Solar Industries India Ltd Q4 2024 Earnings Call Transcript

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

Question: Ravi Naredi - Naredi Investment Private Limited - Analyst : Thank you, Manish-ji, for giving me opportunity first. Sir, losses due to currency fluctuation, hyperinflation, we lose INR900 crore top line in this year. Will you tell more commentary about this, please?

Question: Ravi Naredi - Naredi Investment Private Limited - Analyst : Okay. Whatever investment we are doing in Turkey or other countries, you are making losses of that investment also?

Question: Ravi Naredi - Naredi Investment Private Limited - Analyst : It means when we receive the payment of whatever we have sold -- material there, then the currency loss will be null -- nil?

Question: Ravi Naredi - Naredi Investment Private Limited - Analyst : Okay. So another, you mentioned the 2,000 (technical difficulty)

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : Hello, sir, and thank you very much for the opportunity. Would it be possible for you to help with the volume of business that was done across Turkey and Nigeria? If I can get that data for FY24 versus FY23, it would be really helpful. Thank you.

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : Would it be possible for you to share any guidance for FY25 because things have been really very volatile for our business? Any commentary on that would be really very helpful.

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : Both, local and international. For FY25, what kind of volumes can we expect across both domestic and international?

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : Sir, in the domestic side, you said 15% of volume growth, right? Just confirming that.

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : What can be the CapEx number for FY25?

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : Thank you, sir. My queries have been answered.

Question: Chirag Muchhala - Centrum Broking Limited - Analyst : Yeah, thank you, and congrats for a very good performance in FY24. So sir, a couple of questions. First on the defense segment, so I mean, can you provide status update on the Pinaka order since Defense Acquisition Council approval had come long ago? So exactly where -- which stage the order is in?

Question: Chirag Muchhala - Centrum Broking Limited - Analyst : Okay. Sir, this would be, sir, for phase one or for all the three phases, together now, the order will be placed?

Question: Chirag Muchhala - Centrum Broking Limited - Analyst : Sure, sir. And second related question on defense is that you have mentioned in the press release that you expect some large orders in the upcoming quarters. So excluding Pinaka, which are the other product categories where we can expect large-sized orders? Sir, I can understand the quantitative details might be confidential. But even qualitatively, if you can just provide some other product categories where, just like Pinaka, opportunities are very large, then that would be helpful.

Question: Chirag Muchhala - Centrum Broking Limited - Analyst : Sure, sir. Sir, a question on our domestic market's realization. So in Q3 and Q4, we have seen realization stabilizing at around INR44,000 per metric tonne. 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 17, 2024 / 5:30AM, SLIN.NS - Q4 2024 Solar Industries India Ltd Earnings Call So for the near term of, let's say, FY25, what would be the outlook for the ammonium nitrate prices of realization? Can we expect this to also remain stable, or do you expect any material increase, decrease from the current levels?

Question: Chirag Muchhala - Centrum Broking Limited - Analyst : Okay. So sir, just to clarify, you mentioned that these prices should remain stable, or from this level, they should go up? I just missed that.

Question: Chirag Muchhala - Centrum Broking Limited - Analyst : Okay, okay, sir. And sir, last question. So sir, this is also a year-ending call. So for FY24 and also for the near-term outlook of FY25, if you can just highlight qualitatively the performance of some of our key overseas markets, like Australia, Indonesia -- I mean, South Africa, et cetera. How was the performance in FY24 and qualitatively, FY25, how it looks like? That would be my last question.

Question: Chirag Muchhala - Centrum Broking Limited - Analyst : Okay, yeah. Thanks for the answer.

Question: Dipen Vakil - InCred Capital - Analyst : Hello, sir. Thank you for taking my question. Sir, my first question is on your product development front. Sir, recently, you had announced that there's a new product coming on anti-drone side, namely Bhargavastra. So can you give us a little bit more details regarding the product development side and when we can see it getting a user trial approval and maybe start reporting us on the revenue side?

Question: Dipen Vakil - InCred Capital - Analyst : Got it, sir. Sir, my next question is slightly on the ammunition market scenario, sir. Sir, one of your competitors have mentioned that there has been a significant uptick in the ammunition demand from the global perspective. Sir, so can you throw some light on the demand that we are seeing, witnessing in the ammunition side of it and what kind of performance you expect for ammunition in FY25?

