Orient Bell Ltd Q4 2024 Earnings Call Transcript

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

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Thank you for the opportunity. Good afternoon, Himanshu sir, Aditya sir. Congratulations on a decent set of results. I have a few questions. Firstly, trying to understand based on the current capacity. If I were to calculate on the total capacity, my GVT portion, not on the volumes would capacity on GVT portion would be 40% is that correct?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood. Okay. Secondly, sir, on the Dora -- I'm sorry?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : On the Dora plant that we started back in October, September, October, I think you mentioned that the plant is at stabilized phase right now. So what will be the utilization of that plant?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Obviously one more year for optimum utilization, is that right?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Okay. But would it be possible to give some figures on what would be the percentage utilization at that plant Right now?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood. Okay. Sir, next question is regarding a project versus retail sales that we have. So what would be the contribution in FY24?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Project sales versus retail sales. We would have project orders -- project base orders as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 10:00AM, ORBL.NS - Q4 2024 Orient Bell Ltd Earnings Call

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : If I got it correctly, you said 25% was in projects, which is above 3,000 meters.

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood. Sir. Secondly or next is that in the opening comments, you mentioned that one of the associate entities is planning to add the 5.5 million square meter capacity in Q2 FY25 right? So that is the GVT only right?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood. Next is regarding the patent announcement that was just made. I didn't understand why as there was some issue in my phone. So if you can just repeat it, anti-viral -- what exactly is this and how will this help us?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood. If I'm not wrong, three, four quarters ago we had a similar discussion on the call regarding some patents I believe there are some more in line, so any progress on that? Or is it just as when time comes we come to know?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : On patents. I think we had played for some more patents. So we had put on our website as well.

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Okay, sir, we have mentioned the ad spends for the full year. If you could also mention what is the percentage for Q4 itself? And do we expect the ad spend to continue in FY25, Q4 FY25? Or is it beyond that as well?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood. Okay. And sir, just one question regarding my understanding. When was the first GVT capacity that we added, in which you have added?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood. Okay. I have just a couple of more questions. I will get back in the queue.

Question: Achal Lohani - JM Financials - Analyst : Yeah, good afternoon, team. Thank you for the opportunity. My question is with respect to first on the industry and then the company. First on the industry, you mentioned in the opening remarks that there is pressure on the export and there is some diversion of the Morbi production into domestic segment. Can you elaborate a bit in terms of what capacity Morbi has, how much really is getting utilized and how much of that is getting diverted in the domestic market? A ballpark number would help?

Question: Achal Lohani - JM Financials - Analyst : Right. So in terms of the 1,000 plus units, how much the capacity will be, would that be 1,500 million square meters 2,000, 2,500, any ballpark range?

Question: Achal Lohani - JM Financials - Analyst : No problem. The second question was in terms of pricing. You did mention that part of the savings in the fuel cost was passed on. So at this stage, how does the cost and the price scenario look like according to you? Do you see further pressure on the pricing? Do you see costs going up and hence no further reduction in the price or there could be a need to take a price increase?

Question: Achal Lohani - JM Financials - Analyst : Yeah, I mean, sir. I think broadly it does, thank you. And with respect to the company, given the status of the demand, our production capacities plants, how do we look at the volume growth? I know it's hard to quantify, but still our direction, would you see a single digit, double digit or if I were to ask in a different fashion, assuming a normal demand scenario. But given the capacities of level in Morbi, do you see the -- volume growth, stroke margin pressure will still remain even if demand normalizes?

Question: Achal Lohani - JM Financials - Analyst : Got it. Any guess you would have for FY24 how the industry has done has it seen a flat number, marginal growth or decline?

Question: Achal Lohani - JM Financials - Analyst : Correct. That's about it from my end. Thank you so much and wish you all the best.

Question: Udit Gajiwala - Yes Securities - Analyst : Yeah, hi, sir. Just a clarification. When you said that in April, you saw that 50% of the capacities are shut down in Morbi. Is there is any inventory. So if that pressure continues on inventory front, then the pricing could still be under pressure even for the coming fiscal?

Question: Udit Gajiwala - Yes Securities - Analyst : And sir secondly, you have been hearing that there are more people adding capacity as well. So any idea of the quantum has done existing? How

Question: Udit Gajiwala - Yes Securities - Analyst : How much would that you know the total these will there be an addition? Just trying to understand like you know if demand comes up like we are also hoping having H2 demand actually translates to players like you which would eventually propel growth but if the capacity and the overhang be more, continues to remain, then again that incremental growth will be capped?

Question: Udit Gajiwala - Yes Securities - Analyst : Yeah.

Question: Udit Gajiwala - Yes Securities - Analyst : Sure. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 10:00AM, ORBL.NS - Q4 2024 Orient Bell Ltd Earnings Call

Question: Udit Gajiwala - Yes Securities - Analyst : Yeah, understood that.

Question: Udit Gajiwala - Yes Securities - Analyst : Yes sir. That's helped me. Thank you.

Question: Keshav Lahoti - HDFC Securities - Analyst : Thank you for the opportunity. So what a strong set of volume growth sequentially, 30% volume growth still sort of muted 7% year on year. So what has led to such high growth sequentially and what sort of growth you're looking in FY25?

Question: Keshav Lahoti - HDFC Securities - Analyst : Understood, got it. What the question was more because if we see Kajaria, volume grew sequentially to 9% and used 30%. It's more like a 20% outperformance, a big differences there. So should we expect either internal, whatever levers you guys are implementing, at least 15% kind of volume growth we should expect with Orient even if the demand remains muted in FY25?

