Unbounded Land

  • Sai Silks Kalamandir: Elevating South India’s Ethnic Fashion Landscape

    Ariana

    •

    Business Model:

    1. Sai Silks Kalamandir, a prominent player in ethnic wear, particularly sarees, operates across South India through physical stores, e-commerce, and its website. The company boasts four distinctive brands:
    • Kalamandir: Offers a diverse range of sarees, including Tusser, Kota, and Georgette, priced between INR 1K-1L.
    • Vara Mahalakshmi: Specializes in premium ethnic silk and handloom sarees for weddings, featuring varieties like Kanchipuram, Kuppadam, and Banarasi, ranging from INR 4K-2.5L.
    • Mandir: Presents ultra-premium designer silk sarees tailored for HNI clientele, priced from INR 6K-3.5L.
    • KLM Fashion: Positioned as a value brand, offering fusion wear, sarees, western wear, and daily wear for men, women, and children, with prices ranging from INR 200-75K.

    Q2FY24 Results:

    1. Demonstrated robust financial performance with a 6% YoY and 7% QoQ growth in revenue.
    2. PAT soared by an impressive 33.3% YoY and 40% QoQ, achieving PAT margins of 7%, up from 5.6% the previous year.
    3. Minimal reliance on other income sources.

    Financial Insights:

    1. Strong financial health reflected in a Current Ratio > 2 and no Asset-Liability Mismatch (ALM) concerns.
    2. IPO led to an increase in the equity base.
    3. Negligible receivables, given the credit-centric business model.
    4. Stable borrowings, primarily in the form of lease liabilities, aligning with the need for store infrastructure.
    5. Net CFO remained flat in H1 compared to the previous year.
    6. IPO proceeds strategically utilized for loan repayment and temporary placement in deposits.

    Q2 Concall Highlights:

    1. Facing challenges in achieving significant YoY improvement due to restricted access to one of the main Chennai stores in Mylapore, impacted by ongoing Metro construction. The persisting impact is estimated at INR 15-20 Cr.
    2. Muted sales in Q2 attributed to the Adhik Maas period, with festivities shifting to Q3.
    3. Expansion initiatives include opening premium Vara Mahalakshmi stores and establishing a warehouse in Salem.
    4. INR 130 Cr from the IPO earmarked for setting up 30 stores over 18 months in Tamil Nadu, with a predominant focus on Vara Mahalakshmi and Kalamandir formats.
    5. A strategic plan to open 7-10 stores this year and the remainder in the following year, concentrating on South markets.
    6. Over the past two years, the company achieved a remarkable Store Expansion Compound Annual Growth Rate (CAGR) of 24.5%, with an average revenue of Rs 25 Cr per store per year.
    7. Operating in 4 states and 12 cities of South India, targeting areas with untapped potential within the existing cities.
    8. Comparable Store Sales Growth (SSSG) currently at -5%, anticipated to reach single-digit figures by year-end. Mature store SSSG stands at a healthy 3-4%.
    9. All 57 stores are Company-Owned, Company-Operated (COCO), with a potential shift to Franchisee-Owned, Company-Operated (FOCO) for the KLM brand.
    10. Saree contributed to 68% of revenue in FY23, with only 10% of the inventory offered at a discount.

    Risks:

    1. Intense competition from both organized and unorganized markets, with noteworthy players like Nalli’s, Potli, and Jaylakshmi in the South.
    2. Shift in saree usage from everyday wear to occasional wear, emphasizing the premium segment.

    Outlook:

    1. Single-digit growth anticipated this year, with a robust 15-20% growth forecasted for the next two years.
    2. Growth primarily driven by an aggressive store expansion strategy.
    3. IPO targets include achieving a topline of INR 2000 Cr and PAT of 200 Cr within two years, with a current-year PAT goal of 120 Cr.
    4. Acknowledgment of potential fluctuations by up to 10%.

    In summary, Sai Silks Kalamandir is strategically positioned to capitalize on the evolving trends in South India’s ethnic wear market, leveraging its diverse brand portfolio, expansion plans, and financial prudence to navigate challenges and achieve sustainable growth.

  • Escorts Kubota Q2 FY24 Conference Call Highlights: Tractor Challenges, Construction Equipment Surge, and Growth Strategies

    Ariana

    •

    During the Q2 FY24 conference call for Escorts Kubota, key insights into the company’s performance, challenges, and future strategies were shared.

