#garware hi-tech films Q4 concall happened today. My key takeaways. If you find the thread useful, please RT so it can be benefit maximum investors.
1. Gross Margins dropped by 5% compared to Q3.
In b/w lines: RM prices increased 5%.
1. Gross Margins dropped by 5% compared to Q3.
In b/w lines: RM prices increased 5%.
However they pass on all price increases to customers with some lag. Will be able to pass on prices July onwards. Should see increase in gross margins July onwards. QoQ margin volatility is bound to be there when RM prices cannot be immediately passed on.
Volatility in stock price is not risk it is an opportunity to buy for an informed investor. Did the value of company change by 10% intraday? No.
2. GHTF is doing additional 135 cr capex to increase sun control films capacity by 67% from 2400 lsqft to 4200 lsqft.
In b/w lines: Capex will be ready by Q1FY23. 40% utilization in in FY23 and 100% in FY24. 120cr capex for the ppf line together puts this capex spree at 250cr+
In b/w lines: Capex will be ready by Q1FY23. 40% utilization in in FY23 and 100% in FY24. 120cr capex for the ppf line together puts this capex spree at 250cr+
They haven't done a large capex like this in a long time. This is time for analysts and investors to sit up take notice and do some analysis on whether co can sweat it's capex in next 3-4 years. 600cr incremental revenue will come from capex.
More could come from price increase, changing product mix & market mix. PPF line is already breaking even. This itself shows us what kind of capacity utilisation it must be having in order to break even. In my understanding ppf could do 100cr revenue on conservative side in fy22
3. Co spends 1.5-1.8 cr on R&D every year. So why can't competitors replicate their tech and copy their products?
Answer: two reasons : the fact that they are vertically integrated means that they make their own chips from the crude oil derivatives and PET film from the chips.
Answer: two reasons : the fact that they are vertically integrated means that they make their own chips from the crude oil derivatives and PET film from the chips.
This enables them to have high control over the quality of the PET film which competitors who buy their chips cannot achieve.
Second reason: it is not just about the R&D costs. The research takes time. The tech has been build sequentially over the years on top of each other.
Second reason: it is not just about the R&D costs. The research takes time. The tech has been build sequentially over the years on top of each other.
It cannot just be achieved by throwing money at the problem. Garware has developed some of this tech over decades. It will take competitors many years to develop the same sort of technology capabilities (ability to dye PET films, ability to manufacture sun films, ppf films etc)
If you like the Q4 updates please consider reading the thread which explains garware hi tech films biz:
https://twitter.com/sahil_vi/status/1397036789513089033?s=19
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