Indo Count Industries hosted a conference call on May 28, 2024. In the conference call, the company was represented by Mr Kailash R Lalpuria-CEO and Mr Muralidharan -CFO.

Key takeaways of the call

Movement of the previous 9 months continued and the company concluded FY2024 with record performance. The company’s strategic focus on market penetration has given sustained double digit revenue growth in FY2024.

The company recorded its highest ever quarterly revenue and yearly revenue with revenues for Q4FY2024 being Rs 1093 crore and for FY2024 being Rs 3601 crores. The company has recorded highest ever annual EBITDA of Rs 603 crores in FY2024 and the company’s networth has crossed Rs 2000 crores. The company has delivered on volumes and margins in FY2024 as per guidance.

Volume:

Volumes in Q4FY2024 stood at 28.75 million meter as against 20.4 million meter in Q4 FY2023, a growth of 41% YoY.

Volumes for FY2024 stood at 96.8 million meter as against 74.7 million meter in FY2023, a growth of 30% YoY.

Revenues:

Total revenues stood at Rs 1093 crore in Q4FY2024 as against Rs 810 crore in Q4FY2023 a growth of 35% YoY.

EBITDA for the quarter stood at Rs 166 crore as against Rs 147 crore in Q4FY2023 a growth 13% yoY

EBITDA margin of 15% was on account of one time promotional expense which increased other expenses as such impacted EBITDA margin by 2%. This is one of scenario in Q4 particularly. The company expects the benefits of the same to come  in coming quarter as well. The company expects promotional expenses to be on the higher side for next 3 quarteres.

Total revenue for FY2024 stood at Rs 3601 crore as against Rs 3043 crore in FY2023 a growth of 18% YoY.

EBITDA for the year stood at Rs 603 crore in FY2024 as against Rs 486 crore in FY2023.

EBITDA margin stood at 16.7% as against 16% in FY 2023 up 70 bps.

The company’s disciplined policy to hedge raw material enabled the company to remain competitive.

The inventory built up towards the year end is aligned to sustain the expected higher business activity in FY2025.

PAT stood at Rs 92 cr ore as against Rs 95 crore in Q4FY2023 and PAT for FY2024 stood at Rs 338 crore as against Rs 277 crore in FY2023.

Debt:Equity: Debt equity ratio stood at 0.33x as on march 31,2024. The company’s endeavor is to plough back profit for growth and to reduce debt. The company expects further reduction of debt in next 2-3 years.

Branded Business:

The company expects branded business contribution to increase going forward. The company eventually expect branded business to contribute around 15% of the revenues.

The company acquired the Wamsutta brand, a leading national brand in the US with more than 100 years of existence. The company acquired Wamsutta brand for Rs 85 crore.

The company also secured licensing agreements with Fieldcrest and Waverly - Prominent US national brands which will increase revenue contribution from branded business.

The company expects revenue contribution from branded business to be around US $ 100 million in next 3-4 years. With half of it coming from bedding segment and the balance  from complementary home products.

The company’s licensed brands opens doors for diverse customer base as it caters to the dynamic young population.

This will also boost the company to increase the utilization levels for the company there by improving operating leverage.

Branded business realization will be 15-20% higher than the commodity business and margin will be in the range of 20-24%.

Expansion: The company has enough room for capacity expanses if it wants as it has  land in GHCL where it can add another line.

CAPEX: The company plans to incur a CAPEX of around Rs 150 crore in FY2025  of which Rs 35 crore towards solar plant, Rs 50 crore is towards zero liquid discharge (ZLD) Effluent water treatment plant and the balance 65 crore towards maintence CAPEX.

Geography: US contribute around 70% of the export revenues for the company and the rest of the world contributes to around 30%. With FTA being signed with Australia and on the ongoing FTA with UK and Europe should help the company to reduce the contribution to 60% from US and the balance 40% from other parts of the world.

Domestic Market: Domestic market contributed to 2.5% of the total revenues in FY2024 and the company expects the same to increase to 6-7% of the increasing revenues going forward.

ESG: The company inaugurated its 9.3 MW solar power unit in Gujarat. With this the total capacity of solar power increased to 21.5 MW.

This will help the company not only meet the compliance but also achieve cost optimization.

Guidance:

With healthy order book and improving consumer sentiment, the company has guided volume of 100-115 million meter for FY2025.

EBITDA margins are expected to be in the range 16-18% in FY2025. With increasing value added products, focus on brand acquisition, fashion utilities and through operating leverage the company expects to increase its margin going forward.

The company targets to achieve Rs 6000 crore revenue by FY2027.

Outlook: Retail sales in the US market has remained resilient and has almost returned to pre-covid levels despite higher inflation and borrowing cost driven principally by consumer spending and the growing influence of e-commerce.

Going forward, the company anticipates sustained demand on amount of easing inflation and likely interest rate cuts solidify the company’s leadership position in the Global home textile bed linen market.

The company continues to strengthen product offerings and deepen customer relationship prioritizing long term brand health. This strategic focus helps the company to be well positioned for the ongoing growth.

India aims to boost textile exports to US $ 600 billion  and expand the domestic market to US $ 1.8 trillion by 2047 focusing on quality, sustainability and global leadership. Home textile sector is strong driven by global demand from hospitality and residential sector. While India leads in Home textile , there is room for increasing market share. By leveraging the China +1 strategy India can add another US & 10 billion in exports potentially raising the Indian market share. Additionally Free Trade Agreement with UK and EU will further boost the country’s competitive edge.

Demand in US has been stable and inventory levels has normalized.

Dividend: The Board has recommended final dividend of Rs. 2.20 per equity share of Rs. 2 each for FY 2023-24

Management Commentary:

Commenting on the results, Mr. Anil Kumar Jain, Executive Chairman, said, “Our company has demonstrated remarkable performance in FY24, as evidenced through our results.

The strategic focus on moving towards value-added products through brands and distribution, leveraging capital allocation, optimizing operations and providing overall better solutions to the end customers has been instrumental in driving our growth.

Moreover, concerted efforts to embed robust ESG practices across ecospace, with a strong emphasis on sustainability, reaffirms our dedication to responsible business conduct thereby helping us maintain leadership position.”