{"id":156040,"date":"2023-11-09T12:44:06","date_gmt":"2023-11-09T17:44:06","guid":{"rendered":"https:\/\/44.250.171.167\/?p=156040"},"modified":"2023-11-09T12:44:07","modified_gmt":"2023-11-09T17:44:07","slug":"pondy-oxides-and-chemicals-ltd-q2-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/pondy-oxides-and-chemicals-ltd-q2-fy24-earnings-conference-call-insights\/","title":{"rendered":"Pondy Oxides and Chemicals Ltd Q2 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Pondy Oxides and Chemicals Ltd (POCL) Q2 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Financial Performance<\/strong>\n<ul>\n<li>Reported total revenue of INR392 crores for Q2 FY24, a 22% increase from INR321 crores last quarter.<\/li>\n<li>Revenue from operations increased 31% compared to Q2 FY23.<\/li>\n<li>In 1H24, POCL reported sales of INR714 crores, up 7.4% vs. 1H23.<\/li>\n<li>EBITDA for lead vertical was 5.8% in H1 FY24, similar to 5.7% in H1 FY23.<\/li>\n<li>EBITDA decreased from INR38 crores in H1 FY23 to INR32 crores in H1 FY24, due to lower realization in the aluminum division and increased expenses.<\/li>\n<li>Current ratio stable at 1.56 and debt-to-equity ratio was 0.71, within industry standards.<\/li>\n<li>Return on capital employed was 24% in 1H FY24.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Sales Mix and Exports<\/strong>\n<ul>\n<li>Domestic and export sales split was 45% and 55% respectively.<\/li>\n<li>Exports comprised over half of total sales.<\/li>\n<li>Consciously increased domestic share in recent quarter.<\/li>\n<li>Expect higher exports in H2 versus H1 as demand available<\/li>\n<\/ul>\n<\/li>\n<li><strong>Aluminum Division<\/strong>\n<ul>\n<li>Undergoing OEM empanelment and customer base expansion.<\/li>\n<li>A growth area but still stabilizing operations.<\/li>\n<li>Aluminum prices not directly linked to LME, posing challenges.<\/li>\n<li>Exploring cross-hedging models to stabilize aluminum margins.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Production Challenges<\/strong>\n<ul>\n<li>Faced smelting capacity issues in Q1 due to a rotary breakdown, resulting in lower margins.<\/li>\n<li>Resumed full smelting operations in Q2 and is working to optimize material mix and invest in energy efficiency to reduce costs.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Margin Outlook<\/strong>\n<ul>\n<li>Lead margins are expected to remain stable in H2.<\/li>\n<li>In H2, other verticals may face uncertainty which will improve as volumes increase.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Battery Waste Management Rules Impact<\/strong>\n<ul>\n<li>Will increase usage of recycled materials by OEMs, benefitting organized recyclers like POCL.<\/li>\n<li>Proposed EPR credits for R3 recyclers to also benefit the industry.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Recycling Verticals<\/strong>\n<ul>\n<li>Currently holds around 10% market share in India&#8217;s lead recycling industry.<\/li>\n<li>Will not enter ferrous recycling like iron and steel.<\/li>\n<li>Seeking scalable businesses with decent volumes.<\/li>\n<li>Require domestic waste generation and import potential.<\/li>\n<li>Avoid highly fragmented markets.<\/li>\n<li>Synergies with existing operations also considered.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Plastics Division Progress<\/strong>\n<ul>\n<li>Increased lead capacities generating more internal plastic waste.<\/li>\n<li>In talks for contract tolling with OEMs.<\/li>\n<li>Creating specific plastic grades for certain OEMs.<\/li>\n<li>Expects division to stabilize in 1-2 quarters.<\/li>\n<\/ul>\n<\/li>\n<li><strong>New Businesses&#8217; Profitability<\/strong>\n<ul>\n<li>Plastics and aluminum expected to be more profitable than lead business.<\/li>\n<li>OEM empanelment ongoing, utilizing 25-30% of capacity currently.<\/li>\n<li>See margins and growth stabilizing from Q1 FY2024-25.<\/li>\n<li>Aluminum facing demand challenges presently.<\/li>\n<\/ul>\n<\/li>\n<li><strong>EPR Credit Mechanism<\/strong>\n<ul>\n<li>EPR credits will be generated based on scrap received from OEMs.<\/li>\n<li>Finished goods provided back to OEMs will determine credits.<\/li>\n<li>In early stages, but expect progress in Q1 FY25.<\/li>\n<li>Will drive OEMs to use mandated recycled material percentages.<\/li>\n<li>Big benefit for organized recyclers like Pondy Oxides.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Finance Costs Outlook<\/strong>\n<ul>\n<li>Interest costs expected to remain at similar levels in Q2.<\/li>\n<li>Rates not expected to decline significantly in near future.<\/li>\n<li>Profits earned in Q1 helped substitute some borrowing.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capacity Utilization<\/strong>\n<ul>\n<li>Currently operating at 70-75% of capacity.<\/li>\n<li>Not due to yield loss at higher utilization rates.<\/li>\n<li>Looking to double lead capacity in next 2 years.<\/li>\n<li>Focusing on value-added products, not maximizing volumes.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capex Plans<\/strong>\n<ul>\n<li>Spent about INR100 crores in last 2 years on new verticals and infrastructure.<\/li>\n<li>Planning about INR100 crores in next 1-1.5 years to double lead capacity.<\/li>\n<li>Investing in more modern, automated, and efficient equipment.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Harsha Exito Update<\/strong>\n<ul>\n<li>Expanding into new verticals at Harsha Exito site.<\/li>\n<li>Also expanding current lead production capacity.<\/li>\n<li>Ongoing development work for these expansions.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Target Lead Production Capacity<\/strong>\n<ul>\n<li>Aiming for 200,000 metric tonnes per annum in 2 years.<\/li>\n<li>Harsha Exito to contribute 70,000-100,000 tonnes of this.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Revenue and Margin Growth Plans<\/strong>\n<ul>\n<li>Targeting INR1,800-2,000 crores in FY2025.<\/li>\n<li>Expects over INR2,700 crores in FY2026.<\/li>\n<li>Capacity expansions to drive strong top line growth.<\/li>\n<li>Focusing on higher value-added product share.<\/li>\n<li>Margin growth dependent on value-add share achieved.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Pondy Oxides and Chemicals Ltd (POCL) Q2 FY24 Earnings Concall Financial Performance Reported total revenue of INR392 crores for Q2 FY24, a 22% increase from INR321 crores last quarter. Revenue from operations increased 31% compared to Q2 FY23. In 1H24, POCL reported sales of INR714 crores, up 7.4% vs. 1H23. EBITDA for [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,5753],"tags":[10169,9847,8985],"class_list":["post-156040","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-industrials","tag-earnings","tag-lead-alloys","tag-renewable-plastics"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":158624,"url":"https:\/\/alphastreet.com\/india\/pondy-oxides-and-chemicals-ltd-q3-fy24-earnings-conference-call-insights\/","url_meta":{"origin":156040,"position":0},"title":"Pondy Oxides and Chemicals Ltd Q3 FY24 Earnings Conference Call Insights","author":"Praveen","date":"February 9, 2024","format":false,"excerpt":"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. 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