HIL Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Niteen Dharmawat - Aurum Capital - Analyst : So my question is regarding the raw material trend -- pricing trend. How is that now? Is there any softening that we see now compared to what it was earlier? And second is about the demand, as you're saying that H2 may have some improvement. So do you see any visibility now since a few days are already gone in the second -- in the third quarter. So if you can share some insight into that, that will be helpful.

Question: Niteen Dharmawat - Aurum Capital - Analyst : No, general actually because we are into multiple divisions. So that's why I'm asking in general.

Question: Niteen Dharmawat - Aurum Capital - Analyst : And regarding the demand scenario?

Question: Niteen Dharmawat - Aurum Capital - Analyst : Okay. So this was about domestic. What about the international one with respect to Parador? So if you can throw some light on that as well?

Question: Varij Bangur - Brescon Ventures - Analyst : I just wanted to know the breakup in the Polymer segment between, let's say, our organic pipe division, Crestia and Construction Chemicals and putty. And the same numbers, if you can provide for the last year as well, of the organic brand and Construction Chemicals as Crestia was not there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 08, 2024 / 8:30AM, HLLT.NS - Q2 2025 HIL Ltd Earnings Call

Question: Varij Bangur - Brescon Ventures - Analyst : Yes, sir. Yes.

Question: Varij Bangur - Brescon Ventures - Analyst : So I mean, in the opening comments, you said that the Construction Chemicals and putty has grown by 29% year-on-year in revenue, right?

Question: Varij Bangur - Brescon Ventures - Analyst : Is it correct?

Question: Varij Bangur - Brescon Ventures - Analyst : Okay. So last year, if INR85 crores was on organic pipe division and the total number was INR130 crores. So the nonpipe division was INR45 crores. And this year, the same number is INR41 crores. So I mean, there is a degrowth in there. So even after Construction Chemicals has grown 29%, is that like our putty segment has degrown so much?

Question: Varij Bangur - Brescon Ventures - Analyst : And in Crestia, I mean, when we acquired it, it was at a run rate of INR330 crores yearly. This quarter, we have done INR38 crores. So is that -- the difference of seasonality so high? I mean, yearly, would that -- the run rate that would be maintained of INR300 crores, INR330 crores? Or would it be quite lower because of the price erosion or, let's say, the volume degrowth that we are witnessing, I assume, in Crestia?

Question: Varij Bangur - Brescon Ventures - Analyst : Got it. And just the last question on our organic pipe division. I mean we have such a good brand. Our gross margins, I think -- I mean, our realization are higher. We have placed our brand as a premium to, let's say, a lot of other players in the market. Our gross margins are also good. So what is the difference between gross -- I mean, between, let's say, the gross margin and the EBITDA margin line items? Like they are so significantly high, if you look at the competition. So would this cost be termed as investments? And how many years would it take for our EBITDA margins to -- I mean, at last, our EBITDA margins has to copy the competition, right, even if it is in investment phase right now.

Question: Sanjay Kumar - - Analyst : Am I audible?

Question: Sanjay Kumar - - Analyst : Yes. So on Parador, you keep saying Parador is the crown jewel. For us, sitting in India as investors, it's a black box. We are unable to appreciate Parador, to be very frank. Yes, a failure on our side, but I think it's also a failure on your side to not communicate it properly. So it would be just an observation and feedback. So it would be better if you could give more information on why you guys feel so confident of Parador, what you're doing. 20%, the alpha, market is down minus 10%, your volumes are up 20%. That's significant. So how did you achieve it? What are you doing to gain market share, be it geography-wise, US, Middle East, and so on? And segment-wise, retail and commercial, the historical trends and how they -- how we are doing now? So if you could give more information in the presentation and, if possible, get Neel to attend this call and give his perspective. He's worked at Mohawk and Milliken, so he might be the best person to address this. So that was just a feedback. And second, so you mentioned BDNY exhibition, where we had, I think, collaborated with MEISTER Surfaces. So what is their role? Do we have such partners for other markets as well? How big is the commercial flooring market in US and Middle East? Is that -- is these the two big markets that you're targeting for commercial flooring?

Question: Sanjay Kumar - - Analyst : Sure. Just the size of the commercial flooring market in US and Middle East and how much market share you're targeting of these two markets?

Question: Sanjay Kumar - - Analyst : Wow, that's a huge statement, Akshat. All the best.

Question: Sanjay Kumar - - Analyst : Second, just kind of confirmation. Q2 is seasonally the weakest quarter for all your segments, right?

Question: Sanjay Kumar - - Analyst : Okay, okay.

