Kamdhenu Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Kamdhenu Limited (KAMDHENU) Q4 FY22 Earnings Concall

Q&A Highlights:

• Ashray Jain of Jain Capital enquired about the current utilization levels and the utilization last quarter. Satish Agarwal MD replied that there was an impact of third wave on the business. The current utilization of paint is around 50%.

• Ashray Jain of Jain Capital asked about capex plans in the paint and steel business for the coming year. Harish Agarwal CFO answered that the company does not have any major capex plan in its own plant, but is increasing the capacity in the steel business through franchise route. KAMDHENU is increasing its capacity from 38 lakh metric tonne to 50 lakh metric tonne over the next two years.

• Ashray Jain of Jain Capital enquired that if the company has added any dealers and distributors in paint and steel businesses. Satish Agarwal MD said that it’s carried out at all India level. In steel, KAMDHENU added around 500 dealers in FY22 and in paint added around 200 dealers.

• Anjana Shah with Shah Investments asked about the breakup of the branding and promotion expenses for paint and steel business for FY22. Harish Agarwal CFO replied that in FY22, the company had spent around INR60 crore on branding and promotion. Out of this INR29 crore is done by KAMDHENU and INR31 crore by franchise unit.

• Anjana Shah from Shah Investments enquired about plans to reduce costs overall and improve efficiencies. Harish Agarwal CFO replied that focus is on increasing revenue, royalty income, and paint business revenue. Therefore, KAMDHENU is focusing more on revenue side and not on reducing expenditure.

• Anjana Shah from Shah Investments asked if the company has been able to pass on the price increase to customers in the 4Q22. Satish Agarwal MD said that not in 4Q22, but in 3Q22 KAMDHENU increased the price 8-10% and in 1Q23 also the company is increasing the price by around 6-7%.

• Atul Kothari of Progwell Securities asked about KAMDHENU’s plans on penetrating the southern markets for paint business. Satish Agarwal MD said KAMDHENU is working on penetrating southern market by opening new depot at Vijayawada, Hyderabad, Kurnool, and Bangalore. Once the market is established then the company will look at any manufacturing facility in the southern part.

• Anand of AS Capital asked about dealer addition outlook for the next two years in KAMDHENU brand. Satish Agarwal MD said that the company’s target for FY24 is to have brand turnover of IRN22,000 which is INR16,000 currently. KAMDHENU added that it won’t add any franchisees but increase the capacity with existing franchisees.

• Ankit Agrawal from ARC Capital enquired about the demand in the paint business in 4Q22 from Tier 2 and Tier 3 cities. Satish Agarwal MD said demand was good. Q1 always has less demand vs. Q2 and Q3. The highest demand is in the order of quarters from Q3, Q2, Q4 and Q1.

• Ankit Agrawal from ARC Capital asked about any particular products gaining market share in FY22 in paints. Satish Agarwal MD said KAMDHENU is focusing on increasing the market share of water based products. In FY22, KAMDHENU sold around 79% water based product, 11% solvent and 10% others.