Uflex Ltd
NSE:UFLEX
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
American Express Co
NYSE:AXP
|
Financial Services
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Target Corp
NYSE:TGT
|
Retail
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
403.3
843.6903
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Estee Lauder Companies Inc
NYSE:EL
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Church & Dwight Co Inc
NYSE:CHD
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
American Express Co
NYSE:AXP
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Target Corp
NYSE:TGT
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
Mueller Industries Inc
NYSE:MLI
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Uflex Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Uflex Limited Q4 FY '23 Results Conference Call hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sachin Bobade from Dolat Capital. Thank you, and over to you, sir.
Thank you, Lisan. On behalf of Dolat Capital, I welcome you all to the Q4 FY'23 earnings conference call of Uflex Limited. Hope you all and your family are staying safe and healthy.
From the management side, we have with us Mr. Rajesh Bhatia, Group President and Chief Financial Officer. Now I hand the floor to the management for their opening remarks, and then we would have question-and-answer session. Over to you, sir.
Thank you. Thanks, everybody, for being on this call. The key highlights for our FY '23 and for the Q4, I'll just -- so FY '23 marks the highest sales of revenue Uflex has earned. And vis-a-vis last year, we are up by close to but, more than 11%. We also achieved the highest ever packaging business sales, both Aseptic and Flexible combined. So over the last year, we have about 33% growth in this.
Our Indian business is highest ever [ BAU ] volumes has and [indiscernible] highest ever volumes. It's also achieved the highest-ever profitability. And for the year as a whole, we have an EBITDA of about INR 2,070 crores versus INR 2,278 crores last year. So it's about down by about 9%.
And the year was also exceptional in the sense that we suffered the devaluation loss of about INR 150 crores in by 2 devaluations done by the Egyptian Central bank. And we've also had a substantial foreign exchange valuation losses arising from the dollar trend across all -- against all the other currencies, which was also substantial for the year at INR 1,290 crores.
So when we look at the PAT level versus last year, so INR 350 crores is almost about INR 340 crores is what has its financials. So a very substantial part of this is non-cash. But this is what market we had to take in the numbers, because as you consolidate into final balance sheet.
The interest cost for the year is also slightly higher, because we've seen [indiscernible] is going up in all the jurisdictions, the euro, where we had [indiscernible] INR 15 lakhs, about 3.35%. U.S. dollar interest rates have also gone up plus the working capital of BOPET started in the business in Nigeria, we had higher impact of both our accounts of interest cost increase as well as on account of the working capital deployment.
So overall, the interest cost for the year went up significantly. And couple of things, more Aseptic packaging business did very well. So for the year as a whole, we had about 93%, 94% capacity utilization levels. We also had a volume growth of about 116% in that business over the last year. And businesses for Flexible packaging as well as for the -- which also includes the holography, films has also done pretty well. And we have had single digit growth in 2 businesses as well in terms of the volume.
So why is our packaging films business has shown some kind of softness, because of a bunch of certain capacities as well as the impact of the demand in Europe driven by the Russia-Ukraine conflict, which has led to higher energy cost bill, higher PMI across this [indiscernible]
Today the people are paying because of the higher insurance rate. So all this affected the consumption. The same story happened in the U.S. as well. So at the time when there was a bunching of capacities, so these 2 situations in Europe and [indiscernible] impact of Fed aggressive rate hike, waving tax for demand for the packaging bills, because as per some [indiscernible] cut down on the certain consumption to pay for their higher energy bills and pay for their higher mortgages, EMIs. And that impact is the demand at the time when the new capacity had come on screen.
So Q3 was probably about certain [indiscernible] Q4 is far better. And as we go into the May -- month of May, now we've seen some better pricing not at the same level at which we had in Q1 of the last year, and in Q1 of this year, definitely certain pricing increases that has been taken by the industry as a whole.
And hopefully, I think in next quarter also, we will see a better performance by the packaging films business as well. And in the meanwhile, the other businesses, whether it is sale and purchases, whether it is packaging, flexible, Aseptic, cylinders, all of them continue to do very well. So if I were to segregate between the two things, India business has done pretty well, where we've seen the record turnover, record volumes, record profitability. And so that business has stood up and the overall, if you see India business EBITDA also [indiscernible] last year is up. So the entire profitability volumes, the entire business has done pretty well. It's the overseas build, especially Europe and the U.S., where the demand got impacted and the price special gain. So that business is slowly coming back to the normal levels.