    Tractor Segment:

    1. Escorts tractor volumes experienced a 7% YoY decline in Q2, with volumes reaching 22k units. This downturn was attributed to an overall industry-wide decrease in tractor volumes due to a delayed festive period.
    2. Escorts holds a market share of approximately 10% in the tractor segment.

    Export Challenges:

    1. Exports in the tractor industry faced a significant setback, plummeting by 25% YoY, primarily due to recessionary conditions in Europe.

    Margin Expansion and Construction Equipment Growth:

    1. Escorts reported margin expansion driven by favorable reductions in raw material prices.
    2. Construction Equipment volumes witnessed an impressive 72% YoY growth, totaling 1577 units in Q2. This growth was attributed to the rapid execution of government infrastructure projects.

    Outlook and Growth Expectations:

    1. Escorts anticipates around 2% growth in Q3 FY24 compared to Q3 FY23. The relatively subdued growth is attributed to a higher base in FY23, erratic monsoons, and the absence of a festive period in Q2.
    2. The company is exploring the establishment of a captive financing arm to enhance turnaround times for its products.

    Railway Order Book and Regional Market Insights:

    1. The railway order book has witnessed a decline due to an accelerated pace of execution.
    2. Uttar Pradesh (UP) stands out as the largest tractor market in India.

    In summary, Escorts Kubota addressed challenges in the tractor segment, showcased robust growth in construction equipment, and outlined strategic initiatives for future expansion. The focus on a captive financing arm and insights into regional market dynamics position the company for resilience and adaptability in the evolving industry landscape.

  • TVS Motors Q2 FY24 Conference Call Highlights: Record Sales, EV Growth, and Global Expansion Plans

    Ariana

    •

    In the Q2 FY24 conference call for TVS Motors, the company shared notable achievements, market dynamics, and future strategies.

    Financial Performance:

    1. TVS Motors reported its highest-ever sales and Profit After Tax (PAT), with sales growing by 13% YoY and PAT witnessing a substantial 32% YoY increase.

    Two-Wheeler Volumes and International Sales:

    1. Total two-wheeler volumes experienced a 6% YoY growth in Q2.
    2. International sales faced a YoY decline due to a moderation in demand in Europe. Norton sales were adversely affected.

    Electric Vehicle (EV) Growth:

    1. TVS i-Cube, the electric vehicle offering, achieved remarkable success, selling 58k units in Q2 FY24 compared to 16k in Q2 FY23.
    2. The company envisions transforming TVS i-Cube into a global brand, showcasing its commitment to the EV segment.

    Global Expansion Strategy:

    1. TVS Motors is set to focus on Latin American nations for expansion after targeting Africa and Europe.
    2. This strategic move aligns with the company’s vision to establish a strong global presence.

    Challenges in Entry-Level Bikes Segment:

    1. Regulatory changes and increased insurance costs have elevated entry-level bike prices by 30-50%. However, rural income has not seen a corresponding increase.
    2. Entry-level vehicles have faced challenges in recent years, and TVS is patiently waiting for a revival in rural demand.

    Scooter Market Presence:

    1. TVS emphasized its robust presence in the scooter space, expressing confidence in the continued success of both i-Cube and Jupiter models.

    In summary, TVS Motors demonstrated stellar financial performance, particularly in the EV segment, and outlined plans for global expansion. The company remains agile in navigating challenges in the entry-level bike segment, anticipating a resurgence in rural demand, and is poised for sustained success in the competitive two-wheeler market.

  • Varun Beverages Ltd Q2 FY24 Conference Call Highlights: Resilient Growth, Strategic Expansion, and Future Plans

    Ariana

    •

    In the Q2 FY24 conference call for Varun Beverages Ltd, the company provided insights into its financial performance, capex initiatives, market strategies, and plans for future growth.

    Financial Performance:

    1. Sales exhibited a robust 22% growth, with Profit After Tax (PAT) surging by 30%, while volume growth reached an impressive 15%.
    2. The strong recovery in sales volume followed unseasonal rains in the previous quarter, marking a significant improvement from the 4% volume growth recorded in the last quarter.
    3. Gross Margin (GM) for this quarter stood at 55.3%, showcasing an enhancement from the previous quarter’s 53.7%.

