Key highlights from Cosmo First Ltd (COSMOFIRST) Q2 FY23 Earnings Concall
Management Update:
- [00:03:09] COSMOFIRST said that in margins, the company witnessed some pressure in the overseas subsidiaries due to increase in RM cost and weakening of FX against the US dollar, mainly in Japan and Korea.
- [00:03:36] COSMOFIRST also said, the company feels the near term outlook for the non-specialty film could be challenging.
- [00:08:08] COSMOFIRST is targeting to add close to 70% capacity in a phased manner in next 3 years.
- [00:12:22] The company expects to spend about INR650 crore of capex in next 3 years, largely on the value-add assets on the BOPET, CPP, BOPP line, some capex in specialty chemicals and minor capex in Zigly.
Q&A Highlights:
- [00:19:07] Jiten Parmar from Aurum Capital enquired about the spreads for 2Q23. Neeraj Jain CFO said that the company has close to two-third of its product portfolio, selling into specialty products.
- [00:21:16] Jiten Parmar of Aurum Capital asked about the supply scenario over the next two years. Neeraj Jain CFO answered that at a broad level, in BOPP maybe about 25-30% capacity addition may happen in next 3 years. And in BOPET side maybe about 40%.
- [00:23:21] Jiten Parmar from Aurum Capital asked about COSMOFIRST’s peak debt. Neeraj Jain CFO replied that at Sept. ’22, the company has INR370 crore of debt and announced a capex of close to INR650 crore to happen in next 3 years.
- [00:29:09] Abhishek Maheshwari with Skyridge Wealth Management asked that with the commencement of new specialty BOPET line, if the company can do better EPS for 3Q23. Neeraj Jain CFO said that COSMOFIRST doesn’t provide forward guidance, but factors with respect to demand and supply has not changed much between 2Q23 and 3Q23.
- [00:31:24] Abhishek Maheshwari of Skyridge Wealth enquired about Cosmo Global Enterprises, what kind of assets COSMOFIRST is thinking of investing here. Neeraj Jain CFO clarified that it will be organic acquisitions and future manufacturing assets will be part of this.
- [00:34:01] Rohit Sinha from Sunidhi Securities asked about the capex dedicated to the CPP line and the asset turnover expected. Neeraj Jain CFO said the capex is INR140 crore. And the asset turnover will be more than 2 times.
- [00:34:50] Rohit Sinha from Sunidhi Securities enquired about 2H23 outlook and if the company is seeing any softening in power cost. Neeraj Jain CFO answered that on the demand side, COSMOFIRST is seeing higher demand level in India. On power cost, govt. has withdrawn subsidy for some period and once that’s withdrawn the cost should stabilize.
- [00:41:36] Anshul Mittal with Care PMS asked about the chemical segment growth not as per expectation. Neeraj Jain CFO clarified that in FY23, the company should be able to do between INR180-200 crore of topline from this segment. And in 4-5 years period, COSMOFIRST is looking at INR400-500 crore of sales from chemicals.
- [00:44:14] Shubham Agarwal of Aequitas asked about the total contribution from entire Eurozone. Neeraj Jain CFO replied that Eurozone could be about 8-10% of sales.
- [00:49:32] Vipul Kumar Shah from Sumangal Investments enquired about the asset churn and capex in BOPET line, and if BOPET is 100% specialty. Neeraj Jain CFO replied capex was about INR350 crore and in next 2-3 years BOPET will be mostly specialty. On asset turnover, it depends on product portfolio. If it’s commodity, it may be close to two times; in specialty it may be 1.5 times.
- [00:55:22] Yash of Dante Equity asked about Zigly and how it’s panning out. Neeraj Jain CFO replied that the company planned for about 15 stores by end of FY23. At the end of Sept. ’22 six were opened. Besides offline stores, the company is looking for assertive growth in online business.
- [00:57:44] Vishal Prasad from VP Capital asked about the upcoming capacitor film business and the target sectors and geographies. Neeraj Jain CFO answered that it’s too early to comment. COSMOFIRST is looking at FY24 to kick off the operations.