Key highlights from Rushil Decor Limited (RUSHIL) Q4 FY24 Earnings Concall
- Operational Performance
- MDF and laminate volumes grew 13% and 6% year-on-year, respectively, due to operational efficiency.
- Average capacity utilization for Q4 FY24 stood at 89%, with MDF segment utilization reaching 96% in March 2024.
- Chikkamagaluru plant sold 116% of its production capacity during Q4.
- Financial Performance
- Quarterly revenue increased by 9% year-over-year to INR 233.42 crore.
- EBITDA for Q4 stood at INR 29.23 crore, slightly higher than the previous year.
- PAT for Q4 was INR 9 crore, but after adjusting for short provision of income tax, it would be INR 11.57 crore.
- Annual revenue was INR 844 crore, a marginal increase of 0.66% year-over-year.
- Annual EBITDA stood at INR 119.91 crore, with a margin of 14.21%.
- Annual PAT was INR 43.10 crore, but after adjusting for short provision, it would be INR 45.67 crore.
- Expansion
- Substantial stride made in increasing MDF production capabilities and expanding footprints to meet nationwide demand.
- Positioned to sell MDF products at better pricing after fulfilling export obligations.
- Increased MDF export volumes by 61% year-on-year to 61,716 CBM.
- Greenfield project for laminate segment nearing completion, with machinery received at the facility.
- Strategic entry into the plywood segment, broadening product portfolio.
- Plywood production capacity planned to increase from 300 boards per day to 3,000 boards per day by September 2025.
- Product Portfolio
- Focus on enhancing value-added offerings within the MDF segment, with value-added products contributing 42% in terms of quantity.
- Laminate segment witnessed significant progress, with volumes increasing by 6% year-on-year and utilization levels rising to 90% in Q4.
- Entry into the plywood segment, providing a comprehensive range of options to distributors.
- Brand Presence
- Successful retail branding efforts, covering an extensive area of approximately 45,000 square feet plus.
- Allocated 1-2% of total revenues to support brand visibility and market penetration initiatives.
- Continued investment in strategic marketing initiatives to further enhance market presence and drive business growth.
- Future Outlook
- Projected EBITDA margin range of 14-16% for FY25.
- Laminate segment EBITDA margins projected in the range of 12-15%.
- Targeting healthy utilization levels of 90-95% for MDF plants in FY25.
- Positioned for dynamic expansion, leveraging robust market presence and operational excellence.
- Well-equipped to navigate evolving market landscape, maximizing growth and profitability potential.
- Debt and Inventory Management
- Net debt profile reduced from INR 400 crore in FY23 to INR 286 crore.
- Debt-to-equity ratio stands at 0.53 times, with active focus on further reducing it.
- Committed to reducing inventory levels by 10% annually.
- Implementing robust systems to monitor and optimize resource utilization for operational efficiency and supply chain management.
- Volume Growth Guidance
- For MDF, targeting 96% capacity utilization, and increasing value-added products contribution to 50% from the current 42%.
- For laminates, aiming for 20-25% value growth, driven by new capacity addition in the jumbo laminate segment.
- Exact volume growth projection for laminates is difficult due to different product mixes in the new plant.
- Segment Margin Guidance
- Laminate segment margins expected to improve from the current 10% level.
- New jumbo laminate project margins projected at 12-15%.
- Overall laminate segment margins expected to increase by 1-2%.
- MDF segment targeting EBITDA margin of 14-16%.
- Overall company EBITDA margin guidance for FY25 is 14-16%.
- MDF Pricing and Imports
- No significant price cuts observed in MDF compared to Q4 FY24.
- Imports of around 25,000 CBM per month, but not posing a major challenge due to strong domestic demand and service offerings.
- Ability to balance sales between OEM and retail network allows flexibility in managing realizations.
- Timber Cost
- Witnessed a 10% increase in timber prices from Q3 to Q4 FY24.
- No further price hike observed in the current quarter.
- Blended timber cost in Q4 FY24 was INR 4,222 per ton.
- Aiming to maintain the current timber cost levels.
- MDF Export Pricing
- Took a 7% price hike for MDF exports in Q4 FY24.
- Reason was the completion of export obligations, allowing them to target better realizations and focus on value-added products over commodities.
- Already exporting value-added MDF products, with 4,817 cubic meters of value-added exports in Q4.
- Targeting to increase value-added contribution in exports, similar to the domestic strategy of 50% value-added products.
- Capacity Utilization and Realizations
- Targeting 95%+ utilization for MDF plants, compared to 78% average in FY24.
- Reached 96% utilization in March 2024, aiming to sustain similar levels.
- Blended MDF realizations expected to remain stable at around INR 23,500 per CBM.
- Increasing value-added MDF contribution from 42% to 50% to support better realizations.
- Revenue and Margin Guidance
- Targeting to cross INR 1,000 crore revenue in FY25.
- Contributions expected from new jumbo laminate project and plywood business.
- Aiming for overall EBITDA margin of 14-16% in FY25.
- Demand expected to pick up in May.
- Industry Capacity Expansion
- Industry MDF capacity in FY24 was around 2.8-2.9 million CBM, with average utilization of 78-80%.
- Estimated capacity addition of 800,000 CBM in FY25, taking industry capacity to around 3.5-3.6 million CBM.
- New capacities may not operate at 100% utilization initially, with gradual ramp-up expected.
- No major capacity expansion plans disclosed beyond FY25, apart from the confirmed 800,000 CBM addition.