Indo Count Industries hosted a conference call on Oct 27,2021. In the conference call, the company was represented by Mr K R Lalpuria- Executive Director and Chief Executive Officer and Mr K Muralidharan-Chief Financial Officer.

The company continues to see momentum in the market, mainly in USA. The momentum is across big retailers and omni channel distribution platforms. The momentum is on back of structural and sustainable changes in the marketplace witnessed in the last 18 months.

Economy getting back to normal on back of increased vaccination round the world is also increasing the confidence of retailers and supply chain.

India's inherent strength of being a cotton textile manufacturer, China+1 theme playing in favor of India textile industry coupled with Government of India's efforts on various treaty and Free Trade Agreements will help the industry to move ahead and be reliable and credible supplier to the Global textile market in the world.

Global textile market is US$840 billion and even a 1% shift is US $8.4 billion. China holds 34% market share and India just 4% as such India has huge opportunity.

The government has targeted to increase the textile exports from US $ 33 billion to US$ 100 billion.

Indian home textile industry has been witnessing positive trends due to increased demand towards health, hygiene, and wellness products in the marketplace.

However, industry is witnessing headwinds related to increase in raw material cost, freight cost, unavailability of shipping containers and longer transit duration leading to increased working capital intensity.

Q2FY2022:

The company achieved highest ever revenue and EBITDA during the quarter. Total income stood at Rs 767 cr as against Rs 724 cr in Q2FY2021 a growth of 6% YoY. EBITDA stood at Rs 139 cr in Q2FY2022 as against 127 cr in Q2FY2021.EBITDA margin stood at 18.2% in Q2 FY22 versus 17.5% in Q2 FY21 an increase of 64 BPS on a Y-o-Y basis.

H1FY2022: Total income stood at Rs 1476 cr as against Rs 1060 cr in H1FY2021 a growth of 39% YoY. EBITDA stood at Rs 267cr in H1FY2022 as against 166 cr in H1FY2021.EBITDA margin stood at 18.1% in Q2 FY22 versus 15.6% in H1 FY21 an increase of 245 bps on a Y-o-Y basis.

Of the total other income of Rs 73 cr, Rs 57.5 cr is forex gain and the balance is interest income. H1 revenue and margin does not include Rs 49.99 cr RoSCTL benefit relating to Jan 01,2021 to Mar 31,2021.

Realizations has increased on account of change in product mix coupled with increase in prices. The company is continuously engaged with customers and will try to pass on the increase in input cost.

Export Incentives: The company has realized 7.5-8% of the total revenues as export incentives.

Other Expenses:Increase in other expenses YoY is mainly due to higher logistic and freight cost.

The company entered the largest sub segment of fashion, utility, institutional bedding in 2016 and has continued to make all round efforts in terms of innovation, service, delivery and capacity to grow its brand in the segment. The company is making efforts on digital marketing, e-commerce, developing health and hygiene products to reach out to its customers and strengthen the relationship.

In domestic market brands including, ‘Boutique Living' and inspirational brand and ‘Layers', the company's value-added brand is doing well. The company's focus to capture a larger pie in Indian Market is gaining traction.

The company is focusing on brand promotion in the US, UK, Middle East and India through ten active brands. Expansion: The brownfield capacity of 18 million meters will be operational in Q4FY2022 which will take the total capacity of the company to 108 million meters.

CAPEX: The company will be incurring the CAPEX of Rs 200 cr and will be completed by Q4FY2022 of which Rs 60 cr is spent in H1FY2022 and the balance will be incurred in H2FY2022.

Shipping Frequency: Earlier it used to take 25 days to reach the customer ware house in US where as now it is taking 45-60 days.

Outlook:

The company is confident to achieve revenue of Rs 3200 cr for FY2022 and volume guidance in the range of 855-90 million meters. The company expects to sustain EBITDA margin of 18-20%.

The company's order book remains strong(5-6 months revenue visibility) and the company remains to be optimistic.

Management Commentary:

Commenting on the results, Mr. Anil Kumar Jain, Executive Chairman said, “The Company's intrinsic strength has been demonstrated by its operational performance in conjunction with consistent cash accruals.

The unprecedented supply chain challenges have been impacting the industry pervasively. At Indo Count, we have been able to arrest cost inflation through various measures and our dynamic approach is helping the Company to progress in response to market developments and pave the way for future growth.”