    Capex Initiatives:

    1. FY23 witnessed a capex of 2000 Cr over nine months, directed towards greenfield projects in Bundi, Rajasthan, Jabalpur, and brownfield expansions in India and internationally.
    2. Further capex of 1600 Cr is planned for the next year, focusing on greenfield projects in Gorakhpur (UP), Supa Partner (Maharashtra), Khorda (Odisha), and one in DRC – Africa.
    3. Once commissioned, the combined capex is expected to increase the peak month capacity by 45% compared to FY22 levels, with the Congo plant set to be operational by April/May next year, capable of handling 35-40 million cases.

    Operational Outlook:

    1. EBITDA margin is projected to be around 21%, subject to fluctuations depending on the prices of raw materials like pet chips and sugar.
    2. Varun Beverages anticipates achieving higher volume growth compared to the FMCG business, driven by rapid distribution expansion, particularly in rural areas, and unlocking value.
    3. Formation of a subsidiary in Mozambique aims to leverage surplus capacity in Zambia and Zimbabwe to cater to the Mozambique market.

    Product-Specific Performance:

    1. Juice sales faced a challenge with a flat growth due to adverse weather conditions, impacting the April-June season, which is crucial for juice sales.
    2. Gatorade experienced a significant 50% growth.
    3. Value-added dairy products faced capacity constraints, which are expected to improve with the addition of new plants in January.

    Market Dynamics and Challenges:

    1. The slow pace in volume growth is attributed to a combination of base effects and adverse weather conditions in July.
    2. Increasing penetration in South and West India is expected to improve the seasonality curve.

    Operational Efficiency and Stake Acquisition:

    1. Once all new plants reach full capacity, asset turnover is projected to be around 1.8-1.9 times.
    2. Pricing corrections in large packs have been implemented, stabilizing net realization per case despite increased volume.
    3. Margins in international business remain stable, except in Zambia, where currency devaluation occurred.
    4. The company increased its stake in Lunarmech Technologies to 60%, focusing on backward integration as they manufacture caps for Varun Beverages.

    Future Plans:

    1. Varun Beverages plans to launch additional energy drinks from Pepsi’s product portfolio in India, with pricing details yet to be finalized.

    In summary, Varun Beverages demonstrated strong financial performance, strategic expansion plans through capex, and a proactive approach to market dynamics, positioning itself for sustained growth in the evolving beverage industry.

  • Maruti Suzuki Q2 FY24 Conference Call Highlights: Adapting to Market Dynamics and Future Strategies

    Ariana

    •

    In the Q2 FY24 conference call, Maruti Suzuki discussed key highlights, market trends, and future strategies amid changing dynamics in the automotive industry.



    Market Performance:
    1. The industry experienced a 5% YoY growth, reaching 10.2 lac cars in Q2.
    2. Maruti Suzuki outpaced the industry, achieving an 8% YoY growth in volumes and gaining market share.

    Shifts in Market Dynamics:
    3. Utility Vehicles (UVs) now constitute 50% of the total car market, with Multi Utility Vehicles (MUVs) and UVs representing 60% of the entire market.
    4. The share of Compressed Natural Gas (CNG) and Hybrid vehicles is increasing, while Diesel engine shares are declining.

    Supply Chain and Production:
    5. Improvement in the chip supply situation, with no reported production volume losses.
    6. Maruti Suzuki sold 5.52 lac cars in Q2, reflecting a 6.7% YoY growth.

    Sales and Pricing Strategies:
    7. Sales growth outpaced volume growth due to strategic price hikes and increased sales of high-value cars in the UV segment.
    8. Favorable commodity prices and operating leverage contributed to Maruti’s positive Q2 performance.

    Market Share and Future Growth:
    9. Maruti Suzuki commands a 23% market share in the SUV space.
    10. The company aims to grow in line with the industry in the upcoming quarters.

    Rural vs Urban Dynamics:
    11. Rural growth slightly outpaced urban growth, indicating evolving consumer preferences.

    Transition to Electric Vehicles (EVs):
    12. Maruti Suzuki is planning a transition to EVs over the next 6 years, introducing six new models to align with the evolving automotive landscape.

    Challenges in Small Car Segment:
    13. Challenges persist in the small car segment, driven by regulatory cost increases and a lag in income levels catching up. The share of small cars in the industry decreased to 28% from 34% last year.
    14. The share of first-time buyers is declining for Maruti, highlighting changing consumer trends.