And hopefully, next few quarters, we will see a much better performance on this part of the business as well as other business. So that's the advantage we had in terms of the diversification what we have delivered products in packaging. And if I see the results of all the other fields, I could see that within the Q3 and Q4, they are down as high as 80%. 30% to 50% is very normal, but about there are some numbers which down as much as 80%, 85% as well on a quarterly EBITDA basis.
Simply because that part of the business, flexible packaging things, that confronts to a bit of a gain because of the overcapacity and the situations that have funded in Europe. So that in a way is nutshell performance for FY '23 and Q4. And I think the Aseptic packaging business, as I said, we are at 93% capacity utilization. So we have made efforts to debottleneck the existing capacity and all that.
And hopefully, this year, the way it is growing already, we -- from the declared capacity, we should be at about 120,000 -- 115,000 to 120,000 utilization level with this debottleneck. And we are exploring further opportunities as to how do we debottleneck more in that business from the existing plant at the same time. So that we could take it up our capacity levels to about 12 billion packs per year from current 7 billion packs per year, while that continues to be a healthy demand for the quarter.
And we've also established well there in export part and currently we are also exporting about 40% of our production from the capacity. So that in much is what we've done in FY '23 and Q4 '23, FY '23.
I'm ready for any questions that you may have. And just one thing more, we have announced earlier that we are setting up [indiscernible] to manufacture our raw material for the packaging films. So we -- in India, we are already at an advance stage in that project. And we will probably complete that by the end of FY '24 fiscal. But we've also now taken up a similar investment in -- at Egypt also with -- from which facility we will take care Middle East, Nigeria, Egypt itself as well our Poland facility. So our dependence on the market for improvement of PET chips will become very, very miniscule and our intention is to capture those margins which are there and then compare it for by doing this backward [indiscernible]
Our size today, almost in the polyester films, we almost the largest player in the world. I think we required this also for protection or you can say a strategic investment. We ensure the raw material availability. We've suffered enough in the last 3 years and the raw material for making a short supply. So not only the cost but availability was also an issue and of course, the higher freight rates also are pretty constructive. So we've lost substantial margins because we were buying all the raw materials for the [indiscernible] plant from the third party.
And with the EC enhanced capacity is coming in India, Poland, Nigeria, Russia, I think that then we may need to insulate ourselves. So these 2 investments are not going to be accretive of the top line.
But then they could give us higher margin as well as quality control over the [indiscernible]. And the availability will no longer be an issue. Though in the last 2, 3 years also, we didn't let our production of the backfilling suffered and most of our plants we were operating already at 90% plus utilization level throughout the period. But, yes, there was a lot of effort in terms of [indiscernible] and as well [indiscernible] these 2 investments that planned and they've been -- they're coming up well and in India by the end of this current fiscal in India and [indiscernible] facility. Thank you. So that's what I wanted to say.
[Operator Instructions] Our first question is from the line of Rushabh Shah from Anubhuti Advisors LLP.
So just, I think, I wanted to understand again on the PET chips plant which you are setting up in Egypt. So what will be your capacity? And again, what will be your absolute CapEx on that part? Can you please guide?
About $70 million is the CapEx and that should produce about 200,000 tonnes of chips.
Okay. 200,000 tonnes. Okay. And then this will primarily cater to the Egypt plant and along with that even to Nigeria and Dubai. I have missed that part of your -- into your initial commentary.
Nigeria, Dubai, Poland and maybe to build some portions to America as well.
Okay. So how much of our requirement will be fulfilled from this plant and for [indiscernible] all plants as a raw material requirement?
I think we should be about 60% to 70%.
60% to 70%. Perfect. Perfect. Secondly, my question was with respect to Dharwad capacity. So I think that whole 63,000 tonnes has been commissioned from April month, correct?
Yes.
Okay. And we are expecting revenue to the tune of INR 700 crores to INR 800 crores incremental per annum from this plant?
Yes.
Okay. Margin profile will be the same as what we are doing on a stand-alone basis? Or will there be any, I think, positive or negative to that?
