Categories Concall Highlights, Earnings, Industrials

Pondy Oxides and Chemicals Ltd Q3 FY24 Earnings Conference Call Insights

Key highlights from Pondy Oxides and Chemicals Ltd (POCL) Q3 FY24 Earnings Concall

  • Financial Performance
    • Revenue of INR 454 crores, up 16% YoY and 12% QoQ.
    • YTD revenue of INR 1,168 crores, up 13%.
    • EBITDA at 6.04% in lead vertical.
    • Overall EBITDA at 5.4% due to aluminum and expenses.
    • Current ratio at 1.47 and debt equity at 0.83.
  • Lead Acid Battery Outlook
    • Global market growing steadily at 6% CAGR.
    • Asia Pacific dominates with over 50% share.
    • India’s share increasing year-over-year.
    • Circular economy driving reuse and recycling.
    • Overall positive future outlook.
  • Capacity Expansion
    • Increasing lead capacity from 132 KTPA to 204 KTPA.
    • Acquired facility in Tamil Nadu.
    • Machinery procurement initiated; installation from June 2024 and commissioning by September 2024.
    • Looking to significantly expand capacities across business verticals.
  • Tamil Nadu MoU
    • MoU to set up recycling and manufacturing plants for non-ferrous metals, batteries, paper, plastic, rubber.
    • INR 300-500 crores investment over 5 years.
    • Additional INR 750 crores revenue in phase 1.
  • Growth Roadmap
    • Expanding lead capacity currently.
    • Strengthened plastic and aluminum verticals.
    • Exploring lithium-ion, rubber, paper recycling.
    • New verticals to progressively add to revenue.
    • Prudent investments based on feasibility.
  • Capex Funding
    • INR 133.5 crores raised via preferential allotment.
    • INR 70 crores to be utilized before March 2024 for lead capacity expansion in Tamil Nadu.
    • Future needs to be assessed based on business scenario.
    • No debt funding planned currently.
    • Improved profitability with revenue growth.
  • Working Capital and Sales Mix
    • Working capital of INR 275 crores in Q3 FY24 vs INR 240 crores in Q3 FY23.
    • Increase due to higher inventory and debtors, driven by aluminum vertical.
    • Sales mix of 45% domestic, 55% exports currently.
    • Additional verticals to expand domestic share.
    • Leveraging diverse product portfolio.
  • Product Mix
    • 35% pure lead sales currently.
    • 65% value-added alloy products.
    • Custom alloys for specific customers.
    • Similar mix expected going forward.
  • Growth Outlook
    • Current year revenue around INR 1,474 crores.
    • Next year estimate INR 1,700 – 1,800 crores.
    • 20% growth potential in FY25, driven by capacity expansion.
  • Margin Outlook
    • Current EBITDA around 6% in lead division.
    • Expect over 7% in new Tamil Nadu facility.
    • Overall margins to improve with expansion.
  • EPR and Battery Rules
    • EPR still at nascent stage.
    • Battery rule registrations ongoing.
    • Commercial opportunities in 3-6 months.
    • Software development delays in Tamil Nadu.
    • Progress expected in 6-9 months.
  • Lithium-ion Battery Recycling Update
    • Currently evaluating techno-commercial feasibility of lithium-ion recycling.
    • Made some progress on R&D but still at early stages.
    • Key is to ensure continuous supply/procurement of used batteries.
    • Expect to see more developments in next 2-3 years as recycling becomes imperative.
    • R&D work is advancing to develop recycling tech in preparation for expected growth in this space.

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