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.