The same what we are doing currently except that, it will be built -- because it's a new facility, it's the larger facility than the existing one. So the manpower, if you see [indiscernible] is going to be much lower. It's a more efficient plants. So the par consumption is also going to be more efficient. So a bit of savings on the costs, but overall, if you see in the southern part of the country, the margins, the prices and all that, so that's going to be pretty much the same.
Understood. And I just wanted to -- PET chips plan, which you are setting up -- which we are setting up in Panipat, so earlier, we were guiding for it to be starting by April '25 when we initially announced this whole project. So is my understanding correct that we are now commissioning it by likely of Q4 FY '24?
Yes.
Okay, okay. And in terms of -- we were also setting up an 18,000 tonnes ETP plant in Dubai, we announced along with the Dharwad capacity. So any update on that?
That has also been commissioned.
That month itself, April -- sorry, this quarter?
This quarter.
Okay. Okay. Understood. And just 1 last question on the pricing part. So I think in the yesterday's TV interview, you mentioned that pricing is, I think, anywhere up 13% to 15% from last quarter. So just wanted to understand what is in context of global prices? Or it's -- or India specific or it's across the sphere that pricing has moved up?
India prices moved up slow downs the global prices also that impacted a bit. So I think overall is that, there is being an increase.
Okay. Okay. So any rough -- can we assume that margins for the entire year basically would be better than what we have achieved in FY '23, I think we'll be better off than 12%?
We are [indiscernible] 3, if we ignore that exchange aspect. So I think it's too early to say as to how the packaging film business shapes up. I think let's give it another quarter before we make any [indiscernible] on as to what is the margin that we see, because that's a substantial business for us. And the margin profile of that, it's been overall more margins we made. Though, Aseptic margins and the packaging business, flexible packaging business margins have improved in the last 1 year in FY '23. But overall margin guidance, you have to give us another quarter before we come back to you.
So what were our Aseptic margins in FY '23 as a whole if you can spell out, the revenue and margins.
Okay. [indiscernible]
Okay. And revenue number, if you can guide us.
No, we don't. We will not share that.
Okay. Okay. But just last one part. So for, I think April and May, these months have been relatively far better than what we were seeing in Q3 and Q4 of FY '23?
Yes.
[Operator Instructions] Our next question is from the line of Kaushik Poddar from KB Capital Markets Private Limited.
Can you please clarify the income tax rate that happened in sometime back, I mean, a few months back? Is there any development?
We have given guidance that, at Uflex level, we were not worried about any adverse impacts so far that. So though we haven't heard anything back from the department, but that's the view we are maintaining. It's just because some of the customers and customers have some cautionable practices, and they come back raising the regional suppliers from whom to take the raw material. There is nothing sort of beyond that, and we've already clarified to the stock exchanges, our position on this, and there's been no update or any changes there after all that.
So just to get myself clear, there is no notice or something you have recevied from IT department, is it?
No demand as far.
No demand. Okay. Okay. Okay. And is there any -- see, the packaging division is -- gets a much higher PE multiple and especially your Aseptic packaging, I think it's a great thing you have. So is there any possibility of demerging the packaging from your film business?
Not in any immediate future, but these kind of structuring options can always -- we explode at an opportune time. So, we impressed with as to what are the kind of margins, Aseptic, what other kind of valuation Aseptic will have, or the flexibles will have along that. But if you ask me, at this point, there's nothing as such.
And on the sustainability front, I mean, of this usage of used plastics. Has there been any incremental new development, something going up or coming down or something of that sort? Or there's no more or less, and that's the same.
Yeah. There's nothing on that.
[Operator Instructions] Our next question is from the line of Nirav Seksaria from Living Root Capital.
[indiscernible] guidance in [indiscernible] regarding profitability [indiscernible] any should probably behind it.
I'm not able to hear you clearly.
Mr. Seksaria, may we request you to use your handset, please?
So, sir, in year '22, you have given the revenue guidance is a [ profitable ] guidance, but we won't able to reach that level. So what was exactly the reason behind that?
On the revenue guidance, I think we are more than where we said about INR 15,000-odd crores, we are at about INR 14,800-odd crores revenue. And the last 2 quarters, we did have a price impact on the packaging films business, which -- so were a touch short of about INR 15,000 crores of guidance that we had given overall for the year.
