Ineos Styrolution Q4FY17 Concall Summary

Ineos Styrolution.png

Financial Highlights

  • PBT for FY17 increased by 67% whereas Sales Revenue decreased by 6% Y-o-Y
  • Competitive Pricing, Higher Margins and focus on inventory gains are factors which led to higher PBT
  • Specialties: Revenue increased by 31.5% and PBT increased by 140% Q-o-Q
  • Polystyrene: Revenue decreased by 17% and PBT increased to 668 lacs from a loss in last quarter

Industry performance

  • ABS Segment majorly caters to two wheelers, automotive and household segments
  • Above 8-10% consistent growth over the last 5 yearsfor the ABS industry
  • Raw material  prices (esp. Crude) has  been cyclical over the last few years and styrene prices been volatile
  • Overall Market Size- ABS is of about 200,000 tons, SAN is around 50,000 tons and Polystyrene is of 250,000 tons in India

Current Business Scenario

  • Current Capacity Used -80,000 Tons for ABS, 100,000 tons of SAN and 78,000 tons of Polystyrene
  • Korean imports are rising in some industries where ABS is necessary
  • Currently both spot market rate based pricing and formula based pricing models are used for clients
  • Major competitiors are – Bhanshali(Domestic), LG, Samsung (International)
  • Strength by the company is shown in Supply chain, Productions, R&D etc. in this quarter
  • ABS operations are currently operating at Peak Capacity
  • Around 17 Crores of Maintenance Capex is being invested this quarter

Impact of Demonetization

  • Led to increase in both Finished goods and raw materials inventory
  • Volumes have increased this quarter from last quarterfollowing normalization of demonetization

Future Outlook

  • Double digit growth in revenue and higher margins expected
  • Normal order book is expected post normalization of demonetization.
  • Impact of GST is still unclear on the business segments
  • Tollers will add to the current capacity adding more growth to the topline
  • Raw material price is expected to be relatively stable