Tilaknagar Industries Limited — Investor Meet, 11-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:**

For Q2 FY25, Tilaknagar Industries reported a revenue of ₹375 crore, reflecting a year-over-year growth of 5.8%, with underlying volume growth at 3.1%. The EBITDA surged by 39% YoY to ₹66 crore, equating to a margin of 17.6%, an increase of 422 basis points. Profit after tax (PAT) rose significantly by 82% to ₹58 crore, compared to ₹32 crore in Q2 of the previous year. The company’s net debt-free status as of September 2024 was accomplished well ahead of previous targets, enhancing its financial positioning.

**Future Outlook and Growth Drivers:**

Management expressed confidence in achieving mid-teen volume growth in H2 FY25, driven by improving conditions in key markets, especially Karnataka and Andhra Pradesh, where recent regulatory changes are expected to favor market dynamics. The company is focusing on its premiumization strategy and launching new products, including Mansion House Whisky and a premium brandy, to capitalize on diverse consumer demographics.

**Order Book and Operational Updates:**

The order book is supported by recovering revenue streams in states like Telangana and Andhra Pradesh, both of which are seeing payments normalize. Inventory issues are expected to improve as state regulations transition to a more consumer-oriented model.

**Analyst Q&A Insights (Detailed):**

- **Revenue and Profitability:** Analysts inquired about payment timelines from Telangana. Management noted overdue periods had improved but remain cautious about cash flow normalization.

- **Market Position:** Analysts sought insights into market share growth in Andhra Pradesh post-policy shifts. Management highlighted confidence in capturing a larger market share due to existing brand strength.

- **Operational Challenges:** Supply chain challenges persisted, but overall confidence in managing costs was noted. Management emphasized investment in advertising to boost brand visibility despite higher costs.

- **Capex and Allocation:** The ongoing strategic investments include the expansion of existing brands and potential acquisition opportunities, with a proposed maintenance capex between ₹15-20 crore annually.

- **Long-Term Vision:** Queries regarding the company’s long-term aspirations revealed a target shift towards achieving an 80:20 brandy to non-brandy sales distribution by FY30, supported by the launch of new products in growing segments.

**Market or Regulatory Updates:**

The easing of excise duties in Karnataka is noted to improve sales volumes, alongside new privatization initiatives in Andhra Pradesh expected to increase competition and consumer choice.

**Strategic Focus Areas:**

The management's emphasis on premiumization and product innovation is vital. Developing consumer-driven brands and enhancing distribution capabilities are strategic priorities as the company expands.

**Investor Insight:**

Overall financial health and strategic direction suggest a favorable outlook for retail investors, indicating a potential 'buy' scenario given the strong growth trajectory and market recovery outlook, particularly in southern India. The company’s proactive moves in launching new products and its robust balance sheet reinforce this positive sentiment.