Solar Industries India Ltd Q3 2024 Earnings Call Transcript

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

Question: Dhananjai Bagrodia - ASK Investment Managers Ltd - Analyst : Hi, sir. Congratulations on a very good set of results. Sir, could you just shed some light on the order inflow, where are you all getting the strong order, from which segment? And how has exports been doing in terms of orders also?

Question: Dhananjai Bagrodia - ASK Investment Managers Ltd - Analyst : I'm saying, for orders, your order growth, could you give us some color in terms of where you've been getting the strong orders, from which segments? And any particular regions?

Question: Dhananjai Bagrodia - ASK Investment Managers Ltd - Analyst : So the defense are the Pinaka orders, right?

Question: Dhananjai Bagrodia - ASK Investment Managers Ltd - Analyst : Okay, okay. Sure And okay, I'll come back for more questions. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 08, 2024 / 5:30AM, SLIN.NS - Q3 2024 Solar Industries India Ltd Earnings Call

Question: Amit Dixit - ICICI Securities Ltd - Analyst : Yeah, hi. Good morning, everyone. Thanks for the opportunity and congratulations for a good set of numbers and maintaining the margin despite the volatility we have seen in RM and realizations. I have three questions, sir. The first one is on defense. While we have mentioned that defense revenue would increase materially from Q4, I just wanted to get an understanding on when this INR994 crores defense order execution that we have won recently as export order will actually start. And in exact quantum, how much revenue can we pencil in for FY24 and '25 if you can give that guidance? This is the first question.

Question: Amit Dixit - ICICI Securities Ltd - Analyst : Yeah. From defense sector?

Question: Amit Dixit - ICICI Securities Ltd - Analyst : That's wonderful, sir. The second question is, if I look at your international segment, now I understand that Q3 is generally a tad weak because of year-end and various other things in that part of geography. But if I look at the revenue, that is actually quite good considering in fact the drop is very low, QoQ drop. So just wanted to understand the key drivers behind that? Is it the new markets, Australia, Indonesia, that are contributing more? And you mentioned two new geographies, Kazakhstan and Saudi. So when will their contribution start coming in?

Question: Amit Dixit - ICICI Securities Ltd - Analyst : That's good. The last question I have is on Coal India volumes. If I look at Coal India revenue this quarter, I mean, there was a significant bump up QoQ. So is it possible to mention that in volume terms, what would be the increase in volumes QoQ that we would have supplied to Coal India in this quarter?

Question: Amit Dixit - ICICI Securities Ltd - Analyst : Okay. Okay. Wonderful, sir. Thank you and all the best.

Question: Dipen Vakil - InCred Research Services Pvt Ltd - Analyst : Thank you for the opportunity, sir. Sir, my first question is regarding the raw material prices, sir. So what would be the ammonium nitrate prices for you for, say, blended ammonium nitrate prices for this quarter?

Question: Dipen Vakil - InCred Research Services Pvt Ltd - Analyst : Okay. And I wanted to also understand that with respect to the volatility of the raw material prices, how do we pass on the benefit or as well as the increase in cost to our client? Is there any lag in say by one quarter or something or is it a continuous contract?

Question: Dipen Vakil - InCred Research Services Pvt Ltd - Analyst : Okay, okay. And do you expect raw material prices to have stabilized going ahead? Or do you foresee any further volatility, say, in next quarter or coming year?

Question: Dipen Vakil - InCred Research Services Pvt Ltd - Analyst : Sir, and now coming to your defense order book, sir, you have a defense order book of close to around INR994 crores. So what will be the execution, like what is the breakup currently for the export as well as the domestic defense orders?

Question: Dipen Vakil - InCred Research Services Pvt Ltd - Analyst : Okay. Okay. So the entire defense order book would be executable over three years, excluding the order from Pinaka for now?

Question: Dipen Vakil - InCred Research Services Pvt Ltd - Analyst : And that will be executable in two to three years?

