SAHYADRI - SAHYADRI INDUSTRIES LTD. Share Price

In the earnings conference call held on May 28, 2025, management of Sahyadri Industries Limited provided a cautious yet optimistic outlook for the future. They noted that although the operating environment in FY '25 faced challenges with a 4.6% decline in total income to INR 608.8 crores, they are focusing on strengthening core product lines and expanding both domestic and international markets. The share of the non-asbestos product portfolio increased from 22% in FY '24 to 26% in FY '25, reflecting their shift towards safer products.

For Q4 FY '25, total income was INR 152.6 crores, showing a decline of 1.4% year-on-year but a growth of 15.9% quarter-over-quarter. EBITDA for the quarter was reported at INR 13.9 crores, with an EBITDA margin of 9.1%. The management highlighted that current market conditions and the onset of heavy rains impacted demand, particularly following cyclonic activity. However, they remain hopeful for demand recovery in the coming weeks.

A confident tone was noted as management indicated that overall capacity utilization stood at 68%. Looking ahead to FY '26, they projected further growth, particularly in the value-added product segment which is expected to constitute around 20% of total revenues.

The company has made significant strides in improving its financial structure, with a debt-to-equity ratio reduced from 0.32 to 0.21, and total debt now standing at INR 10.3 crores. They anticipate better revenue and profitability compared to FY '25 as a result of improved capacity utilization and operational efficiency.

Management also indicated plans for a final dividend of INR 1 per share, reaffirming a commitment to returning value to shareholders despite the challenges faced. Overall, the following key forward-looking points were emphasized: focus on core products, anticipated resultant improvement in demand post-monsoon, and a strategic push towards exports and value-added products.

Question 1: "What is the capacity utilization currently?"
Answer: Our current capacity utilization stands at 68%.

Question 2: "What is the total debt we have?"
Answer: Our total debt is around INR 9.2 crores. If we include vehicle loans, the total is INR 10.3 crores.

Question 3: "What is the working capital debt that we have?"
Answer: Our working capital debt was INR 45 crores as of March 31.

Question 4: "How do you see the demand shifting up now?"
Answer: April was strong, but May demand declined due to cyclonic impacts and early monsoons. We need to monitor the situation going forward.

Question 5: "What is the capex status and by when will we have a steady state on it?"
Answer: Our capex is delayed due to land acquisition issues, with completion expected by Q4 FY '27 for Palghar and Q4 FY '28 for Odisha.

Question 6: "Current demand scenario compared to last year?"
Answer: Demand has been subdued this year. We aim to regain last year's numbers, but weather impacts complicate the forecast.

Question 7: "What are the margins for value-added products versus conventional ones?"
Answer: Value-added products generally yield 10% to 15% higher margins than conventional offerings.

Question 8: "Any plan to raise debt for the new capacities?"
Answer: We won't raise debt this year for expansions as we are awaiting land acquisition. Future debt may be raised based on cash flow assessments.

Question 9: "What is the outlook on raw materials for the next year?"
Answer: There's no significant cost increase expected in fiber while cement might vary. We are monitoring the situation closely.

Question 10: "Do you foresee improvements in gross profit margins?"
Answer: Improvement is unlikely due to stable raw material prices, barring substantial price increases across the industry.