    Industry Growth and Future Outlook:
    15. Despite a 4% Compound Annual Growth Rate (CAGR) in the last 5 years, the car industry’s overall growth is deemed disappointing for a country like India.
    16. Only the top 3% of the Indian population currently owns a car, emphasizing potential for future growth.

    In conclusion, Maruti Suzuki’s Q2 FY24 conference call outlines the company’s proactive stance in navigating market shifts, embracing new technologies, and addressing challenges to ensure continued growth and relevance in the evolving automotive landscape.

  • Patanjali Foods Q2 FY24 Conference Call Highlights: Navigating Challenges and Focused Growth Initiatives

    Ariana

    •

    In the Q2 FY24 conference call for Patanjali Foods, the company addressed key performance indicators, challenges faced, and strategic initiatives employed to ensure sustained growth in a dynamic market.



    Financial Performance:
    1. Overall sales experienced an 8% YoY decline.
    2. Subdued demand in the rural economy, attributed to sustained high food inflation and irregular monsoons, significantly impacted FMCG staples.

    Challenges in Edible Oil Business:
    3. Headwinds in the edible oil business, including soya, sunflower, and mustard oil segments, contributed to falling prices and overall sales de-growth in Q2.
    4. The edible oil business continues to be loss-making, primarily driven by hedging losses.
    5. Market dynamics show mid and small-sized players losing market share due to challenges in navigating oil price volatility.
    6. Anticipation of improvement in H2, driven by festive demand and the marriage season.

    Strategic Focus on Edible Oil Business:
    7. The focus is on premium oil brands and enhancing distribution strength to mitigate the impact of volatile oil prices.
    8. Efforts to bring more predictability to the edible oil business.

    Growth in Food and FMCG Division:
    9. The Food and FMCG division’s share of total sales increased to 32%, up from 25% QoQ.
    10. Nutrela, a strong player in the FMCG space, demonstrated an 11% YoY growth.
    11. The biscuit portfolio exhibited robust growth, recording a 20% YoY increase.

    Retail Network and Product Portfolio:
    12. The retail network surpassed 3 lakhs, growing at 9% QoQ.
    13. A breakdown of product performance was discussed (details in attachment).
    14. Patanjali has been leveraging its strong distribution network, particularly in the Nutrela and biscuit portfolios.

    Growth Strategies for Biscuit Portfolio:
    15. The biscuit portfolio is experiencing volume-led growth, expanding to 1 lakh+ retail touchpoints.
    16. Premium and strong brands like Nariyal and Doodh biscuits outperformed the overall segment.

    In summary, Patanjali Foods is actively addressing challenges in the edible oil business, emphasizing premium brands, and leveraging its robust distribution network to foster growth. The strategic focus on the Food and FMCG division, particularly in high-margin businesses, along with the expansion of retail touchpoints, positions the company for recovery and sustained success in the dynamic FMCG market.

  • Carysil Q2 FY24 Summary: Resilient Growth and Strategic Expansions

    Ariana

    •

    In the Q2 FY24 summary for Carysil, the company showcases notable financial achievements, economic insights, and strategic moves that contribute to its robust position in the market.



    Financial Performance:
    1. Revenue demonstrated an impressive 18% YoY growth and a substantial 15.6% QoQ increase.
    2. Profit After Tax (PAT) surged by an outstanding 77% YoY and showed a commendable 33% QoQ growth.
    3. PAT margins witnessed a substantial rise, reaching 9.7% compared to the previous 6.4%.

    Economic Updates:
    4. The global economy exhibits stability, with certain sectors resilient, particularly those not directly tied to consumers.
    5. Economic slowdown has been milder than anticipated, indicating a degree of resilience.

    Consumer Demand Trends:
    6. Consumer preferences for improved aesthetics and a focus on comfort are driving trends in home decor.
    7. Emphasis on enhanced kitchens and baths is observed among consumers.
    8. Demand for luxury and premium goods is rising, propelled by shifting consumer preferences, urbanization, and emerging lifestyle products.
    9. The market experiences a favorable tailwind, with demand consistently increasing, while potential risks include high inflation and interest costs, as well as potential temporary slowdowns due to geopolitical events.

    Strategic Initiatives and Market Expansion:
    10. Carysil aims to position India as a manufacturing hub and a top alternative for distribution.
    11. The company received an overwhelming response at the ACETECH exhibition in Mumbai.
    12. New markets, including the United Arab Emirates, South Africa, Australia, Oman, Saudi Arabia, and Turkey, are recognized as potential growth areas.

