Concall Summary: IFB Industries Q4FY20

Reading Time: 2 minutes

Participants:

Equirus
Edelweiss
Phillip Capital
Investec
ASK Investment
Kapoor & Company
Goldman Sachs
ICICI Prudential
Lucky Investment
Banyan Capital

Business Overview:

Revenue at Rs 507 crore vs Rs 653 crore YoY
Loss at Rs 19.5 crore vs PAT of Rs 5.5 crore YoY

ConCall highlights:

74-75% counters are open (fully and partially) now; demand was quite healthy in June and in the current month also
IFB is currently negotiating with supplier for reducing material cost; supplier for both washers and ACs are common
Company is also taking steps to reduce indirect cost
IFB has maintained its market share but there is some drop in billings due to changes in the model
AC plant has a capacity of 500,000 per annum on a single shift basis. IFB is targeting 250,000-275,00 units sales for its own brand in next 12-15 months and rest is for OEM
Import content in AC will come down to 35% by November this year from 65% currently
One large Korean company setting up an electronics plant in Goa. IFB will procure controller for both washers and AC from them
Company is working with one domestic manufacturer for AC compressor and by end of the year will also localize the compressor
Demand for dishwashers is very strong and likely to remain strong; the company is currently out of stock for dishwashers
Company is not looking at any new category for the next 12-15 months
IFB has 535 IFB Points as on date and it contributes around 15% in the top line. IFB will increase IFB Points to 600 by the end of this year
Company is working on to reach double-digit EBITDA margin
Capex: Capex cycle is almost over for the company. IFB has capitalized around Rs 211 crore in FY20. Current CWIP is Rs 8 crore and capital advances of Rs 47 crore, as some part could not be completed due to lock-down
Depreciation for the full year has increased to Rs 89 crore vs Rs 54 crore YoY due to adoption of Ind AS-116; pure depreciation is Rs 52 crore rest is related to rent
The company is currently under MAT and paying around tax of 22%. IFB has MAT credit of Rs 18 crore in hand
Once a company move into a new tax regime then it cannot come back
AMC revenue per annum is around Rs 50 crore
Entry-level price for 6.5 kg top loader is around Rs 15,000 and for top loader, it is Rs 20,000-20,500. Company has introduced entry-level top loader at a much lower price in February but due to lock-down it didn’t contribute much
The monthly volume for top loader prior to COVID was 22,000-25,000
Revenue contribution from e-commerce is around 14-15%
Margin in the manufacturing side is higher than the trading products
Market share: Front-load- 40%; top load (fully automatic) – 8-9%. The company is not present in the 6 kg segment. IFB has an 18% market share (top load fully automatic) in 6.5 kg and above. Microwave oven market share is 22-23%
CSD contributes only 1% of revenue
Washer plant is running at full capacity and demand is currently 150% of January-February (pre-COVID)
16% of employee cost is related to the engineering division