HMA Agro Industries Ltd (NSE: HMAAGRO) Q2 2025 Earnings Call dated Nov. 15, 2024
Corporate Participants:
Nikhil Sundrani — Company Secretary and Compliance Officer
Gulzeb Ahmed — Whole-Time Director and Chief Financial Officer
Analysts:
Rohan Parikh — Analyst
Unidentified Participant
Presentation:
Operator
Good afternoon, ladies and gentlemen. I am Pelsia, moderator for the conference call. Welcome to HMA Agro Industries Limited Q2 2024-2025 Financial Results Conference Call. [Operator Instructions]
I would now like to hand over the floor to Mr. Nikhil Sundrani. Thank you. And over to you, sir.
Nikhil Sundrani — Company Secretary and Compliance Officer
Yeah. Thank you. Good afternoon, everyone. I warmly welcome all our esteemed investors, analysts and stakeholders to this investor call. It is always a pleasure to connect with you and share the progress and performance of the company. Today’s call holds special significance as we present the financial performance of our company for the quarter and half year ended 30 of September 2024. This period has been truly remarkable for us, marked not only by the steady financial growth but also by the significant achievements that reflect our commitment to excellence and sustained progress.
As a company, we continue to navigate a dynamic and challenging environment with resilience, innovation and strategic focus. Our unwavering dedication to the strengthening operations, expanding capacity and enhancing our market presence has allowed us to achieve new milestones making this quarter particularly noteworthy. However, while I refrain from discussing specific numbers at this point, I assure that the figures we are about to share reflect the hard work and collective efforts of our teams across all levels.
For an in-depth perspective on our financial performance, I am pleased to hand over the call to our esteemed Chief Financial Officer, Mr. Gulzeb Ahmed. He will provide you with the detailed presentation of the financial results, key highlights and insights into the growth trajectory of our company. Once again, I extend my gratitude to all of you for continuous support and trust in HMA Agro Industries Limited. I hope you find today’s sessions both insightful and informative.
Over to you, Mr. Ahmed.
Gulzeb Ahmed — Whole-Time Director and Chief Financial Officer
Thank you, Nikhil. Very good afternoon to all esteemed investors and stakeholders present today on this conference call. It is my pleasure to present the financial performance of HMA Agro Industries Limited for the quarter two and a half yearly ended on September 30, 2024. I will provide you a brief overview of the — our key financial figure, compare them with the previous quarter and highlight the progress we have made.
I am pleasured to share the financial results of HMA Agro Industries Limited for the quarter two. This quarter has been significant for us not only in terms of the financial performance, but also because of the several key milestones that reflect our growth and position in the market. Let’s talk about the quarter performance. If we talk about the Q2, the revenue of company standalone is INR1366.6 crore we have made for the September 30 closing quarter and company — and this is the robust growth that we have made if we compare this from our last quarter. In the first quarter, the revenue generated by the company is INR693.9 crore. Compared to the last year, the revenue in the second quarter was INR1,180 crore.
In the — if we talk about the other direct income, in this quarter, company has made INR11 crore direct income and, in the previous quarter, the direct income has been generated by the company is INR9 crore. If we talk about the half yearly performance overview for this year and last year till September 30, 2024, we have reported a revenue of INR2,060.5 crore. On the other hand, in the last half year, the revenue is INR2,131.6 crore. There is a small difference between the half yearly and we are hoping a good comeback in the rest two quarters.
Let’s talk about the future growth and the current outlook. We are expanding our presence in untapped market. We are exploring new clients in the existing market and also trying to enter a new market with our products. We are creating a good strong marketing with all our existing clients. And whoever is coming new, we are trying to retain them and let do business with us in a regularly way.
Also, we would like to inform all our investors and stakeholders that now company has officially recognized as a five-star export house from Government of India. This is the highest category for a five-star export house. We are also working to increasing our capacity from — in existing plant. Also, we are trying to making agreement with another plant, so we can serve the extent — the increasing growth what we are getting. Our newly — last year, we have started our plant, which was going for under capacity. Now we are getting this plant inspected from various countries. Soon, we will be getting the registration in various countries and we will be able to increase the capacity that will be produced in that United Agro Farm and we will be going to serve from this plant to the countries where we are getting the permission and registration for this point.
We hope with increasing demand of food and we also hope with the food safety initiative that countries are making, HMA is 100% geared up with all its capacity, with its team, with its brand recognition in various markets, we are going to grow with a very good stable group. And with our team, we will be able to serve whatever demand we are getting and this will make strong growth in future for HMA.
Now I would like to hand over for the closing remark to Mr. Nikhil to close this the presentation session and then we will be able to have question from our stakeholders. Nikhil, hand over to you.