Question: Dipen Vakil - InCred Research Services Pvt Ltd - Analyst : Got it. Got it. Thank you so much and all the best for the period.

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Yes. Thank you for the opportunity. First question is with regards to the new geographies that we are expecting to contribute from next year. So any sense on the type of market, whether it is explosive or more defense related, the market size, the CapEx you'll be investing? So any commentary on that?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Okay. So they will be exported from India and no manufacturing setup is being planned there right now?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : And what would be the CapEx we'll be incurring for these two geographies and for the company as a whole for FY24 and '25?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Thank you. That's helpful. Sir, secondly, on the ammonium nitrate prices. So any outlook on that, whether we see the price correction and how will it factor in our realizations going forward?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Okay. So the current realizations of around 44,000, 45,000 could continue over the next few quarters. Is that understanding correct?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : But if the status quo remains, the prices remain at the current level, the 44,000, 45,000 should sustain?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Understood. Sir, next is on the defense segment. We had been guiding for a INR700 crores revenue for FY24. So do we expect to be at the run rate going in the fourth quarter? Or is there a revised guidance for FY24 itself?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Okay. And during the quarter, the neutral revenue performance in the defense segment, was it related to the Red Sea issue? Was there a deferment in the third quarter because of that issue?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Can you quantify how much of the revenue would have been, if that's possible?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Okay. Understood. Sir, just one last question. We had a fire incident in December. And we had mentioned that the financial impact is just limited to that one building. So is that building -- is that financial impact going to restore? Or are there any other regulatory implications that we should be concerned about in this quarter or going forward?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Understood. Thank you so much for answering all my questions and all the best.

Question: Bharat Shah - ASK Investment Managers Ltd - Analyst : Yeah, hi, Manish. It is really remarkable given the kind of price volatility that ammonium nitrate has been undergoing and the final good price, the volume growth and the outcome that has been achieved. Would you now say that given all kind of immense changes, volatility in last few quarters, both in the domestic, is it an international part where the issues are still being faced on the freight or on the Red Sea issue. But hopefully, the currency and the inflationary environment in the export markets is somewhat abated is my impression. So considering all of it, defense is on a strong footing, domestic demand drivers fundamentally are on strong footing, though price volatility is a bit of an issue. And internationally, barring probably the Red Sea issue, hopefully, things should be increased. Is that a fair summary that we'll have far more normal business environment going ahead rather than very unusual one that we faced in the current year?

Question: Bharat Shah - ASK Investment Managers Ltd - Analyst : In terms of the medium-term three- to five-year picture, overall, 18% to 20% growth in the volume is something which one can say is reasonably well founded, right?

Question: Bharat Shah - ASK Investment Managers Ltd - Analyst : Fine. So overall, the situation, you would regard it as far more conducive overall, defense clearly, domestic part also very strongly so. But price volatility, you already talked about that you do not see it really materially impacting going ahead. And hopefully, Pinaka order should come by soon rather than later. And international markets are stabilizing relatively. Therefore, overall business conditions are far more conducive in terms of asserting a bit of a pricing power than before. Would that be a reasonable thing to say, a pricing power-related issue?

Question: Bharat Shah - ASK Investment Managers Ltd - Analyst : The reason why I was asking, Manish, was whether fundamentally, on a business construct wise, would we say in the medium term, three to five years, our profit growth will be faster, slower, or similar to the underlying volume growth. So from that perspective, I wanted your understanding.

Question: Bharat Shah - ASK Investment Managers Ltd - Analyst : Thank you, Manish, and all the very best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 08, 2024 / 5:30AM, SLIN.NS - Q3 2024 Solar Industries India Ltd Earnings Call

Question: Pratik Mukasdar - RNL Investments Partners - Analyst : Manish-ji, congratulations for a great strong set of numbers, I would say. I have two, three questions. One that our margin was -- it was all-time high margin and really congratulations on that. So would you like to say, these margins are maintainable, or it will trend further up? One point is this. Second is, do you want to -- would you like to raise your volume guidance also because we are doing great volume numbers? And thirdly, this Turkish lira has been really spot of bother for us in the past quarter. So I'm sure you must be taking all the steps but is it a way to hedge it or somewhere we can reduce the risk of it?