Question: Sanjay Kumar - - Analyst : Got it, got it. And third, how are you -- how is the Polymer division coming up piping? I think government spending has been very weak, of course, elections, monsoons and so on. So how has H2 been? How has October been, November been? Is government CapEx picking up? Any volume guidance for H2 just in the pipes division?

Question: Kavish Jain - - Analyst : Am I audible?

Question: Kavish Jain - - Analyst : Okay. So what is our mix of asbestos and non-asbestos products? And what is the outlook on raw material availability for asbestos and margins? And further, can you throw some light on adoption rate, cost difference for similar product? And any tailwind that supports non-asbestos products?

Question: Kavish Jain - - Analyst : Okay. And what would be your three key monitorables or milestones for the success of Parador? And how we are working towards it?

Question: Sai Ganesh - Square 64 Capital Advisors - Analyst : (inaudible) Yes, am I clear now?

Question: Sai Ganesh - Square 64 Capital Advisors - Analyst : Yes. I just wanted to know about the demand outlook for the -- demand and margin outlook for the roofing business for second half of the current year.

Question: Sai Ganesh - Square 64 Capital Advisors - Analyst : Yes.

Question: Sai Ganesh - Square 64 Capital Advisors - Analyst : Container. Outlook of the container price for fiber imports. Outlook for that. How they are playing right now?

Question: Sai Ganesh - Square 64 Capital Advisors - Analyst : Okay. Did we get any inventory losses in pipes segment in this quarter or the previous quarter?

Question: Sai Ganesh - Square 64 Capital Advisors - Analyst : Inventory losses in pipe segment.

Question: Sai Ganesh - Square 64 Capital Advisors - Analyst : Inventory losses.

Question: Sai Ganesh - Square 64 Capital Advisors - Analyst : Okay. And margins on the roofing in H2? Any guidance you can throw on that?

Question: Khush Gosrani - InCred Asset Management - Analyst : Sir, could you highlight, in the pipes business, what was the EBITDA per kg that you would have done?

Question: Khush Gosrani - InCred Asset Management - Analyst : Sure. And how is the competitive intensity in your Building Solutions, especially on the excessive blocks? Because it seems that you have been able to grow the business, but the margins are flattish. So if you could help us what has happened over here?

Question: Khush Gosrani - InCred Asset Management - Analyst : Sure. And coming to Parador, sir, what would be the revenue ex of Europe -- revenue contribution ex of Europe in Parador? And what would it have been in Q2 last year?

Question: Khush Gosrani - InCred Asset Management - Analyst : Yes, revenue contribution out of Europe. So if I exclude Europe, so from USA or the African region, what it would have been in this quarter and what it would have been last quarter?

Question: Khush Gosrani - InCred Asset Management - Analyst : Got it, sir. Got it. And how do you see the margins coming back to EBITDA breakeven? Will it happen by Q4? Or it will be postponed to next year Q1, Q2? Would you like to share any guidance over here?

Question: Khush Gosrani - InCred Asset Management - Analyst : Yes, yes, Parador. Parador, I mean.

Question: Khush Gosrani - InCred Asset Management - Analyst : Sure. And this would become sustainable going forward? Because we have seen it last year happening also in Q3. Q4, it became positive. But Q1, again, we saw it going back to red. And Q2, again, it is in losses. So do you feel that this could be sustainable going forward? You have done whatever cost measurements you have to do, and you see improving the margins that is worrying. Do you see it?

Question: Khush Gosrani - InCred Asset Management - Analyst : Got it, sir. I'll collect offline for the EBITDA per kg for the pipes, sir.

Question: Khush Gosrani - InCred Asset Management - Analyst : INR1.5, correct?

Question: Khush Gosrani - InCred Asset Management - Analyst : And what could (inaudible) last year?

Question: Khush Gosrani - InCred Asset Management - Analyst : Okay. Got it. Got it.

Question: Jiten Parmar - Aurum Capital - Analyst : So my question, some of it kind of -- some of it got elevated in the last question. But still, I want to make some point and also ask some questions regarding Parador. Now we acquired this company in 2018. Obviously, a lot has gone wrong post that. We had COVID. We had European slowdown. But it's been 6 years. Now, you -- in the previous question, you had said that, henceforth, we should be EBITDA positive and it should be sustainable. Now if that happens, it's fine. But if that still doesn't happen, does the management have a view that till what time we will get to this division before finally taking any decision on this? I mean how long a rope will you give to Parador? That's my question.

Question: Jiten Parmar - Aurum Capital - Analyst : Great. Of course, as somebody who tracks the company and somebody who is invested, I would definitely want this to turn around, I mean. But just wanted -- from a shareholder perspective, wanted some clarity on how we are going to mitigate this risk. That's all I had.