Concall Summary: KRBL Ltd Q4FY20

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Business Overview

  • Revenue at Rs 1,062 crores vs Rs 1,196 crores YoY
  • EBITDA at Rs 238 crores vs Rs 232 crores
  • PAT at Rs 150 crores vs Rs 137 crores

Participants

  • Credit Suisse
  • Nippon Mutual Fund
  • Marshmallow Capital
  • Kotak PMS
  • Care Portfolio Managers
  • Banyan Tree
  • Vallum Capital

Concall Highlights

  • Borrowing at the end of Q4FY20 stood at Rs 496 crore vs Rs 1,428 crore YoY
  • KRBL has procured highest ever paddy during this season as prices were lower; total inventory at Rs 2,852 crore
  • KRBL has lost revenue of Rs 100-150 crore during the quarter due to the lock-down
  • ROCE has improved to 22.7% for FY20 as compared to 19.3% YoY
  • KRBL has achieved over 5% volume growth in the domestic market and 14% volume growth in exports in FY20
  • The company used to load 5000 MT/day at ports during the pre-COVID period which has now come down to 800-900 MT/day
  • Earlier it used to take 4-5 days to load a 25,000MT vessel and now it takes 20-25 days
  • There is a very long waiting period for getting berth at a vessel; waiting period is currently around 15-20 days
  • The company is currently running at full capacity and packing labors have come back
  • Basmati rice of more than 40,000 MT lying at Kandla port valued at Rs 470-480 crores
  • KRBL faced some challenges in the last two months and now the company will execute 5 months worth of export orders in the next 3 months
  • HORECA and institutional sales comprise 13% of domestic sales. These segments were badly impacted during lock-down; as Govt. now allowing restaurants to operate it is now gradually improving
  • KRBL will be debt-free by mid of August 2020
  • The company has reduced guidance to 10% for FY21 due to COVID; earlier, the company has guided 20% for FY21. Growth in export will be higher than the domestic market
  • KRBL has guided Rs 5,000 crore revenue for FY21
  • KRBL will invest their cash-flow into inventory and other regional rice categories
  • Aging cycle for non-basmati rice is around 8-9 months
  •  Govind Bhog market size in Kerala alone is 5 lakh MT; only regional players are present in this segment
  • India Gate basmati rice is a leader on Grofers and BigBasket and not very aggressive on Amazon
  • Labor availability at Kandla Port is just 20% of the pre-COVID level
  • Saudi Arabia, Iraq, and Iran store rice for 9-12 months. They do not buy aged rice, only KRBL exports aged rice to them
  • Energy division: KRBL has very lucrative long term PPA with Government. PPA with Maharashtra Govt. at Rs 5+ and with Andhra Govt. at Rs 4+; IRR is quite good. Company has appointed KPMG to demerge the energy business
  • The export realization for the quarter was Rs 90/kg and average realization for domestic+export at Rs 68/kg
  • 80% of total sales are branded only; domestic sales are branded only. Private label sales is only 15-20%
  • EBITDA margin has improved this quarter as there were no private label sales  
  • Inventory: 4.27 lakh MT of paddy and 3.14 lakh MT of rice. Paddy inventory cost Rs 28,934/MT and rice Rs 48,021/MT
  • For achieving Rs 8,000 crore of the turnover, the company needs Rs 4,000 crores of inventory
  • 23 Indian companies are currently doing business with Iran
  • No mandi fees and no market fees would aid the bottom-line to the tune of  Rs 20-25 crore
  • KRBL has applied for a refund of Rs 100 crore from Income Tax department
Also Read on FinMedium:  Concall Summary: JM Financial Ltd Q4FY20

Image Source: Company website

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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