Question: Keshav Lahoti - HDFC Securities - Analyst : Got it. Understood, one thing what we are seeing in the industry, just to push volume, the higher incentive to dealers are given. So what sort of additional incentive possibly the Orient and at industry level might be given in Q4, which have, sort of hampered margins, gross margin.

Question: Keshav Lahoti - HDFC Securities - Analyst : Okay. One last question from my side. Is it possible to divide the 7% year on year volume growth in retail and institutional? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 10:00AM, ORBL.NS - Q4 2024 Orient Bell Ltd Earnings Call

Question: Keshav Lahoti - HDFC Securities - Analyst : Additionally, you can give some sort of sense. Ideally, the projects would have grown at a faster than retail?

Question: Keshav Lahoti - HDFC Securities - Analyst : Okay. That's it form my side. Thank you.

Question: Hena Vora - DAM Capital Advisors - Analyst : Hello, hi. Thank you for the opportunity. As I said, a couple of questions from my end. Firstly one on retail project demand, we've been doing certain channel checks where everywhere we've got the feedback that post selection is when is the time, only product will come, right. Now things are a little slow, but that's the timeline given to us. We just want to understand what are your thoughts on this. When can we expect the project demand to return?

Question: Hena Vora - DAM Capital Advisors - Analyst : Okay, so basically what I'm saying is these government projects are what will fuel growth in H2 of FY25 and private projects will possibly fuel growth in FY26. Is that sort of a right understanding?

Question: Hena Vora - DAM Capital Advisors - Analyst : Okay, understood. And also on the retail front, right, so what we understand is one product will come and that will be fueling growth. But retail has still been a laggard. So any thoughts over there that would recover and what could bring recovery in retail?

Question: Hena Vora - DAM Capital Advisors - Analyst : Okay, what I was trying to understand is more from an overall perspective that we have seen that retail has lagged. Is it somewhere that people don't want to spend towards the tiles or don't have the money in their wallets to how has it been in the market? Basically what has led to the slowdown?

Question: Hena Vora - DAM Capital Advisors - Analyst : Understood. So the last bit on growth would be on the industry. If we -- let's assume what we talked about, right? Government demand comes back, then you have a private project and retail resume consumption. Would you see the tiles industry growing at like a 10% to 12%, something which is happened, in the plastic pipes industry when all the tailwinds are in favor, they are growing on a CAGR basis at 12%. So is that something which would be possible in the tiles industry overall?

Question: Hena Vora - DAM Capital Advisors - Analyst : Okay, fair. And just lastly on margins, not asking for guidance but more on fuel prices. You did say that they would remain stable or they have remained stable until May, but given the way crude is moving, can we expect that maybe in the second half of the year, we might see some impact coming from fuel?

Question: Hena Vora - DAM Capital Advisors - Analyst : Okay. Thank you so much. And that is my last question.

Question: Aniket Kulkarni - BMSPL Capital - Analyst : Yeah, good afternoon and thanks for the opportunity. So two previous participant said that the demand should improve by '26 onwards, even the launch of projects which have happened. It's -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 10:00AM, ORBL.NS - Q4 2024 Orient Bell Ltd Earnings Call

Question: Aniket Kulkarni - BMSPL Capital - Analyst : Hello, is it clear now?

Question: Aniket Kulkarni - BMSPL Capital - Analyst : So my question was to previous participant, you mentioned you expect the demand to improve from FY20 sales, given the steady launch of projects domestically, but if the exports do not improve, so will the excess supply hamper your growth prospects or there is enough capacity to cater to all of the demand?

Question: Aniket Kulkarni - BMSPL Capital - Analyst : Okay. Thank you so much.

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : So just a couple of questions, first is regarding the channel inventory at dealer level. So how are the channel inventories placed right now. Are there more orders coming in? Are they fully stocked or what is the consensus over there?

Question: Aniket Kulkarni - BMSPL Capital - Analyst : So is that the same for? As in, I actually wanted for what was the consensus at our level, our dealers?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : No, I was just repeating what you said. It is more of a conscious view on the stocking the inventory right now that is what has been perceived on the industry level?

Question: Aniket Kulkarni - BMSPL Capital - Analyst : Understood. And sir, on the order book side, so how are we looking at right now? What kind of order book do we have mainly to understand that, one of the key reasons for a better performance would be our ASPs from here, we are one of the lowest ASP suppliers right now among the player. So how are we placed over there? what is the thought process to be increase there? What kind of order book do we have that can support this? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 10:00AM, ORBL.NS - Q4 2024 Orient Bell Ltd Earnings Call

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood, sir. So on the order book side, can you just give some light if you give those details?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood. And lastly, sir, is it going to let me know the average gas price for Q4 and FY24?

Question: Miraj Shah - Arihant Capital Markets Ltd - Analyst : Understood, okay. Thank you. That's it from my side and all the best for the future. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2024 / 10:00AM, ORBL.NS - Q4 2024 Orient Bell Ltd Earnings Call

Question: Hena Vora - DAM Capital Advisors - Analyst : Hi, thank you for the opportunity again. Just to follow up. First one, you explained the last participant about the bit about gas prices falling. Would you be passing that on? Is that would you said? Would that be passed on?

Question: Hena Vora - DAM Capital Advisors - Analyst : And just to follow up on what I had asked earlier. Would you be able to break up how much of your overall demand comes from institutional private products and then retail? So in that 25%, how much would be institutional?

Question: Hena Vora - DAM Capital Advisors - Analyst : Okay, thank you so much. That's all.