Concall Summary: IFB Industries Q4FY20

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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
Also Read on FinMedium:  Concall Summary: Hero MotoCorp Q4FY20

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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