Concall Summary: Everest Industries Q4FY 20

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Business Update

  •  The demand for roofing products by the retail segment was not depressed as such but due to lower liquidity traders demand was not that great
  • The roofing industry was one of the first industry to open up and rthere are adequate stocks to supply in the market
  • 50% of the steel building sites have become operational but working on minimal strength
  • Have witnessed stroing demand for roofing products from areas that are opening up
  • The boards business is seeing poor business and sites are not seeing work and hence demand is subdued

Participants

  • GIRIK Capital
  • Edelweiss
  • Kedia Securities
  • Phillip Capital

QnA

  • There was not a complete shutdown in rural India like it was witnessed in urban India
  • Deman was very strong in May but unable to say whether it was due to pent up demand from April or it is a trend for the future
  • The migrants coming back to villages is not a positive because these are people who have no money and who have left there jobs and who in the first place moved because they had no opportunity in the villages
  • There is a shortage of steel roofing sheets in the market and thus this has enabled to have better growth in roofing products and also enabled pricing increase
  • In the last 6 months have worked a lot in streamlining operations and cut down on wastages in operations that have helped the steel building segment margins
  • Not taking orders at low margins and looking at better realisation orders. Also steel prices have been stable and coming down
  • Will want to wait for sales data of June and July which will give an indication as to which direction is the economy moving in
  • The company had built up inventories for the peak season and all inventories that were built up will be easily liquidated during the coming months
  • Going forward crop prices will be a bigger determinant in Q3 & Q4 of this fiscal year
  • The APMC regulations being disallowed will help the farmer in realising higher prices as their was a 50% gap in prices farmer was getting and what end customer was paying
  • However the implementation of this reform on thr ground needs to be monitored properly
  • Looking at rationalisation of inventories on the finished goods side, saving costs on all operational front as well to conserve cash
  • In the roofing business see demand continuing properly. In the boards and panel business getting new enquiries which I feel now are driven by Covid
  • Over the last year while prices were stagnant over the year costs of raw materials and also operational costs had gone up sharply which affected profitability
  • There are only two production lines on which we are not operating currently and all 35 depots are now operating normally
  • In the steel building segment there is a problem of labour because most of the labour has gone away and on all sites working under extremely difficult situation with limited labour.
Also Read on FinMedium:  Concall Summary: United Breweries Ltd Q4FY20

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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