Question: Pratik Mukasdar - RNL Investments Partners - Analyst : Okay. And on Turkish lira, would you like to --

Question: Pratik Mukasdar - RNL Investments Partners - Analyst : Thank you.

Question: Franklin Moraes - Equentis Wealth Advisory Pvt Ltd - Analyst : Yeah. So thanks for taking my question and congratulations on a good set of numbers. So when you say that on a conservative basis, you expect 15% volume growth, I wanted to understand whether this would be more of a uniform thing, or we are expecting some dip maybe next year and then picking up going forward?

Question: Franklin Moraes - Equentis Wealth Advisory Pvt Ltd - Analyst : And when you look at the drivers for achieving that growth rate, would they be the same that are present today? Or would it come from some different segments?

Question: Franklin Moraes - Equentis Wealth Advisory Pvt Ltd - Analyst : Okay. Fair enough. Thanks a lot.

Question: Rohan Gupta - Nuvama Wealth and Investment Ltd - Analyst : Hi, sir. Good morning and thanks for the opportunity. Sir, first of all, congratulations on such a strong performance in the current scenario. Sir, a couple of questions. And one is on defense business and the order book. Though the current order book is INR994 crores, you've mentioned that INR1,500 crores kind of the contract you are expecting to start commissioning from the next year, which includes Pinaka as well as the export opportunities. Am I right on that number, sir?

Question: Rohan Gupta - Nuvama Wealth and Investment Ltd - Analyst : And sir, this INR1,500 crores that have to be completed in what time frame, sir? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 08, 2024 / 5:30AM, SLIN.NS - Q3 2024 Solar Industries India Ltd Earnings Call

Question: Rohan Gupta - Nuvama Wealth and Investment Ltd - Analyst : Okay. Sir, second question is on our margin front. So definitely, we have done a fantastic job with roughly 25% margins in nine months as against the guidance of roughly 22%. This, I believe, is also because of the fall in raw material prices, but we have been able to clearly maintain our EBITDA margin per tonne at the previous level, and that's what I think is resulting into higher margin. Sir, if we see that ammonium nitrate prices probably have bottomed out and they may go up going forward. So do we see that this kind of margin, 25% margin in percentage may hold on? Or do you think that there can be some risk to the margin going forward?

Question: Rohan Gupta - Nuvama Wealth and Investment Ltd - Analyst : That's great, sir. Sir, just one from my side. So we have taken a new market in Kazakhstan and Saudi. Sir, any investment idea you will give that how much money, CapEx we are putting in these new territories?

Question: Rohan Gupta - Nuvama Wealth and Investment Ltd - Analyst : Sir, that's it from my side. Sir, thank you so much, sir.

Question: Harshvardhan Singh - FirstRand Bank India - Analyst : Congratulations for great results and positive upside growth. I just wanted to know the revenue of INR1,500 crores from defense is after considering the order of Pinaka rockets or before?

Question: Harshvardhan Singh - FirstRand Bank India - Analyst : Okay. So it is after considering the Pinaka orders?

Question: Harshvardhan Singh - FirstRand Bank India - Analyst : And I also wanted to know, in financial year '23, the revenue from the defense sector was around 9%. So when we are expecting that the revenue from the defense sector will go to the double digits, like it would be crossing 10% and above?

Question: Harshvardhan Singh - FirstRand Bank India - Analyst : Hello?

Question: Harshvardhan Singh - FirstRand Bank India - Analyst : Okay. Thank you, sir. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 08, 2024 / 5:30AM, SLIN.NS - Q3 2024 Solar Industries India Ltd Earnings Call

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Thank you so much for the follow up. I just wanted to know if you can share the net debt number as of December?

Question: Jenish Karia - Antique Stockbroking Limited - Analyst : Okay. Thank you so much.