Sahyadri Industries Limited — Investor Meet, 13-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

1. Financial Performance: For the nine months of FY '25, Sahyadri Industries reported total income of INR 456.2 crore, a decline of 5.7% from INR 483.7 crore year-on-year. EBITDA fell to INR 44.2 crore, down from INR 55.8 crore, with an EBITDA margin of 9.7%. For Q3 FY '25, total income was INR 131.7 crore, down 3.4% from INR 136.3 crore in Q3 FY '24. The EBITDA was INR 9 crore, decreasing from INR 13.8 crore, resulting in an EBITDA margin of 6.8%. Net profit after tax for the nine months decreased to INR 15.2 crore from INR 22.1 crore year-on-year, and for Q3 it was INR 0.8 crore, down from INR 3.2 crore.

2. Future Outlook and Growth Drivers: Management expressed optimism about upcoming demand recovery in Q4, attributing potential growth to improved macroeconomic indicators and a gradual increase in consumer sentiment. Despite facing challenges from raw material prices and currency fluctuations, they believe they are positioned well for growth as the rural economy stabilizes.

3. Order Book and Operational Updates: The company reported a revenue of INR 129 crore in the building materials segment for Q3, a significant increase from INR 100 crore in Q2 FY '25, with EBIT improving to a profit of INR 2.6 crore from a loss of INR 2 crore. Capacity utilization was at 67% for the nine months, a decrease from 73% the previous year, reflecting a strategic decision to align production with demand.

4. Analyst Q&A Insights:

- **Revenue and Profitability:** Analysts raised concerns regarding market share stability and demand decline attributed to weather disruptions. Management confirmed demand has recently shown positive signs.

- **Market Position and Competitive Landscape:** Management acknowledged no significant alterations in market share but noted a generally challenging building material environment alongside logistical challenges impacting costs.

- **Operational Challenges or Risks:** Rising logistics costs and rupee depreciation were highlighted as major concerns, with management prioritizing cost management strategies moving forward.

- **Capex and Capital Allocation:** Expansion plans in Maharashtra and Odisha are ongoing, with hopes to resolve land acquisition issues in the coming months.

- **Strategic Priorities and Long-Term Vision:** There is a focus on maintaining operational efficiency amidst fluctuations, with plans to exploit potential market recovery.

5. Market or Regulatory Updates: Notable fluctuations in global supply chain dynamics and logistics costs were discussed, alongside the impact of domestic weather conditions affecting operational deliverables.

6. Strategic Focus Areas: Key strategic themes include enhancing operational efficiency, optimizing costs, and preparing for market recovery, with management maintaining a cautiously optimistic tone.

7. Investor Insight: The financial metrics suggest mixed performance with possible demand recovery anticipated in the forthcoming quarters. Caution regarding raw material prices and operational costs persists, indicating a ‘hold’ position until clearer growth signals emerge.