Balkrishna Industries Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Balkrishna Industries Ltd (BALKRISIND) Q4 FY22 Earnings Concall

Q&A Highlights:

• Ashutosh Tiwari from Equirus asked about the realized hedge rate for 4Q22. Rajiv Poddar Joint MD said the realized hedge rate was 86.5.

• Ashutosh Tiwari of Equirus asked if Waluj machinery is still usable or if the capex be incurred later on. Rajiv Poddar Joint MD replied that at the moment it is usable and since there is a strong demand, the company is continuing to use it. BALKRISIND will decide at a later date about how to go about the planned investment.

• Ashutosh Tiwari of Equirus also asked about the capex number for FY23. Rajiv Poddar Joint MD answered that it will be roughly INR900 crores for FY23.

• Ashutosh Tiwari of Equirus asked about the inventory and distribution channels as it stands today. Rajiv Poddar Joint MD said that it is normal for three months as per where it was standing.

• Siddhartha Bera from Nomura enquired about drivers for freight cost jumping sharply and its outlook. Rajiv Poddar Joint MD said BALKRISIND had some old contracts which were running in the earlier part of the year due to which the impact was not seen so sharply earlier. Now the contracts are renegotiated at current cost. And this trend is likely to continue for some more period.

• Siddhartha Bera from Nomura asked about capacity expansion outlook. Rajiv Poddar Joint MD answered that the whole team is working on the drawing board. As soon as the company has something more specific, it will come to the Board, and once the Board approves, it will be announced.

• Siddhartha Bera of Nomura also asked how much time it takes for the capacity to come on stage from planning stage. Rajiv Poddar Joint MD replied that it takes between 18-24 months.

• Siddhartha Bera of Nomura also asked about the working capital outlook going forward. Rajiv Poddar Joint MD said that the working capital will remain at the current levels. This is due to turnover of the company growing, lead times growing due to higher shipping periods and raw material cost going up.

• Jinesh Gandhi with Motilal Oswal Financial Services asked about the price increases taken in 4Q22 and 1Q23. Rajiv Poddar Joint MD answered that in 4Q, the company took a price increase of 2-3% towards the end of Feb., beginning of Mar. BALKRISIND is planning to take another price increase in June to the extent of 3-4%.

• Jinesh Gandhi with Motilal Oswal Financial Services also asked about the carbon black sales for Q4 and FY22, the external sale. Rajiv Poddar Joint MD replied that it was less than 3% for both 4Q22 and FY22.