Key highlights from Fineotex Chemical Limited (FCL) Q3 FY22 Earnings Concall
Management Update:
- FCL said the company’s prime focus going forward will be to expand its product portfolio and consequently increase its wallet share and have a more diversified product range.
Q&A Highlights:
- Sathish Kumar asked if the company has any revenue target for FY25. Sanjay Tibrewala ED said that in the last quarter FCL had 74% growth in the turnover and in the current quarter it’s 81% already. Considering this, the company is looking forward to have similar kind of growth rate in the coming quarters.
- Sathish Kumar also asked about any specific reason for the recent growth of the company. Sanjay Tibrewala ED answered that there are multiple factors. One is that the predominant business is into textile chemicals and that it’s having a good traction due to the “China Plus One” factor in their businesses. Additionally, the company’s product mix has been revamped and started focusing on sustainable solutions.
- Nikhil Rungta from Nippon India asked what’s the sustainable amount on a quarterly basis, considering for the quarter, the company crossed the revenue of INR100 crore versus INR58 crore YoY. Sanjay Tibrewala ED commented it’s the first quarter the company achieved the INR100 crore sales on a consolidated level. The company added that it will be expecting much better growth and targets in coming quarters.
- Analyst Smita asked about what benefit the company got from the China Plus one impact and what if it reverses. Sanjay Tibrewala ED answered that the company is directly offering its product lines to textile companies. And it’s the textile companies that will be benefiting from China Plus One factor. The company added that it’s not the China factor that’s helping it but it’s also because of the kind of the differentiation in the product mix FCL has.
- Analyst Smita also asked about which raw material impacts the company more on the costing part. Sanjay Tibrewala commented that the company’s top 10 product lines are contributing almost 20% to its business broadly. Similarly, the top 10 raw materials will not be contributing more than 20-25% to the company’s consumption. So there is no one particular raw material or product affecting FCL’s books overall.
- Akhil Hazari from RoboCapital asks about what is the current capacity utilization excluding the Ambernath plant. Sanjay Tibrewala ED said that excluding the Ambernath plant, the company has touched almost 70% utilization.
- Akhil Hazari from RoboCapital also asked about the revenue mix of textile, non-textile, biotech, HealthGuard etc. Sanjay Tibrewala ED commented that broadly the company’s core business is textile, specialty, performance chemicals and solutions, which contributes to almost 94% of FCL’s business.
- Ankit Bansal from HCL queried that with the product line the company has, why FCL is seeing growth only sequentially but not exponentially. Sanjay Tibrewala answered that the risk reward ratio for the textile customer is low and that’s the reason it’s a high entry exit barrier business. Also, the customers are looking for new product lines and the gestation period of textile industry is long.
- Sathish Kumar asks if the technical solution is a one-time solution or repeatable. Sanjay Tibrewala ED commented that as such all the businesses of the company is repeatable.
- Sunil Jain from Nirmal Bang enquired if there is new products or solutions the company has introduced in last six months contributing heavily to revenue. Sanjay Tibrewala ED said it’s not only in the last six months but lot of efforts has been taken in the last couple of years to help increase revenue. However, in the last 2-3 quarters there has been a lot of change in the product mix also that helped gain more market attention.