Mishra Dhatu Nigam Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Mishra Dhatu Nigam Ltd (MIDHANI) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:08:08] Aditya Deorah of Divisha Investments asked about inventory moving from INR800 crore in FY21 to INR1,091 crore in FY22 and INR1,280 crore for 1H23. Sanjay Kumar Jha MD said inventory is an important part that MIDHANI is dealing with on a day today basis. The requirement of nickel based alloys has gone up and it adds to the inventory.

• [00:10:31] Aditya Deorah of Divisha Investments enquired that for FY23 what sales growth MIDHANI is expecting. Sanjay Kumar Jha MD said the internal target is INR1,000 crore of sales.

• [00:14:56] Ankit Shah from White Equity asked about the LCA order and when the certification can be expected. Sanjay Kumar Jha MD replied that certification is awaited only for couple of items, but for whatever is supplied is already certified.

• [00:16:33] Ankit Shah from White Equity enquired about the amount or percentage of non-recyclable scrap sitting on the balance sheet. Sanjay Kumar Jha MD answered that whatever scrap MADHANI cannot use will auction in the market. So the question of scrap retention doesn’t arise.

• [00:17:15] Ankit Shah from White Equity also asked about exports shaping up in next 2-3 years and any certifications that’s expected to receive in near future to boost exports.  Sanjay Kumar Jha MD replied that by mid of next year MIDHANI will start getting certification. On export good potential is there but issues are of payment conditions and pricing.

• [00:23:50] Venkatesh Subramanian with LogicTree asked about the opportunity size the company can target over the next 4-5 years, domestic and exports. Sanjay Kumar Jha MD answered that the volume depends on how the domestic industry is growing. The scenario for next 4-5 years is very good for entire Indian industry in defense manufacturing.

• [00:27:54] Romil Jain of Electrum asked about the products manufactured in titanium right now. Sanjay Kumar Jha MD said MIDHANI is producing from heavy forging to a small wire in titanium, it’s diverse.

• [00:32:47] Ranjit with Mahindra Mutual Fund asked if there was any inventory related readjustment in the income statement as prices have come down. Gowri Sankara Rao Director Finance replied that MIDHANI’s RM is mainly nickel, cobalt, tantalum etc. where the prices have not come down.

• [00:36:19] Ranjit with Mahindra Mutual Fund enquired when the company expects the Rohtak facility to be in a normalized utilization level. Sanjay Kumar Jha MD said that in FY23, MIDHANI is targeting around INR100 crores. The orders are there but supply chain constraints exist.

• [00:41:25] Charanjit Singh with DSP Mutual asked about the overall order inflow, how defense segment could see the growth space and nuclear. Sanjay Kumar Jha MD answered the order portion of INR1,500 crores will remain after closing of FY23 also.

• [00:42:52] Charanjit Singh with DSP Mutual asked about MIDHANI’s gross block currently, and the asset turns and revenue generation capacity. Gowri Sankara Rao Director Finance said it’s currently INR97 crores. And with the addition of INR982 crore, after capitalization, one more addition of INR100 crore will come. So by year end it will be INR1,100 crores. With new facility MIDHANI can reach same level of gross block as MIDHANI’s revenue.

• [00:45:00] Charanjit Singh with DSP Mutual enquired about the status of weakness in launches in the space side. Sanjay Kumar Jha MD answered that MIDHANI is listening through media and MIDHANI is expecting the launches to pick up going forward.

• [00:49:27] Ankit Shah from White Equity asked about the progress on the precious metal scam. Sanjay Kumar Jha MD said that it was theft of scrap but not precious metal and people involved were some contract workers and security staffs. On quantum, 950 Kg was intercepted by CBI.

• [00:52:34] Rohit Ohri with Progressive Share Brokers enquired if the company will be able to maintain the EBITDA margins of usual 30-33%. Sanjay Kumar Jha MD answered that with the available product mix it will be possible to maintain that range.