DDev Plastiks Industries hosted a conference call on May 21, 2024. In the conference call the company was represented by Narrindra Suranna – Managing Director;  Ddev Surana – Chief Executive Officer; Rajesh Kothari – Director and Arihant Bothra – Chief Financial Officer.

Key takeaways of the call

Largest manufacture of polymer compounds in India with Installed capacity of 2,37,500 MT.

Volumes in Fy24 grew 16% to 166718 MT [14% Antifab; 15% PVC Compound; 69% XLPE; 1% Engineering products; 1% HFFR].

Of the FY24 sales about 75% is from domestic market and 25% from exports. Revenue mix in terms of industry – W&C 76%, auto 2%, packaging 4%, others 18%.

The company has became net debt-free in 4QFY24 and is committed to maintaining this status through FY25.

Planned capex is  Rs 300 crore to be done in staggered manner over the next three years via brownfield expansion of existing manufacturing facilities.

The margin of antifab/filled compounds/master batches range at 3-5% and that of PVC compounds are 4-6%. But that of XLPE compounds/Sioplas/semicons are 8-15%, engineering plastics 10-15% and HFFR are about 10-12%.  

Margin improvement is largely due to  product mix with the company move towards more value added high growth products. The company reduced its reliance on low margin products and has moved capacity to high margin products. The share of low margin antifab/master batches and PVC compounds to topline has declined from 41% in FY20 to 28% in FY24.  

XLPE volume growth in FY24 was 20%. Within  XLPE compounds also the company has increased its offerings to LT to 36 kv/72kv.

Expect a revenue growth of 15% CAGR in next 5 years with EBITDA margin of 11-12%.

Cost of raw materials is a complete pass through for the company. But the margin in Q4FY24 at 14% has the benefit of yearly rebates (on RM). Normally the yearly rebates are not passed on to the customers and that was accounted in Q4FY24 boosting the Q4FY24 margin. So sustainable EBITDA margin is 11-12%.   

Currently has 5000 MT of HFFR capacity  and the capacity utilization is currently at 30%.  Once the customer approvals are in place the capacity can go upto 70%. The company expects the capacity to be sold out by FY26. The new HFFR plant will give a peak revenue of Rs 80-85 crore at 70% capacity utilization.  The company is in the process of obtaining customer approvals. Once customer approvals are in place the company can easily expand the capacity further by adding new machines. The company will add 15000 MT of HFFR capacity in one year period.  

Apar, Havells, KEC, KEI, Paramount and Polycab contribute to about 22% of Total Revenue in FY24.

Constantly working on product mix enriching and product innovations. The company is focuses on products not produced in India in cables segment. Expect to launch XLPE Compound suitable for Insulation for Cables upto132kv in the next few month and the next focus would be going