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Analyst Meet / AGM
08-Aug-19
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Conference Call
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Deepak Nitrite
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Has benefited from shutdown of facilities in China and resultant disruption in global supply chains
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Deepak Nitrite conducted conference call to discuss results for the quarter ended June 2019 and way forward. Executive Director & CEO- Mr. Umesh Asaikar, Director, Finance & Chief Financial Officer- Mr. Sanjay Upadhyay and Sr. GM, Finance- Mr. Somsekhar Nanda of the company addressed the call.
Highlights of the Concall
- Standalone revenues were up 31% YoY in Q1FY20 to Rs. 554 crore driven by healthy momentum in performance products segment, which reported strong volume as well as realisation gains as key customers approved of new, high performance Optical Brighteners (OBAs). In the segments of basic chemicals and fine & speciality chemicals, the company has taken strategic positions on key accounts which resulted in temporary volume moderation in key products but enabled it to realise improved margins
- Standalone EBITDA rose 231% to Rs. 188 crore. EBITDA margins touched an all-time high of 34% compared to 13% in the same period of last year. Apart from benefit of strong realizations in the performance products segment, the company delivered improved profitability in segments of basic chemicals and fine & specialty chemicals too.
- Deepak Nitrite has benefited from shutdown of facilities in China and resultant disruption in global supply chains.
- Deepak Nitrite is the only company in the world that manufactures performance products from basic building blocks, thereby present throughout the value-chain. Disruption in a few segments across this value-chain has led to significant price increase and Deepak has been continually benefitted out of this development. Furthermore, high performance OBA products launched recently has received positive response, further elevating its performance. All this has led to higher-than-expected contribution of PP segment to total turnover, as compared to the previous year.
- Basic Chemicals segment also realized positive topline growth with higher contribution supported by demand pick up for Nitro Derivatives.
- Fine & Speciality Chemicals segment witnessed stable performance. Due to cyclical nature of business, the performance is expected to improve in the ensuing quarters.
- The company witnessed heightened price volatility and compression of spreads in Phenol on account of worldwide slowdown in the auto industry which impacted the demand for Phenol-based derivatives.
- Deepak Phenolics (DPL) continues to operate efficiently and the company has elevated the capacity utilisation to over 90% in Q1FY20 on a sustained basis
- DPL expects subdued margins in Q2FY20 due to monsoon but it expects significant improvement in Q3 and Q4FY20.
- The company believes that the Phenol prices may move up worldwide, from the third quarter.
- Domestic revenues for the quarter stood at Rs. 320 crore as compared to Rs. 265 crore in the same period last year, delivering growth of 21% Y-o-Y. The positive demand landscape combined with higher realisation gains supported this growth which was driven by the PP segment which showed improved performance parameters which have been well received by customers.
- Revenues from exports were Rs. 227 crore in Q1 FY20 compared to Rs. 154 crore in Q1 FY19, resulting in robust growth of 47% yoy. Export performance was driven by ability to gain market share with global customers on the back of shifts in global capacities for certain products
- The company is developing a downstream product of acetone. At full utilisation it will capitively consume close to 25% of total acetone produced. The plant is expected to be commissioned by Q4FY20.
- Total debt stands at Rs 277 crore at the end of Q1FY20
- The company expects overall EBITDA margins at 16-18% in FY20
- The company expects capex of Rs 400 crore in FY20- around Rs 200-250 crore for Deepak Nitrite and Rs 150-175 crore for Deepak Phenolics.
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