Agarwal Industrial Corporation Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Agarwal Industrial Corporation Ltd (AGARIND) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:05:25] Keshav Kumar at RakSan enquired that the cyclicality seen in container rates in general, if it applies to specialized vessels of AGARIND or market is stable. Vipin Agarwal CFO said it’s different for container and marine vessels. Container rates have increased as per the demand. However, the company’s main logistics is marine vessels.

• [00:07:20] Keshav Kumar of RakSan asked if the company is seeing any impact in the downstream bitumen production due to the increase in refining capacities by 20% by PSUs. Vipin Agarwal CFO clarified the PSU prediction is only for the oil products. For bitumen, the PSUs will be cutting down the production. The demand for bitumen will come from imports only.

• [00:08:47] Abhishek Sharma asked about 2Q23 volumes.  Vipin Agarwal CFO answered that 2Q23 volumes have remained steady, in line with last year.

• [00:10:12] Abhishek Sharma enquired about the market share currently that was around 25% in 1Q23. Vipin Agarwal CFO clarified that it remains at the same level, probably 1-2% up or down.

• [00:13:08] Vinayak Mohta of Stallion Asset asked about relative share of PSUs vs. private sector of total market size. Vipin Agarwal CFO said the total production of PSU is about 5-5.5 million tons and total demand is about 8 million tons. So 2.5 million is private bitumen, consisting of bulk and packed.

• [00:16:17] Vinayak Mohta of Stallion Asset enquired about the margins AGARIND is looking to sustain on an EBITDA level going forward. Vipin Agarwal CFO answered that the company will be maintaining higher return than the 7.73% declared in 2Q23.

• [00:22:16] Samir Palod with AUM Fund enquired how capacity utilization is defined in the business. Vipin Agarwal CFO said optimum utilization of time would be 1.5 times of the storage facility that AGARIND has. And fleet also the company is utilizing 100% of the capacity it has.

• [00:28:18] Ayush Vimal from Clearview Capital asked that over the last year, most capex is around the ship operating and charting business, so how much volumes can be achieved on an annual basis. Vipin Agarwal CFO replied that there is no maximum. AGARIND can turnaround its tank storage capacity even in 1 day or 3 days.

• [00:29:58] Shubham Jain asked about the capex guidance for FY23, FY24. Vipin Agarwal CFO answered that major capex will go into addition of any vessels based on opportunity, which will be around INR50-55 crore for FY23.

• [00:34:29] Shubham Jain enquired about the current volume produced vs. the max possible in three shifts. Vipin Agarwal CFO clarified that AGARIND is already at 30-40% manufacturing from whatever volume it is making.

• [00:35:03] Keshav Kumar at RakSan asked about the post-monsoon demand currently. Vipin Agarwal CFO answered that the company is fully on demand.

• [00:38:06] Anupam Agarwal with Lucky Investment asked about the tonnage per vessel the company is looking at for the INR50-55 crore capex. Vipin Agarwal CFO answered the vessel size will be about about 6-12 kt. The company may require about 13-15 vessels in the own fleet to bring that kind of volume.

• [00:40:23] Anupam Agarwal of Lucky Investment enquired about the funding source of the INR50-55 crore capex every year. Vipin Agarwal CFO answered that as of now all the vessels are mostly funded by internal accruals.