Question: Dipen Vakil - InCred Capital - Analyst : Got it, sir. Sir, just one bookkeeping question. Sir, can you give us an overall split of explosives and initiating systems and defense in domestic as well as international?

Question: Dipen Vakil - InCred Capital - Analyst : Got it, sir. Sir, wish you all the very best for FY25. Thank you so much for answering my questions.

Question: Bharat Shah - ASK Group - Analyst : Yeah. Hi, Manish. Hearty congratulations for the year gone by. I think a year of remarkable tumultuous changes; ammonium nitrate price volatility, world like a war zone, which in some sense is beneficial to you. But a lot of volatility in many, many key metrics. And to manage that and to emerge from it stronger, certainly team Solar and you both deserve great compliments. Just one or two questions on the future outlook. Earlier, we have many times discussed that long-term growth is going to be 20%-plus in volume terms. And it would remain at that level or better for at least next three to five years, considering all the various product initiatives, opportunities within country, outside country, defense and non-defense, all implications. And that is something we have felt comfortable again and again. But for the current year, FY25, volume growth, we are saying, is likely to be more like 15% domestic and international; hard to club it all together but maybe 10% to 15%. But in value terms, you gave a guidance of 30% jump in revenue. So, A, is the volume growth softened compared to 20%; and B, therefore, we expect some firming up of the price so that revenue growth is 30%?

Question: Bharat Shah - ASK Group - Analyst : Therefore, by implication, defense business would have a better pricing, I suppose?

Question: Bharat Shah - ASK Group - Analyst : Right. Sir, I understood, non-defense part of the business, volume growth will be 15%. Defense will triple in rupee terms. And given the fact that it is better pricing, therefore, overall revenue growth, you expect to be 30% in rupee terms.

Question: Bharat Shah - ASK Group - Analyst : Yeah. And by implication is -- you mentioned also that margins are expected to improve because defense business is margin-rich kind of activity. So that will pull up the margins, or non-defense business also is expected to improve the margins?

Question: Bharat Shah - ASK Group - Analyst : Sure. And therefore, satisfactory margins you would put it as in 22%, 24% range?

Question: Bharat Shah - ASK Group - Analyst : Sure. That's what I meant. And one last question, Manish. Over many discussions in last couple of years, you generally believe that volume growth would be 20%-plus. So in the current year, that's a bit of a lower one, but it's -- I hope it is one-off. And longer-term trajectory for three, five years, we are looking at volume growth of 20%-plus. Is that correct, or any revision there?

Question: Bharat Shah - ASK Group - Analyst : Okay. No, I appreciate it. And once again, congratulations for the remarkable performance in very, very difficult and volatile conditions that the last year represented. Hearty congratulations.

Question: Amit Dixit - ICICI Securities Limited - Analyst : Yeah. Congratulations for a good performance, sir, in a very testing time for aluminum -- ammonium nitrate prices and all. So a few questions from my side. 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 17, 2024 / 5:30AM, SLIN.NS - Q4 2024 Solar Industries India Ltd Earnings Call Just wanted to know -- because you have upped the CapEx significantly compared to last year. So -- and you are indicating that INR400 crore would be towards defense and INR400 crore towards explosives. Is it possible to highlight the particular -- I know actually defense is a system space. But in explosives where we are expanding, are we expanding capacity at the current space, or it is also to do with the -- with some of the greenfield projects that we might undertake?

Question: Amit Dixit - ICICI Securities Limited - Analyst : Wonderful, sir. That's helpful. The second bit is on defense space. So if I look at your order book, what has been understated is the texture of this order book. So our export order book, particularly the orders which are of shorter duration, have gone up significantly. Now while we expect to receive the -- or some certain big orders in the country, will this -- will getting these big domestic orders also open up further export opportunities for the similar products?

Question: Amit Dixit - ICICI Securities Limited - Analyst : Wonderful, sir. Thanks, and all the best.

