA margin for the year was 21.89% as against 16.47%

• The Board has declared an interim dividend in the month of February of Rs 7.50 per share and decided that this may be treated as final dividend and no further dividend was considered by the board

• As regards the status of the expansion, the Mangrol expansion of 4.2 million tons out of which 3.5 million tons have already been commissioned and only the grinding unit at Balasinor of 0.7 million is yet to be commissioned. The work at Balasinor was stopped due to Covid-19. However, now the civil construction work has restarted and is expected by September-October the grinding unit at Balasinor to be commissioned

• For the expansion at Mangrol, we have spent about Rs 4,195 crore uptil now. We have also taken up Line 3 modernisation and work on that is also at an advanced stage and uptil March, out of our project cost of about Rs 400 crores, we have spent about Rs 140 crores and the work over here had also stopped but now we are gradually resuming the work and we expect that by December this year, we should be able to commission the Line 3 work

• During the month of May and April, sales started in the south and in the month of May sales started in the north. As of now, we have seen an upward trend of about Rs 10 a bag but we will have to see how going forward will be the position

• We have kept all other capex on hold. We will review the normal capex scheme where we have started work and done 50% of it and wouldn like to complete that work. But, that expenditure is not much and may be around Rs 40-50 crores

• On the Panna site, in the first stage, if we set up the plant, the capacity would be around 3-3.5 million and presently we are going ahead with the acquisition of the land where we have already acquired 80% of the land and remaining 20% is yet to be acquired which is in process. We expect that to be delayed because of Covid-19 but we expect that we will be able to procure that land within this year. We will first check Mangrol project and then how the Panna expansion is to be carried out.

Conference Call with Caplin Point Labs Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript.

Key Highlights from Management

Top line growth of 35.47% at Rs. 904.5 crore in FY20 on a higher base of Rs. 668 Cr last year. Caplin Steriles Ltd (CSL), the company’s subsidiary operating in the Regulated markets (US), injectable business delivered a strong 3.5x revenue growth during its first full year of commercial operations, contributing 8% to the operating revenues for the year

Operating Revenue at Rs. 65 crore in FY 20 Vs Rs. 18.7 crore last year, while EBITDA crossed the Rs.300 crore mark in FY20 with a strong growth of 20.4%

Contribution margin is at 52% in current year. The marginal temporary reduction in gross margin level vis-à-vis- last year is on account of a) company has exported certain Covid-19 related items at Zero Margin to key markets as part of its humanitarian efforts during the crisis b) Sale of products from pre-acquisition inventory in its subsidiaries.

With continued focus on R&D, Company has not only increased activities in current areas of focus but also commissioned DGCI approved CRO facility and Captive API Development KiloLab to facilitate back ward integration.

R&D Opex increased by Rs 24.8 crore, by more than 90% during the year (from Rs 28.2 cr in FY 19 to Rs.53 cr in FY20). PBT grew by Rs. 42.59 cr (Rs. 226.87 cr to Rs. 269.46 cr), and growth of 19% over the previous year. PBT margin is at 30%.

 PAT registered a growth of INR 38.53 cr (22%) over previous year. EPS grew by 22% from Rs. 23.35 to Rs. 28.42 ? Company’s Capex in (Non-R&D) Fixed Assets is close to Rs. 37 cr. ROE at 28% and RoCE at 36% on a significantly higher base of >Rs. 310 cr compared to last financial year (70% increase in Base).

Inventory at the year-end (including in-transit inventory) stood at Rs 238 cr primarily on account of Inventory at warehouses of subsidiaries which were acquired during the year. This equates to around 3-4 months of sales, which we believe gives us the strength to serve the customers more efficiently and pave for growth through our unique Stock and Sale model.

Cash & Cash equivalents at Rs. 284 cr in FY20, an increase of Rs 61 cr over previous year’s balance of Rs 223 cr. This has since increased to around Rs. 343 cr as on June 17th, 2020. Despite growth of over 35% in Operational Revenue, Receivables were at 95 days compared to 89 days in previous year. Out of the Rs. 229 cr of receivables as on March 31st, 70% has since been collected as on June 17th, 2020.