And as I said already, and that target had [indiscernible] because Europe, and you see Europe had a dual problem. One is as a consumer within your limited budget, you started allocating more for your energy requirements. You started allocating more for your more mortgage payments. So obviously, the consumption got impacted there.
And U.S., it was more of from the point of view that the higher mortgage payments, somewhere the consumer adjusted their other sort of requirements, which brought the -- which impacted the demand. And this all got impacted at a time when certain new capacities also came on.
And that's the reason why we see the prices started softening and the demand getting impacted. So hopefully, in Europe now, the energy prices are back to the normal levels, a little bit higher though, but still there's a lot of [indiscernible] and we see that at least in the wholesale market, the prices are back to the normal.
And once that translates, that then gets passed on to the [indiscernible]. So that pricing power will come back in Europe to -- and the propensity to consume will increase. That's what we are all waiting for. And in the meanwhile, [indiscernible] as -- because India [indiscernible] wears the capacities gains has been growing till -- at a decent pace. And -- so India, 6 months is good enough to absorb one new plant that is set up at a 10% to 11% or so of the demand to increase. So I think all these things will happen simultaneously, the recovery takes a bit of time. And that's what is expected in the current quarter somewhat. And then for the next quarter, I think the things should be much better than what they were in Q3 and Q4.
And sir, when do we expect the EU and the U.S. business to normalize?
I think we should look at Q3 or Q4 of FY'24.
[Operator Instructions] Our next question is from the line of [indiscernible] from [ ENN ] Fincap.
Quick question from [indiscernible] on the repayment profile of the term debt, if we can just talk about the maturities for FY '24, '25, '26?
I don't have that number as of now, but I think overall basis, that should be within 500 [indiscernible], overall.
So cumulatively, over the next 3 years, it's going to be 500?
No, no. Every year.
And this is the standalone consol level?
Consol level.
[Operator Instructions] Our next question is from the line of Rajeev Arora from [ RS Leasing Consultants ].
First of all, congratulations on a reasonable set of operational numbers despite all the headwinds and the exchange losses that the company sustained. My question is on the debt side. This year, the debt has increased by about INR 500 crores. Where do we expect -- do we have any capital expenditure for which you know how to take debt? And where do we see our debt levels on a consolidated basis in the next financial year?
I think the only project we have right now is the chips plant, all other projects have been completed, and the debt is fully [ crossed ] for that. So that's the one -- and so this project is about -- close to about INR 580-odd crores, of which the debt level would be about [ INR 350-odd crores ]. So even if we take all the debt in the next financial year for this minus sort of the debt level the amortization, so I don't see that from a current level, net debt of about INR 4,400 crores, there's going to be any substantial sort of incremental increase.
So we should expect, say, about INR 4,500 crores on a net basis. Is it less than [indiscernible] assumption?
There's a working capital debt, which we've not drawn because we were incurring a lot from the internal accruals and all that. So maybe if we draw that to another maybe INR 500-odd crores.
One more question. On the trade receivables side, there is a quantum jump from last year. In fact, last year compared to the year before the last year. So can we expect the levels of trade receivables to come down to the levels they used to be 2, 3 years -- 3, 4 years back?
How can that be that when we have from FY '22, '21, our top line was about INR 9,000 crores. Today, we had about INR 15,000-odd crores. So how can the receivables be at the same level when the volumes are growing, when the commodity prices were high in the last couple of years and all that. It can't be at the same level. So it's the best to see it as -- in relation to your...
In terms of the debtors turnover ratio.
[Operator Instructions] Our next question is from the line of Rushabh Shah from Anubhuti Advisors.
Sir, just an extension to the question asked by last participant. So I think for the next 2 years, our CapEx requirement would be to the tune of INR 700 crores to INR 750-odd crores. So will we take any incremental debt? Or this will be both funded from internal accruals itself?
We'll take the whatever is the debt possible to be drawn for that, we'll take that debt.
Okay. Okay. And are we looking for any repayment this fiscal or the debt levels will be going up from these levels?
No. So we are looking at the normal amortization, which may be to the tune of INR 450 crores or INR 500 crores each year. So those normal amortization payments will continue to be [ paid ].
