Key takeaways of the call

Expects revenue growth of 18-20% for FY22. It expects to maintain 11% plus margin for current fiscal.

The company targets a revenue growth of CAGR 17-18% for next 4 years. Capex targeted in next 4 year is about Rs 600-700 crore largely towards EHV, LT/HT cables.

Even the performance of the company in Q1FY22 also impacted by Covid related lockdown restricting the opening of retail outlets and production by many states.

EHV sales (part of domestic institutional sales) stood declined to Rs 29 crore in Q1FY22 from about Rs 88 crore in Q1FY21 as the company could not despatch inventory worth Rs 75 crore in June 2021 as SEBs could not take delivery due to mobility restrictions on account of COVID 2019. The despatch was made/completed in July 2021. However the HT & LT cables (part of domestic Institutional) was up 93.15% to Rs 423 crore.

About 49% fall in export sales is largely due zero contribution from large Dangote order in Q1FY22. The Dangote order that was completed contributed Rs 93 crore in Q1FY21.

The company continue to focus on driving the retail sales with expansion of dealer network. The company as end of Jun 2021 had 1650 dealers and added about 150 sales people across branches to strengthen the dealer network. Dealer sales contribution to topline in Q1FY22 stood at 38% as against 25% in previous period.

Q1FY22 sales growth on account of price increase is 42-45%.

The stated policy of restricting the EPC business to an annual turnover of Rs 500 crore continues. EPC Sales declined by 10% in Q1FY22. Of the EPC Sales the EHV sales was Rs 27 crore against RS 17 crore.

Current pending order book stands at Rs 3022 crore [EPC Rs 1160 crore; EHV Rs 502 crore; Cables Domestic Rs 1310 crore & Exports Rs 50 crore].

Total borrowings as end of Jun 2021 stood at RS 298 crore (including channel financing of Rs 128 crore) as against Rs 305 crore of borrowings as end of March 31, 2021. Cash and bank balance stood at Rs 158 crore compared to RS 221 crore in March 2021.

Net debt including acceptance stood declined to Rs 336 crore as end of Jun 2021 from Rs 408 crore as end of March 31, 2021.

From EPC debtors the company in FY22 expects release of Rs 150 crore being retention money on completed projects. These funds will be used for WC requirement as well as capex.

Capacity utilization in Q1FY22 was 66% in cables, 43% in House Wire and 100% in SS Wires. The company has put up differential capacity to take care of the growth in the meantime till the completion of capacity expansion programms.

Of the 77% growth reported by Housewire about 20% is growth in value terms and balance is from volume terms.

As copper price is stable there is no price increase in July 2021.

Major component of interest cost is Rs 3.73 crore towards WC; Bank Charges on Bank Guarantee is RS 5 crore. BG is higher due to the large Rs 400 WB Funded project won in Zambia.

Ad spend will be Rs 25 crore for FY22.

By next year expect channel financing there will be zero debt.

Expect HW to register a growth of 100% in current fiscal and thereafter a growth of 50-60%YoY as the company is building strong brand and reach.

The EHV capacity is designed to give an annual revenue of Rs 475 crore and the company is expected to register an EHV revenue of Rs 450 crore. The Q1FY22 EHV sales was impacted by delay in despatch due to Covid.