Nikhil Sundrani — Company Secretary and Compliance Officer
Yeah. Thank you, Mr. Ahmed. In closing, I want to emphasize that HMA Agro Industries Limited is well positioned and sustained for growth. Our financial performance enhanced by our recent achievements and strategic capacity expansion sets the stage for continued success in the coming quarters. We remain committed to delivering value to our shareholders, customers and partners through operational excellence, innovation and a strong market presence. Further, we are proud of this quarter’s strong performance driven by our strategic decisions and operational excellence. With this momentum, we are confident of achieving enhanced growth in the near future and delivering sustained value to our stakeholders. Thank you to our dedicated team for their hard work and to our stakeholders for their continued support and confidence in HMA Agro Industries Limited. Together, we look forward to achieve even greater milestones.
Thank you for your trust and support. We are now open the floor to your question-and-answer session.
Questions and Answers:
Operator
Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question comes from Rohan Parikh from Ohm Stock Brokers. Please go ahead.
Rohan Parikh
Hello, sir. I’d like to congratulate you on your excellent performance this quarter. However, I had a few questions in terms of the margins, et cetera that we are doing right now. So I have data quarterly from the year 2022, right? We’ve had consistent profit up until September-December ’23. Then the profit dipped from INR49 crores, INR50 crores operating profit to directly minus INR3 crores and then INR8 crores. So I want to know first what happened in the past two quarters and why did the profits dip?
Gulzeb Ahmed
Actually, the whole impact is because of the tension going on in the GCC and Red Sea. The prices has been very, very unpredictable. It has increased four times what we used to pay before. And also, the demand and change in the pattern of buying of buyer has created panic in market because few buyers are there who think if we bring our product from this way, maybe there was some problem. So few people are canceling their order, new people are buying their order. So the stability of sale price are not that good. But now things are getting better because everybody has seen there is a road from South Africa, Golden Hopes, product can reach there. It will take some longer time for them. And also, they are planning very perfectly now. So when you have good planning of demand, we can ask our client to pay us our prices. But when there is unstable demand, we have to do push marketing. So that’s the only reason which create the tension in all Red Sea.
Rohan Parikh
Right, sir. Okay. Sir, my second question is that we’ve seen typically historically 5% to 6% margins at peak in our business. What would be the continued margin that we would do going on from here?
Gulzeb Ahmed
The margin is only depend on purity. How smooth is business going on? What is the availability of raw materials? As we all know, this is agri product and we have to buy the buffalo. If there is the adverse weather impact or if there is so many holidays in India, so that create our raw material expensive, because we have to be go to our suppliers or our vendor, they go to the villages where they buy the buffaloes and they send us, which is our main product. So the margin is depend on two factor. One is the availability of raw material, weather condition and also the demand. If there is a stable demand, let’s say we are looking forward and we have the data from the market.
Now the fasting month, Ramadan, is coming in the first March, so we are getting good, good inquiries. If this demand we conclude, so we can increase the margin. But if there is an impact of chicken, the chicken price drop globally, that will impact the margin of red meat also because people always prefer what is the good source of protein available although the red meat is higher preference, but if there is a huge difference from the Brazilian chicken prices, so the margin shrink. But we are not having any kind of information from global market that there will be impact. So we are hoping for good things to be come and we can finger cross to have our demand. We can able to demand good prices for our product.
Rohan Parikh
Thanks, sir. One last question before I join the queue again. What is the U.S. CPL capacity utilization in the current state? And what are our plans for the Europe export?
Gulzeb Ahmed
Europe is basically totally depend on the animal health status has to be recognized in the EU. But there are possibilities within one year or maybe 1.5 years or two year, Europe has to buy products from India. As we all know, what is the situation of Europe economy now, how much income their people are earning and how much the ability to spend they have. So once there is a slowdown in economy, there is a slowdown in the purchase power of the people. The country has to be decide to bring cheap source of food first, food and medicine. So India is the only option available for Europe because U.S., Brazil, Australia, New Zealand, these are the global competitor for India. Their prices are two times or three times than our prices. So by any means, there has to be open India market. This is the only thing how strongly things have been taken up in the WTO, but we have already received data from India side and from another countryside, things are already started negotiating.
Rohan Parikh
Right. And the U.S. CPL capacity utilization currently here?
Gulzeb Ahmed
Our capacity utilization like we have the HMA group holds the capacity of 4 lakh metric ton yearly. So we are still under the capacity. Currently, we are doing only 55% or 60%. So we still — we are geared up with the thing. So whenever we receive extra demand, we are immediately taking it.
Rohan Parikh
Okay, sir. Thank you so much.
Gulzeb Ahmed
Thank you.
Operator
Thank you. [Operator Instructions] Next question comes from Atharva Kulkarni [Phonetic], an individual investor. Please go ahead.
Unidentified Participant
Hi. I just wanted to know what are your plans for capex this year and when do you plan to get it on board?
Gulzeb Ahmed
Capex planning, we are still in making final decision with our team and this question later we will reply you separately, because this is the open platform. So for this, I would like Nikhil to be in touch with you to reply you in good ways [Phonetic].
Unidentified Participant
Okay. Got it. And so my second question is regarding that you have put a capex of around INR250 crores, what — in what plant or in what specific have we put on that capex?
