Solar Industries India Ltd's consolidated revenue for Q4FY18 came in at Rs575.34cr, up by 30.1% yoy. The operating profit for the quarter stood at Rs118.14cr, up by 28.5% yoy. The EBITDA margin declined marginally by ~26bps yoy to 20.5% in Q4FY18. The net profit for the quarter stood at Rs67.78cr, up by 21.1% yoy. The revenue, operating profit and net profit missed the street estimates by 15%, 10% and 14% respectively.
• Gross profit margin of the company declined by ~211bps yoy to 42.4% in Q4FY18 on account of likely increase in the cost of raw materials. The packaged explosives segment witnessed 34% growth yoy (20% volume and 12% price) in Q4FY18. The bulk explosives segment witnessed de-growth of 5% yoy (-3% volumes and -2% price) in Q4FY18.
• The revenue from housing & infra segment and exports & overseas segment increased significantly by 29.34% and 80.77% yoy to Rs163.37cr and Rs202.72cr respectively.
• Domestic EBITDA margin is subdued on account of rising ammonium nitrate prices and lower margin on account of Coal India Limited (CIL) segment.
• The other expenses for Q4FY18 increased significantly by 27% yoy to Rs95.59cr.
• The effective tax rate of the company increased to 31% in FY18 as against 28% in FY17.
• Board of directors recommended a dividend of Rs6 per share for FY18, subject to shareholders’ approval in annual general meeting.
• Total debt-equity ratio of the company declined to 0.44x as on March 31, 2018 as against 0.52x as on March 31, 2017. The net-debt of the company as on March 31, 2018 stood at Rs414.92cr.
• The total order book of the company as on March 31, 2018 stood at Rs1,092cr with Rs782cr under Coal India, Rs55cr under bulk explosives and accessories and Rs255cr under defense segment.
• Management provides an estimated top-line growth of ~25% in FY19 backed by strong order book. It aims a turnover of Rs200cr under the defense segment.
• The company fully hedges imports whereas exports are open, as per its hedging policy.
• Surge in crude oil prices has led to increase in logistic cost of the company.
• Gross margin has decreased on account of rising prices of ammonium nitrate. The prices are passed on to the customers with a lag of one quarter.
• Impact of rising aluminum prices on aluminium powder is not significant for the company.
• Solar Industries has two-year contract with Coal India. The company wants to retain its position of key supplier of ammonium nitrate to Coal India Limited.
• Capex of Rs300cr in FY19 will be deployed for industrial explosives segment (Rs225cr) and defense segment (Rs75cr). The capex attributable to domestic industrial explosives segment is Rs150cr and overseas is Rs75cr.
• Growth in CIL segment is expected to be at 6% in FY19. Coal production is expected to increase by 5-6% at an overall level in India in FY19.
• The company aims at achieving 30% return on capital employed in FY19.
• Capital employed towards defense is Rs400cr in FY18 coupled with additional deployment of Rs75cr in FY19.
• Overseas capacity – operating at optimum levels in FY18. The company plans to expand the capacities through capex programme, which is likely to be announced in September, 2018. Domestic capacity of 3lakh tonnes in FY18 would be expanded to 4lakh tonnes in FY19.
Solar Industries India Ltd ended at Rs. 1,065, down by 0.85 points or 0.08% from its previous closing of Rs. 1,065.85 on the BSE.
The scrip opened at Rs. 1,055 and touched a high and low of Rs. 1,075 and Rs. 1,051 respectively. A total of 8,25,848 (NSE+BSE) shares were traded on the counter. The stock traded below its 100 DMA.
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