IFGL Refractories Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from IFGL Refractories Limited (IFGLEXPOR) Q3 FY22 Earnings Concall

Management Update:

• IFGLEXPORF said that in FY23 the company plans to spend about INR10 crores in the Orissa and Kandla plant and at Vishakhapatnam, in the Phase 2 expansion, the company expects to spend about INR20 crores, which should be completed by FY23.

Q&A Highlights:

• Shubham Agarwal from Aequitas India asked how the refractory industry gets impacted because of the Chinese refractory players. Kamal Sarda CEO said that Chinese competition is not something to be worried about. And on the power side, the industry is not very power intensive, but the real impact would be on the raw material side, which will be impacting the refractory industry worldwide. However, the company added that the situation has eased up over the last few months.

• Shubham Agarwal from Aequitas India asked about how much of the company’s raw material does the company import from China. Kamal Sarda CEO replied that on a quantity terms it would be around 50%.

• Shubham Agarwal of Aequitas India also asked about the time lag between increase in raw material price and the company’s negotiation with customer and the contract period. James McIntosh MD replied that it depends on a contract by contract basis. The period ranges from three months to one year. And any new pricing strategy happens in the new contracts.

• Shubham Agarwal from Aequitas India enquired that by when does the company expects to reach the guided EBITDA margin of 13-14%. Kamal Sarda CEO answered that it should be soon as the normalcy is back and when all the price increases are in place and the cost becomes normal.

• Abhisar Jain with Monarch AIF asked about the Vizag plant, when the company expects revenue from Vizag in the P&L. Kamal Sarda CEO said that the dispatches from Vizag continues. As of today, there is a consolidated order at IFGL level. All the orders are built through the Kalunga because of GST issues. Therefore, all the billings are happening from there and there is sales going on.

• Gokul Maheshwari of Awriga Capital asked about the demand trends in the near term from the steel industry. James McIntosh MD said that there is no indication that the steel industry is not going to continue its growth trend. And looking at pre-COVID demand and 2021 demand, there was a growth trend. Therefore, the company believes demand will continue to grow.

• Gokul Maheshwari of Awriga Capital asked if the company is seeing any changes in the local competition. Kamal Sarda CEO replied that the competition scenario remains the same. There is no major changes happening.

• Gunjan Kabra from Niveshaay asked about the difficulty in raw material sourcing because of price increase. Kamal Sarda CEO replied that there is no pressure on the raw material, but there is only pressure on the logistics part. So availability is still there. The shipment time from China to India, which used to be 25-30 days now it has gone to 40-45 days. However, the company is taking care by keeping additional stocks.