Gulzeb Ahmed
Actually, all the activities, economical activities are performing by our master company, which is HMA. So we don’t put any capex on any plant actually. We already have plant, which is built. Only there is one new plant which is having only a small duck which is called United Agro Farm.
Unidentified Participant
Okay, sir. And so my last question would be that your guidance for FY ’27. So what growth levers are you seeing that would help you reach your guidance? What growth levers are you seeing currently?
Nikhil Sundrani
The growth for Indian product we can see with the growth or the slowdown in economic and also the increasing demand of protein. So once we are going to any exhibition, let’s say we participate in any exhibition we receive clients from all over the world. So once we start discussing with them, everybody very shock, oh, in Europe, we have the price for $7, $9, but you are able to supply in $3 or $4. So those are the market which will create a new growth for Indian product. And also, the food security policies of various countries. Once you do Google, you will find every country who has the dependency of their food from import. They are very much worried about the food security. The recent example is Indonesia, Egypt, there are many countries Malaysia, they are worried, so they are talking to the suppliers countries negotiating what will be the food you can supply. So recently HMA has also made a one joint JV in Malaysia. This is Selangor — Malaysian Selangor state government, which signed JV with us. So whatever demand we have HMA will be able to supply them at the market price. So food security is the strongest point that will bring the growth to Indian meat industry.
Unidentified Participant
Okay, sir. Got it. Thank you.
Gulzeb Ahmed
Thank you.
Operator
Thank you. [Operator Instructions]
Gulzeb Ahmed
If there is no question, I think Nikhil, we can close.
Operator
Sir, we don’t have any questions, sir — I’m sorry, sir, we have one question. A follow-up question from Rohan Parikh from Ohm Stock Brokers. Please go ahead.
Rohan Parikh
Sir, I just want to ask one thing. We’ve been purchasing fixed assets since 2019, INR9 crores and INR22 crores and INR20 crores and INR70 crores, INR110 crores, INR40 crores. So what is this fixed asset purchasing that we’ve done and what is the asset turnover that we are currently standing on?
Gulzeb Ahmed
Can you repeat your question?
Rohan Parikh
So sir, if I look at the history, we’ve been purchasing fixed assets from the market every year. In the last three years, we’ve gone aggressive and we purchased almost INR200 crores worth of assets. So what is this asset that we are purchasing and what is the asset turnover that we are currently standing on?
Gulzeb Ahmed
INR200 crores assets.
Rohan Parikh
Yeah. You have purchased fixed assets of INR200 crores, which is seen in the cash flows of the business. So what is that number?
Gulzeb Ahmed
I think Nikhil will be able to reply you on your email. I don’t think the figure will be correct or if this — Nikhil, can you please take the question on e-mail and reply personally?
Nikhil Sundrani
Sure, sir. Sure, sir.
Rohan Parikh
[Indecipherable]
Gulzeb Ahmed
So please share your e-mail ID.
Rohan Parikh
Sure, sure. I’ll you — I think I got a number.
Gulzeb Ahmed
We’ll share you our e-mail ID and we’ll be — Nikhil will help you out. Problem.
Rohan Parikh
Done, done, done. Thank you so much, sir.
Operator
Thank you. [Operator Instructions] We have a follow up question from Atharva Kulkarni, [Phonetic] an individual investor. Please go ahead.
Unidentified Participant
Hi, sir, just one question. I want to understand what’s the raw material prices being over the years and how do you see the prices going forward?
Gulzeb Ahmed
Raw material prices basically as I reply in my first question, it was asked by the first column. It basically depend on various factor. One is the availability of raw material and another factor, the weather. When you see there is a very hot summer, so live animal is hard to travel. So previously when they used to make the travel of big trucks for five or six nodes, they have to travel with two, three nodes, so the transportation cost of the traveling from village to the cattle market has going to be add on. So this will also make impact on raw material prices. And all same like when the adverse weather when we have more rainy season when we have very high dense fogs. So any adverse impact of weather impact on the raw material prices it is not fixed. And also, it’s depend on the demand. Once you see there is a uncertain demand definitely the prices of raw material will be increased. But generally, we see when there is a — it is especially connected with the harvesting if there is a good harvesting, so the raw material for livestock have a big impact on higher side on their prices in cattle market. Hello?
Unidentified Participant
Yes, I got it. That was my question.
Gulzeb Ahmed
Yes, yes. Thank you.
Unidentified Participant
Thank you.
Operator
Thank you. [Operator Instructions] There are no further questions. Now I hand over the floor to Mr. Nikhil Sundrani for closing comments.
Nikhil Sundrani
Okay. Thank you all the investors, stakeholders for joining this call. And thank you, Mr. Ahmed, for providing the answers for the questions. And we will be connected in near future also. Okay, thank you.
Gulzeb Ahmed
Thank you. Thank you, Nikhil.
Operator
[Operator Closing Remarks]
Nikhil Sundrani
Thank you.
Operator
Thank you, sir.