Key highlights from Mrs. Bectors Food Specialities Ltd (BECTORFOOD) Q4 FY22 Earnings Concall
Management Update:
- BECTORFOOD said it expects inflationary trend to continue in the next two quarters because of geopolitical concerns and supply chain disruptions. Consequently, the company is focusing on improving price realization and cost efficiencies.
Q&A Highlights:
- Nidhi Babaria of Dalal and Broacha asked about the reason for gross margin being decent while EBITDA margin going down significantly in 4Q22. Anoop Bector MD replied that the drop has been because of higher raw material prices, fuel, transport and also employee cost. On the PAT side, the drop was a bit higher due to a one-time provision of INR5.5 crores.
- Nidhi Babaria of Dalal and Broacha enquired that in 4Q22, on an absolute basis, what was the portion of investments or expenses done towards the expansion side or adding distributors. Anoop Bector MD said that the company moved from 65 ADSR in Dec. to 266 ADSRs in March, which is the reason for increased cost. The distributors were also increased from 527 at Dec. to 543 in March.
- Nidhi Babaria of Dalal and Broacha asked if the company is losing market share or is it the premium segment which is a bit lackluster vs. basic biscuits. Anoop Bector MD said there is nothing like losing market share. The raw material prices were at the higher side. So it was import to reduce stock in the market and work towards bringing in better efficiencies which could be seen as slower growth number.
- Nidhi Babaria of Dalal and Broacha enquired about the breakup on domestic sales versus exports sales. Anoop Bector MD replied that both sales are doing extremely well. The company is looking at 13%, 14% growth numbers going forward. BECTORFOOD said it has to create a fair balance on domestic and export and in coming years would be able to show a 14% growth number for both businesses.
- Nidhi Babaria of Dalal and Broacha asked about price hikes taken and the future plans. Anoop Bector MD replied that it’s the first time in history that every quarter the company is adjusting its prices and working towards covering up inflation. BECTORFOOD said it has increased its realization for 4Q22 of approx. 10% in the domestic side and around 15% plus in the export side.
- Saiprasad Prabhu with Bajaj Holdings asked if biscuit exports were flattish in 4Q22. Anoop Bector MD answered that exports were flattish because there were logistic issues on the shipping front in 4Q. However for FY22, it grew by 17%. So export continues to do well for the company and it is seeing considerable gains coming going forward.
- Saiprasad Prabhu with Bajaj Holdings also asked that if exports has grown 17% for FY22, if for FY23, on a high base, the company can maintain the 13-14% growth in exports. Anoop Bector MD said that BECTORFOOD’s export team has worked very well on this and is looking at a 14% growth number going forward.
- Saiprasad Prabhu with Bajaj Holdings asked if the employee cost sequentially is going to remain same or will dip from current levels. Anoop Bector MD clarified that there will be a considerable dip going forward because there were certain one-time expenses, which had come in. Also company’s strategy has changed where frontliners are not going to be on company rolls.
- Saiprasad Prabhu with Bajaj Holdings asked about fuel price and the impact of it on EBITDA margins. Anoop Bector MD replied that on the other expenses side, there has been a 2% increase. Power and fuel for 4Q22 was a 1% increase at 5%. And logistics from 7.5% last year increased to 8.81% in 4Q22.
- Percy Panthaki from IIFL asked that considering the input costs remains constant at current level, what kind of EBITDA margin as a whole is expected for FY23. Anoop Bector MD answered that the company has always looked at 14%, and will stick to that number.
- Percy Panthaki from IIFL enquired about the growth in the B2B bread segment for FY22. Anoop Bector MD said the company has seen considerably good growth numbers coming there, which are double-digit numbers. The company expects this business to be outperforming in future.
- Prithvi from Unifi Capital asked about container shortage etc. in the biscuit exports and the situation currently. Anoop Bector MD said that in 4Q every company is fulfilling its targets, so there was a shortage for some time. But otherwise things are more than normal and there are no shortages. Going forward, BECTORFOOD is looking at some benefits coming in from the shipping cost also.