Conference Call with Apar Industries Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript.
Key Highlights from Management
Indian economy to contract by 5% in FY21, Q1 FY21 GDP to shrink 25% (CRISIL). Business loss of ~1.5 months due to lockdowns. Delayed tenders, and execution at customers end due to labour issues to impact demand.
Rabale plant, located in city, has permission to operate at only 50% of staff strength. Increased financial distress, credit tightness in the market. Margins to be additionally impacted from pricing pressures due to lower price of crude, gas oils etc.
New and higher value products to drive revenues & margins: HEC, Copper Conductors, CTC for Transformers Industry, newer Railway products, harnesses, pressure tight cables, Medium Voltage Covered Conductor (MVCC) etc. Focus is on exports.
DNA of financial prudence with low leverage & healthy cash levels, cautious order booking with firm eye on creditworthiness and margins. Focus on collections. Major capex has already been incurred, and we have low capex requirements in FY21-FY22.
We have increased the provisions and write-offs for doubtful debts to Rs 29 crore in FY20 from Rs 5 crore in FY19.
Conductor revenue is at Rs 3,624 crore, adjusted EBITDA per MT up 20%.
Higher value products (HEC, Copper Conductors for Railways) share in revenues up at 38% versus 25% in FY19. Sales volume at 1,58,104 MT, down 14% YoY.
EBITDA per MT is at Rs 10,790, up 20% YoY with improved product mix. New orders inflow of Rs 2,617 crore, down 52% YoY with slowdown in Railways tenders and increased sales focus on margin and payment terms. March’2020 order book at Rs. 2,004 crore. New product launch – CTC for Transformers industry
Oils revenue at Rs 2,323 crore, adjusted EBITDA per KL at Rs 2,990.
Total Volumes at 4,03,626 KL, down 6% YoY. Lockdown in March resulted in truncated peak demand period especially for automobile retail sales. Export revenue share 37%, up by 4% YoY. Hamriyah capacity utilisation up at 68% in FY20 versus 62% in FY19. Auto lubes & industrial oils contributed 23% to revenues. EBITDA per KL of Rs 2,990 at a similar level to FY19 (Rs 2,998). Impacted by Rs 18 crore write-offs/ provisions for doubtful debts.
Cables revenue at Rs 1,601 crore, adjusted EBITDA margin over 11%
Export revenues up 59% YoY – 17% revenue share in FY20, up from 10% in FY19. Power cables’ revenue up 4% YoY driven by exports. Lower demand from renewables, but higher from Railways, EPC and Utilities.
Elasto/ E-beam revenue declined marginally with lower demand for solar cables. Good demand from Railways & Defence. Telecom cables declined significantly due to no demand from BSNL and Reliance Jio. EBITDA margin (post adj.) at 11.1%, compared to 11.3% in FY19. New product launch – Medium Voltage Covered Cables (MVCC)