Okay, okay. And in terms of our aseptic packaging, I think last time, what we guided was that we are -- I think, we were going from 9 billion [ process ] to 12 billion in FY '24. So are we going ahead with that project?
That's part of the debottlenecking of the existing plant that we'll do. So that will not happen in FY -- so that might only materialize by the end of FY '24 or at best in -- by January '24. So that opportunity we keep on looking in terms of how do we debottleneck existing clients to produce [indiscernible] from this plant. And that typically happens because you have more capacity, let's say, some times on printing, sometimes on extrusion. So you just try to find equipment to balance that so that -- so today, our printing capacity is more in that plant and extrusion is a limited capacity. So we may -- we are going to add one extruder in the existing client.
Okay. But currently, we are almost running above our capacity utilization what we have?
Currently, we are at a much higher than our existing capacity numbers.
[Operator Instructions] Our next question is from the line of Nirav Seksaria from Living Root Capital.
Sorry, I joined a bit late. Could you quantify the foreign exchange losses we had this quarter?
This quarter?
For the year, sorry.
For the year is about INR 340-odd crores.
And [indiscernible] because of the Egyptian currency.
So INR 150 crores of this is because of announced devaluation by the Egyptian Central Bank. And the rest of this comes from because after the Egyptian Central Bank announced a certain devaluation, the market is still pricing in the further devaluation or the further -- because literally, they -- this dollar strength against other currencies is driving all these countries hard, Nigeria, Egypt, Mexico.
So we've seen a constant pressure in terms of their currency values vis-a-vis dollars. And when we convert those currencies into dollars and then from dollars to rupee, that's the impact which -- at a consolidation level. But if you talk of their -- like in India, we are -- if we're making a balance sheet in rupee and in Egypt, we're making a balance sheet in Egyptian pound. So there in the local currencies, there is only a positive impact seen in that business. But the moment you convert into INR reporting, that's what the differential comes into play and when you convert your existing receivables, your existing debt at a dollar level when that's [indiscernible].
[Operator Instructions] Our next question is from the line of [indiscernible] from Fincap.
One more question from our end. What would be the geographical split of the revenues for FY '23?
I think I'll say it in this manner that India is the largest, then next comes Egypt, and then Mexico, Poland, and then all the others are almost that at the same level.
Okay. And India would be roughly 40%?
Yes, India would be about 40%.
[Operator Instructions] Our next question is from the line Rajeev Arora from [ RS Leasing Consultants ].
Are we considering any hedging instruments so that we can avoid any foreign currency losses in the future?
No, actually, it's not possible. You can do that only to the extent that you have your liabilities to hedge. But you have regular sales. So when those have to be converted into the dollar number and from dollar to INR. So that impact cannot be there avoided on the balance sheet. Now suppose to an extent you have a dollar loan and earning in local currency and then you have to convert. So you can probably hedge that, like we do hedge it in India. Only that hedging is sort of possible because ultimately, the whole profit and loss account, your turnover and all that so those losses will come on your balance sheet [indiscernible] your losses will appear on your balance sheet.
To which extent did we have the hedging in place?
We didn't have any hedging in place. We did not hedge.
So are we considering anything like this in the future because of lessons learnt now?
No. We have not been at any hedging as of now.
Can it be suggested that to the extent the stock is there -- constant stock on an average basis. To that extent, we can consider taking -- having foreign currency hedging. Would it be possible? Is that a good suggestion?
Sort of -- we looked at this. But reacting to a situation now, it's not going to help it. So you may -- because today, if you talk about the -- your forward covers are much more expensive than what they were. So if you book now and then you end up losing money on that as well so it's not the right move.
[Operator Instructions] That was the end of our question-and-answer session. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thanks, everybody, for participating on our earnings call for Q4 and FY '23. We will surely update you as and when there is any updates on any of our business, which has a substantial impact. And the Q1 of FY'24, we are upbeat on the flexibles, we are upbeat on the aseptics. There has been a pickup in the packaging films business as well. As I said, it's too early to say -- make sort of a final judgment about as to how the FY'24 is going to shape up from a packaging films business perspective. So we'll be back with you with more insight about the business as we report our earnings for the next quarter. Thank you.
On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.