Conference Call with Natco Pharma Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript. 

Call Participants: Mr. Rajeev Nannapaneni - Vice Chairman and Chief Executive Officer, Mr. Rajesh Chebiyam - Vice President, Acquisitions, Institutional Investor Management and Corporate Communications

Introductory remarks from Rajesh Chebiyam

Good morning, and welcome, everyone, to NATCO's conference call discussing our earnings results for the fourth quarter and full year FY2020. I hope all of you have been staying safe during this unprecedented, stressful Covid-19 situation. Regarding the earnings details, we hope you have received financials in the press release which we sent out yesterday and is also present on our website. 

• For FY20, NATCO recorded consolidated total revenue of Rs 2,022.4 crore as against Rs 2,224.7 crore, a decline of 9% YoY

• The net profit for the period, on a consolidated basis, was Rs 458.1 crore, as against Rs 642.4 crore last year, showing a decline of about 29%

• For the fourth quarter ended March 31, 2020, the company recorded a net revenue of Rs 477.2 crore, on a consolidated basis, which is almost flat as compared to Rs 486.7 crore during Q4, FY 2019

• The profit after tax, on a consolidated basis, was recorded as Rs 93.2 crore for the quarter, as against Rs 120.4 crore in the same quarter last year

• The overall decline in revenue and profits, from prior year, was primarily due to continued decline in Hepatitis C product portfolio and to an extent in oncology segment due to pricing pressures

• The company also faced slowdown in business operations during the fourth quarter due to supply chain issues amidst Covid-19 concerns, which were subsequently resolved

• Even though lockdown was in the later part of March, a lot of people were uncomfortable coming for treatments to the hospital because there was a risk as most cancer patients have immunosuppression so they could lead to Covid-19 infection. We have seen that it has been playing out in March, April and May and June as well

• If you look at the onco portfolio, because of people not coming out, there was an initial fall in sales but things are picking up now specially on the oral onco, the sale has become more stable now. But, we have seen a lot of pressure on the chemo side. People are not coming back at the same level as they used to. The fear of infection continues so there is some pressure in the domestic business especially with the hospital related

• There was a pricing pressure for overall 2019-20 but now pricing factor is not involved. It is now Covid-19. There was overall decline full year and the primary reason for the drop in the sale was because of the pricing pressure. The secondary factor playing now is Covid-19 and Covid-19 specifically to the chemo products. Our portfolio has both oral products if you can take it home and chemo products which are taken in hospitals. The oral tablets have sort of rebounded now as it is seeing more stability and things have settled down. But where this is going, I have no idea like no one else. If you ask me if there is lower demand, yes there is lower demand

• We have seen a decline of Rs 400 crore but that's a very unusual portfolio. Because of Covid-19, normal people are coming and getting tested because of hospitalisation pressure. The impact is less now. When we were degrowing earlier, impact was more then

• Total domestic formulation sale was Rs 540 crore for the year and oncology recorded about Rs 308 crores and the non-onco related recorded Rs 117 crores. CND did about Rs 45 crores which is a significant jump as we had almost zero sales a year and a half ago. We are doing well

• About 60-65% revenue stands for oral and 30-35% tends to be chemo, typically as per a rough estimation 

• For Canada, we are scheduled for a trial in the first week of July 

• We are anticipating approval shortly for RT PCR. We filed it 9 months ago. I don’t know how much time approval will take but it's doing well. There is nothing much to report on the court case during this time

• There is some dependence on China for API but not to that extent. Whatever government has announced in terms of incentives is for specialty chemicals business which we are not in

• During this year again, we have an extensive portfolio. We launched about 10 products last year and are planning to launch around 8-10 products this year too. It is a challenging time to launch in Covid-19 as the ability to meet the doctor is limited as all doctors have not come back but we are optimistic that the things will improve except in the containment zones. Overall, I am fairly bullish and expect domestic business should grow but it is little hard to say that how much it will grow 

Conference Call with Navin Fluorine Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript.