GuruFocus -
- Half Year Revenue: INR150.8 crores, growth of 22.47% compared to H1 FY24.
- Half Year EBITDA: INR154.1 crores, growth of 26.55%.
- Half Year PAT: INR78.05 crores, growth of 54.18%.
- Half Year EPS: INR25.17, growth of 54.18%.
- Q2 Revenue: INR253.46 crores, growth of 24.33%.
- Q2 EBITDA: INR88.29 crores, growth of 20.67%.
- Q2 PAT: INR44.96 crores, growth of 37.49%.
- Q2 EPS: INR14.5, growth of 37.49%.
- Investment in Mekaguda Facility: INR440 crores for capacity expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pokarna Ltd (BOM:532486) reported a strong quarter with significant growth in revenue and profit, showcasing resilience and adaptability in market conditions.
- The company achieved a 22.47% growth in total revenue for the half-year, with a remarkable 54.18% increase in PAT, indicating effective sales strategies and cost management.
- Strategic growth initiatives include launching new quartz products and expanding market efforts, focusing on high-value markets to optimize product mix and operational efficiencies.
- Significant investment in capacity and technology expansion, including a new Bretonstone production line and technological upgrades like the KREOS and CHROMIA lines, to enhance manufacturing capabilities.
- Growing interest in newer markets such as Canada, France, Mexico, and Russia presents promising growth opportunities, diversifying revenue streams beyond the US market.
- The granite business continues to face challenges, with a cautious near-term outlook despite cost control measures and revenue-increasing efforts.
- Competitive pricing pressure from producers in India and Southeast Asia poses a challenge, requiring strategic focus on innovation and differentiation.
- The US market, a primary revenue source, is experiencing demand fluctuations due to inflationary pressures and high mortgage rates, impacting immediate growth prospects.
- The expansion project in Telangana may cause minimal disruptions to existing operations, and the full capacity stabilization is expected to take up to two years.
- The company's debt levels are expected to increase with the new INR440 crores investment, with a mix of debt and internal accruals funding the expansion, potentially impacting financial flexibility.
A: Historically, asset turnover is about 1 to 1.25, so we foresee revenues around INR450 crores to INR525 crores. The US remains our primary market, and while demand hasn't fully rebounded due to high mortgage rates, our focus on mid- to top-tier products helps us perform better than competitors.
Q: Will the expansion cause any disruption to existing operations, and is it a brownfield expansion?
A: The expansion at our Mekaguda facility is designed to minimize disruption, though some is expected. It's a brownfield expansion, and while we anticipate a 1 to 1.25 asset turnover, the new technology could potentially improve this.
Q: How do you see the freight rate situation and US distributor orders?
A: Freight rates have improved compared to previous quarters. While distributors typically reduce orders around Christmas and New Year, the freight situation is no longer impacting orders significantly.
Q: What is the expected impact of the new CHROMIA and KREOS lines on product launches and margins?
A: KREOS products are expected to launch in Q4 FY25, and CHROMIA will be operational by then. KREOS should help sustain or improve margins, while CHROMIA will target new segments.
Q: How will the new CapEx program affect profitability, and what is the debt structure for this investment?
A: The new CapEx is expected to yield an EBITDA of INR145 crores to INR165 crores and a PAT of INR100 crores to INR110 crores. The investment will be funded with INR300 crores of debt and INR144 crores from internal accruals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.