    Acquisitions and Expansion:
    13. Successful acquisitions of Tickford Orange Limited and United Granite LLC in the US.
    14. The current utilization of United Granite is at 60%, with plans to increase it to 90% and expand operations throughout the US.
    15. EBITDA margin targets set to increase from the current 7-11% range to 15%.

    Product Performance and Market Share:
    16. H1FY24 sales volumes indicate strong performance across various product categories.
    17. Expectations for increased domestic sales in Q3 following the reorganization of the distribution network.
    18. Growth in market share and customer base in export markets, overcoming challenges in the western market.
    19. Higher realization in the European market compared to the US due to CIF pricing.
    20. No lingering concerns over inventory overhang.
    21. Faucets and kitchen appliances are expected to contribute to topline growth from Q3.
    22. Granite sinks identified as the fastest-moving product in the market.
    23. Export performance highlights strong quarters in the US, UAE, Australia, Turkey, with improvements expected in Denmark, Sweden, Germany.

    Outlook:
    24. A confident outlook predicts domestic revenue to grow by 30-40% in FY24.
    25. Aspirations for the next fiscal year include domestic business reaching INR 200 Crores.
    26. The company aims for a substantial revenue milestone of INR 1000 Crores in FY25.
    27. Margins are expected to remain robust, ranging between 18-20%.

    In conclusion, Carysil’s Q2 FY24 summary reveals a company navigating challenges with strategic foresight, achieving financial growth, and positioning itself for significant milestones in the coming fiscal years.

  • Action Construction Equipment Q2 FY24 Concall: Resilience and Strategic Advances in a Challenging Landscape

    Ariana

    •

    In the recent Q2 FY24 conference call, Action Construction Equipment (ACE) showcased robust performance and outlined strategic initiatives in the face of a complex economic landscape.



    1. Strong Performance in Lean Quarter:
    ACE reported yet another quarter of robust performance, notably during the leanest period of the year, emphasizing the company’s resilience.

    2. Segment-wise Performance:
    – Crane Segment: 30% YoY growth with 15% margins.
    – Construction Equipment: Impressive 100% YoY growth with 12.72% margins.
    – Material Handling: 26% YoY growth with 12.8% margins.
    – Agriculture: 33% YoY growth with 4% margins.

    3. Demand Dynamics:
    – Global economy experiences a slowdown, while the Indian economy remains buoyant with robust public investment.
    – Subdued consumption and demand, especially in rural areas, attributed to subpar monsoons and food inflation.
    – Optimism prevails for a good festive season, increased agri output, rising manufacturing, and private capex.

    4. CAPEX Initiatives:
    – 75% of brownfield CAPEX for the year is complete, set to be fully operational in Q4.
    – New facilities, including high-capacity cranes, forklifts, and tower cranes, will significantly boost production capacity.
    – Full utilization of new capacity aims to achieve a topline of 4000 Cr.

    5. Inventory Management and Market Dynamics:
    – Inventory increased for the festive season to address heightened demand.
    – Competitor dynamics: Liebherr, a European company, has set up a new plant in India, but ACE remains confident in its technological prowess, especially in tower cranes.

    6. Product Development and Export Focus:
    – ACE is working on evolving specific models of backhoe loaders and a machine called telehandler, targeted for export markets.
    – 55-60% of business expected in H2.

    7. Changing Emission Norms:
    – Emission norms transition from BS4 to BS5 from April 1st, with efforts to defer implementation by 6-8 months.
    – Price hikes expected in the range of 5-10% for different horsepower categories.

    8. Challenges and Defence Orders:
    – Hurdles in selling electric cranes due to pending Central Motor Vehicle rules.
    – Despite challenges, the company is receiving repeat orders from the defence sector regularly.

    Outlook and Guidance:
    – Revised guidance for the Crane Segment at a minimum of 25%, up from the previous 18-20%.
    – Upholding previous guidance of 50% growth in the construction segment and 15-20% in material handling and agri segments.
    – Overall topline expected to grow by more than 25%, with an expansion in margins from the current level of 15%.
    – The company aims to double revenue by FY27, contingent on macro conditions and upcoming elections.

    In conclusion, ACE’s Q2 FY24 con call highlights its proactive strategies in a challenging economic environment, with a focus on technological prowess, capacity expansion, and navigating regulatory transitions. The company’s resilience and strategic outlook position it for continued success in the dynamic construction equipment sector.

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