Question: Rohan Gupta - Nuvama Wealth Management Limited - Analyst : Manish-ji, hi, sir. Good morning, and congratulations on a strong set of numbers in such a turbulent time. Sir, my first question is on the volume growth guidance which, you have mentioned, is roughly this year is looking close to 15%. Sir, I think that '24 year gone by was even more challenging, and with the high TAN prices, explosive prices were on the higher side. Then also we could achieve 20% kind of a volume growth in the current year. So just wanted to understand that the weakness which you are anticipating in the next year in terms of the [fuel] volume, while the infra activities and all remains solid. So -- and when the Coal India demand and everything is still on track. So just wanted to understand the reason for looking at a 15% kind of volume growth for the next year.

Question: Rohan Gupta - Nuvama Wealth Management Limited - Analyst : No, sir. Absolutely, it's quite encouraging to -- even at 15%. I just wanted to understand the reason for slightly -- some moderation in numbers, which we are seeing in growth for the year. So I get your point. You are being slightly, I mean, conservative and looking at the current environment. Sir, second is -- 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 17, 2024 / 5:30AM, SLIN.NS - Q4 2024 Solar Industries India Ltd Earnings Call

Question: Rohan Gupta - Nuvama Wealth Management Limited - Analyst : Definitely, sir. Sir, coming on our defense business, so current quarter has picked up very well. And your growth -- I mean, your guidance for next year is quite increasing, with roughly INR1,500 crore to INR1,600 crore kind of revenue. Sir, you are talking about further putting INR400 crore CapEx in your defense in the current year. And I understand that broadly, we would have invested close to so far now INR800 crore to INR900 crore in defense business. Sir, I mean, though we do understand that the defense followed any asset turnover metrics because here the delta can be quite high, but just to give some broad numbers, if you can get that -- what kind of asset turn or the -- this defense in a longer term, can have on an ongoing basis over next two to three years?

Question: Rohan Gupta - Nuvama Wealth Management Limited - Analyst : Okay. So I was just looking that -- from a INR1,500 defense for next year and if we continue to maintain that run rate, are we planning to invest significantly in FY26? Maybe the defense as a business may require an investment of INR500 crore to INR1,000 crore, or it will be sufficient with the current investment. And after that, investment in '26, '27 will be moderated at INR300 crore to INR400 crore annualized number? That's what I just wanted to understand.

Question: Rohan Gupta - Nuvama Wealth Management Limited - Analyst : Fair enough, sir. And sir, just last bit from my side. And so on a global market, sir, definitely, we have seen Nigeria and Turkey going through the tough environment. But apart from currency, have we seen that volumes have been impacted in these markets? And in the current year, in FY25, if you can give some sense that the newer markets where we have entered, Australia, Tanzania, and all, last year, so how these markets are picking up? And any new markets you are planning to enter into the current year?

Question: Rohan Gupta - Nuvama Wealth Management Limited - Analyst : Sir, any comment on the newer markets you're entering?

Question: Rohan Gupta - Nuvama Wealth Management Limited - Analyst : Okay, thanks. That's all from my side. Thank you so much.

Question: Manish Mahawar - Antique Stockbroking Ltd. - Analyst : Sir, congratulations, Manish and team Solar. Sir, just one question in terms of explosives -- domestic explosives market perspective. What was the market size of explosives in India last year, FY24, and our market share?

Question: Manish Mahawar - Antique Stockbroking Ltd. - Analyst : Okay, definitely. But industry has grown around 7%, 8%, that you said, right, in the comment -- one of the comments?

Question: Manish Mahawar - Antique Stockbroking Ltd. - Analyst : Okay. And sir, maybe one more question. In terms of your overseas business, right, we have already been -- I think two, three years back, you have said you will expand to four to seven to eight geographies. How do you see over next two or three years from here on we'll add furthermore three, four geographies, or we just wanted to ramp up these seven, eight geographies first from here on, sir?

Question: Manish Mahawar - Antique Stockbroking Ltd. - Analyst : Okay. Understood, sir. Thanks, sir. That's from my side. Thank you, and all the best, sir.

Question: Amit Dixit - ICICI Securities Limited - Analyst : So thanks, everyone. I would like to thank Manish, sir, and the management team for sparing their valuable time this morning. 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 17, 2024 / 5:30AM, SLIN.NS - Q4 2024 Solar Industries India Ltd Earnings Call Thanks to all the participants for attending the call. I would like to pass it on to the management now for any closing comments, sir, that you might have.