Capitaline

Analyst Meet / AGM 24-Jun-21

Conference Call

Oriental Carbon & Chemicals

Hopeful of pickup in demand from July 2021 onwards

Oriental Carbon & Chemicals held conference call on June 23, 2021 to discuss the performance for the quarter ended June'21. Mr. Akshat Goenka – Promoter & Jt. Managing Director and Mr. Anurag Jain – Chief Financial Officer of the company addressed the call.
Highlights of the Concall

Strong demand momentum has sustained in Q4 FY21.

Key raw material prices have now stabilized after a steep up move in past six months. Raw material price impact is not yet fully built in and is likely to impact Q1FY22 performance

The company expects sustained EBITDA margin of 28-32% in long term

Tyre industry has witnessed positive demand momentum driven by shift in consumer behavior, preference for personal mobility, government spend on infrastructure, import restrictions and increased demand from rural markets.

Sustained recovery in OEM along with increase in demand from replacement market have bodes well for the tyre manufacturers.

New announcements on tyre capacity expansions by various companies will drive demand for insoluble sulphur.

Q1 of FY22 has again been impacted by second wave of COVID-19. The company is hopeful of demand picking up pace from July 2021 onwards

Manufacturing Operations at both its plants are running normally despite covid second wave.

Capex is facing delays on account of hampered civil work due to unavailability of labour and mobility issues for procuring machines due to covid induced localized !ockdown in few states

The company expects Phase-1 of 5,500 TPA insoluble sulphur line and 42,000 TPA sulphuric acid line in Dharuhera {Haryana) to be commissioned by Oct-21 with revenue potential of around Rs 100 crore and capex spend of Rs 150 crore.

The company is confident that medium term outlook is going to be stable.

Gross debt as of FY21 end was at Rs 178 crore and is likely to peak out in H1FY22 at around Rs 185 crore

The company is not keen on diversifying from its present business model.

Global insoluble sulphur capacity currently is pegged at around 3,00,000 tonne with China Sunshine executing incremental capacity addition of 30,000 tonne. OCCL is executing around 11,000 tonne (both phases combined)

Global demand- supply scenario is well balanced with capacity utilisation at optimum levels

The company expressed its intention to further consolidate its market share in the domestic market (present levels at around 55-60%) and gain further market share in global markets (around 10%)

The company has already incurred Rs 120 crore of its planned capex in FY21 with balance Rs 30-35 crore to be incurred in FY22

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