Himatsingka Seide Ltd has conducted their conference call for Q4: FY2021

Here are the key highlights πŸ˜ƒ
Business Updates:
β€’ Demand for home textile continuous to be strong.
β€’ Improvement in capacity utilization and order book
β€’ Revenue growth driven by enhance capacity utilization in terry tower.
β€’ Q4 revenue doesnot include recognition of export incentive under RoDTEP scheme.
Capacity Utilization:
- Sheeting: 76% in Q4 - 71% in Q3
- Terry Towel: 63% in Q4 - 45% in Q3
- Spinning: 101% in Q4 - 101% in Q3
Co. has space to de-bottleneck the facility, but will do at proper time.

Revenue Mix:
β€’ Brand Share: 565cr Q4 vs 385 in Q4FY 20 vs 550cr in Q3Fy 21
Impact on Profitability:
- Lockdown due to wave 2
- Disruption due to covid
- Non Recognition of Export incentive under RoDTEP, as price is yet not decided
- Increase in Raw material price of raw cotton
Raw Material:
β€’ Raw Cotton and Yarn prices are highly inflated. On weighted average basis lot of people has absorb.
β€’ Superior product mix, price increase and grow will offset inflation.
β€’ There is no issue of supply of yarn, as supply chain disruption are handled.
β€’ Company is partially integrated for yarn facility, while partially is bought from third party. 35-40% is produced internally.
β€’ There wont be increase in spinning capacity for the near term time.
β€’ Enhance capacity in sheet & terry towels can growth the sales
β€’ Organic de-bottlenecking can enhance the capacity.
β€’ Home textile has growth both topline & bottomline.
β€’ ROCE target: 17-18%
β€’ There are few 2-3 players, with entry barrier & upside can do well for co
β€’ Gross debt- 2467 cr in Mar21 vs 2814cr in Mar20
β€’ Total Term Debt 1613cr while Working Capital debt at 836 cr.
β€’ Major capex is done and only organic capex is there, hence debt would be reduced (~200cr). Continue focus on delivering the balance sheet.
β€’ Normal EBIDTA is in the range of 20-22%.
β€’ There would be little impact in the margin in coming quarter due to increase in raw material price.
β€’ On annual basis, co. can be near to the bottom level of margin.
RoDTEP: Benefit impacted in Q4 is by 35-40cr. According to media it should be announced shortly.

However inflation is high in month of may, hence any exceptional gain from benefit can be offsetted.
Europe Tie-up:
β€’ Co. has tied up with Disney for supply of product, and there is excitement in operation going on. Mgmt expect good growth coming up for this year.

Maintenance CAPEX: 3.5% of Net Block
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