GuruFocus -
- Consolidated Revenue from Operations: INR 1,024 crores, up 42% year on year and 30% quarter on quarter.
- Consolidated EBITDA: INR 53.24 crores, increased by 75% year on year.
- EBITDA Margins: 5.2%, up from 4.2% in H1 FY24.
- Consolidated PAT: INR 28.21 crores, increased by 188% year on year.
- PAT Margins: Increased to over 3% for the period.
- Lead Division Sales: Increased by 47% year on year to 45,959 metric tons on a half-yearly basis and 49% year on year to 25,294 metric tons on a quarterly basis.
- Finance Costs: Decreased by INR 2.1 crores, a 25% reduction year on year.
- Standalone Revenue from Operations: Increased by 41% year on year.
- Standalone EBITDA: Increased by 68% year on year.
- Standalone PAT: Increased by 117% year on year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pondy Oxides And Chemicals Ltd (BOM:532626) reported a strong financial performance with a 42% year-on-year increase in consolidated revenue, reaching INR 1,024 crores.
- The company achieved a significant 75% year-on-year increase in consolidated EBITDA, amounting to INR 53.24 crores.
- EBITDA margins improved to 5.2%, up from 4.2% in the previous year, indicating enhanced operational efficiency.
- The company is expanding its lead vertical capacity from 132,000 metric tons to 204,000 metric tons per annum, positioning itself for future growth.
- Pondy Oxides And Chemicals Ltd (BOM:532626) has a strategic focus on value-added products, which constitute about 60% of the lead segment, contributing to higher margins.
- The company experienced a sharp increase in working capital, resulting in negative operating cash flow post working capital adjustments.
- Aluminum and plastic segments have been underperforming, with aluminum operations paused and plastics not fully utilizing capacity.
- The company faces challenges in hedging raw material price volatility, impacting margins.
- There is a bottleneck in the smelting capacity, which could limit production efficiency.
- The company is not yet ready to commercialize lithium-ion battery recycling, potentially missing out on emerging market opportunities.
A: The volume increase was primarily driven by the lead vertical due to potential demand and expansion plans. Additionally, new customers and market penetration contributed to the growth. - Piyush Dhawan, President of Commercial and Strategy
Q: How are the aluminum and plastic segments performing, given their previous losses?
A: In aluminum, we are shifting focus to value-added products, pausing current operations. The plastics segment has turned EBITDA positive, with a sustainable model expected to bring a turnaround by Q3 or Q4 of this financial year. - Piyush Dhawan, President of Commercial and Strategy
Q: What caused the increase in EBITDA per ton of lead this quarter?
A: The increase in EBITDA per ton of lead is due to the value-added products segment within the lead portfolio. - Piyush Dhawan, President of Commercial and Strategy
Q: How does the company hedge against raw material volatility?
A: Hedging is used to mitigate price volatility and risk. The process involves securing prices during the voyage from dispatch to plant receipt, ensuring stability in raw material costs. - Ashish Bansal, Managing Director
Q: What is the timeline for diversification into lithium recycling?
A: We are evaluating lithium-ion recycling but do not plan to commercialize it yet. We expect end-of-life lithium-ion batteries to enter the market commercially in about two years, which will be the right time to consider larger-scale recycling. - Ashish Bansal, Managing Director
Q: How will the new capacity expansion affect utilization and growth?
A: The new capacity will start production in the last quarter of this financial year, with stabilization expected in the following quarter. This will lead to absolute growth in volume and numbers. - Ashish Bansal, Managing Director
Q: Are there any plans to enter the steel recycling market?
A: Our focus remains on non-ferrous metals like lead, aluminum, and copper. We do not plan to enter the steel recycling market. - Piyush Dhawan, President of Commercial and Strategy
Q: What is the expected impact of domestic sourcing on EBITDA margins?
A: Increased domestic sourcing will positively impact cash conversion cycles and provide a larger procurement base, supporting our expansion plans and potentially improving margins. - Piyush Dhawan, President of Commercial and Strategy
For the complete transcript of the earnings call, please refer to the full earnings call transcript.