Key takeaways of

Revenue in Q1FY20 grew by 14.9% yoy to Rs 1933 crore primarily driven by growth in all segments. Driven by improvement in sales mix, expansion in contribution margin and other income the EBITDA margins increased by 190 bps to 13.3% and thus the EBITDA was up by 33.7%yoy to Rs 257.4 crore. Eventually the PAT was up by 75.7% to Rs 135.3 crore. PAT margin increased by 240 bps due to increase in EBITDA and decline in finance cost.

Revenue of Wires & Cables business was up by 7.3% yoy primarily driven by growth in cables business particularly in optical fibre cable (OFC). However performance of wires segment was relatively muted. EBIT margins increased by 180 bps to 11.5% Driven by improvement in sales mix, expansion in contribution margin and other income the EBIT margin increased by 180 bps to 11.5% and EBIT was up by 27.3%yoy to Rs 186.2 crore.

Demand for wires is muted with slowdown in RE and construction sector. Moreover there is certain degree of Channel destocking on account of copper price volatility.

Revenue of fast moving electrical goods (FMEG) jumped by 62.1%yoy to Rs 240 crore primarily driven by fans, lightings & luminaries, switches and switchgears. With EBIT margin contract to 3.7% (compared to 9.3% in corresponding previous quarter) the EBIT stood lower at Rs 8.8 crore compared to Rs 13.8 crore in the corresponding previous period.

Revenue of Others more than doubled (up 136.6%yoy) to 122.6 crore facilitated by execution of EPC contracts during the current quarter. The EBIT of other was Rs 11.9 crore (nil in Q1FY19) with EBIT margin stand at 9.7%.

Implementation of Ind AS 116 - Leases accounting has resulted to 16 bps increase in EBITDA margins.

Q1 is typically a soft quarter and normatively, there is pick up as the year progresses.

In FMEG - Fan accounts close to 50% of FMEG revenue. Fan is followed by lighting in terms of contribution to topline of the segment. Fans registered a growth of over 70% in Q1FY20. Traction in fans with new models introduced in last few quarters were are all accepted well. Apart from fans other product lines have also registered strong growth in Q1FY20. LED lighting business registered a significant traction with rev up by 40% in Q1FY20. Switchgears have also grew sharply during Q1FY20.

The company in current fiscal hopes to supply about Rs 500-600 crore worth of export orders especially from Africa.

The company is confident of improving 100-150 bps improvement in FMEG EBIT margin in next four years.

The others business of the company includes EPC business [Revenue increased to Rs 464 crore in FY19 from around Rs 250 crore in FY18] EPC orders are taken when the cable content is at 40% to push up cables business, so the EPC business is not focused to drive topline but cables revenue.

Capex for current fiscal is Rs 200-250 crore.

The company is looking to launch new range of switches in the market.

Cable & Wires – In B2B segment the company already has approvals in place or continues to look out for newer approvals with customers for products of OFC, Specialty Cables, Electronic Beam cables etc. Approvals include growth sector customers such as railways, mining, infra etc. Supply will be made against orders from such customers, exports etc. Opportunity is to penetrate the US market through an agent.