STYRENIX - Styrenix Performance Materials Limited Share Price

In the Q1 FY '26 earnings call, management of Styrenix Performance Materials provided an optimistic outlook, emphasizing strong demand for their products despite some challenges. Key performance highlights include a sales volume of 51.8 kilotons (KT), up 8.1% from 48.1 KT in Q4 FY '25, and revenue reaching INR 721 crores, a 28.85% increase from INR 701 crores in the previous quarter. Quarterly PBDIT stood at INR 86.1 crores with a margin of 11.9%, and PAT was INR 54.9 crores with a margin of 7.6%.

The management noted that their expansion plans are on track, with the debottlenecking exercise completed as per schedule. Specifically, they expect annualized volume growth of 10% to 12%. In the Thailand operations, they have achieved around 55% capacity utilization, with ongoing efforts to increase this through new customer acquisitions and product validation.

Management raised concerns over a potential slowdown in certain sectors, notably automotive and consumer durables, but believes this will be adjusted throughout the year. They confirmed that no new inorganic acquisitions are currently in the pipeline, focusing instead on existing capacities and improvements in efficiencies. Notably, they anticipate significant revenue growth potential in Thailand, targeting a potential increase in revenue of 70% to 80% at peak utilization.

Additionally, management indicated a dividend of INR 50 crores was paid, aligning with their philosophy of shareholder value return while confirming no immediate cash constraints for future capex plans. They are optimistic about navigating the evolving market dynamics, particularly as they see continued long-term growth potential amid competitive pressures.

Question 1: "During the quarter, we had witnessed a notable decline in the realizations and the gross and EBITDA spreads. Is this related to lower product mix or the market spreads of both the products, PS and ABS have itself declined?"

Answer: While there was a slight decline in realizations due to early monsoons affecting demand in sectors like household appliances, we managed to achieve record sales volumes, reaching about 51,000 tons. The decline in spreads can be attributed to a mix change and raw material price fluctuations rather than just market conditions.

Question 2: "Can you elaborate on the volumes from Thailand and the ramp-up for this fiscal and next?"

Answer: For Q1, Thailand contributed about 16,000-17,000 tons to our consolidated volumes. We're operating below full capacity, with significant potential for ramp-up. Our strategy includes aggressive sales initiatives across Asia. While I can't provide specific increases, we expect noteworthy growth over the next year or two as we establish our brand in the region.

Question 3: "What would be the target this year given the current demand scenario, and how do we plan to grow despite challenges in automotive?"

Answer: Despite some segments lagging, we target a 10-12% volume growth this year. Our sales in Q1 were robust, indicating we're on course to hit our annual targets. We believe soft demand in some areas will correct throughout the year, supporting our growth trajectory.

Question 4: "Can you provide insights on the ABS spreads and how they look currently in the market?"

Answer: ABS spreads are in line with historical averages. Influencing factors occasionally cause fluctuations, but overall, we expect the situation to stabilize in the coming months. Our market positioning and consistent demand support maintaining our margins effectively.

Question 5: "What is the current margin and sales outlook for your Thailand operations?"

Answer: Margins and sales in Thailand will improve with increased capacity utilization, anticipated at 70-80% if product mixes remain stable. We're targeting gross margins through better product differentiation and optimizing our operations as we integrate fully.

Question 6: "Please clarify the timeline for the ABS capacity expansion?"

Answer: For the ABS capacity expansion, we're aiming to add 50,000 tons in FY '27 and another 50,000 tons in FY '28. Our current plans remain unchanged, and we'll keep updating on progress when feasible.

Question 7: "Have you added new customers in Thailand?"

Answer: Yes, we've successfully onboarded several new customers in Thailand. Leveraging our approvals from the Indian market, we can offer products in Thailand while also expanding our reach in China, Japan, and other Southeast Asian markets.

Question 8: "How do you foresee the impact of high energy costs in the EU affecting export opportunities?"

Answer: While currently, our capacity in India is fully utilized, high energy costs in the EU may create future export opportunities as capacities grow. We're exploring these opportunities to position ourselves strategically in the global market.

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