Ice Make Refrigeration Limited (ICEMAKE) Earnings Call Transcript & Summary

Hello, everyone. So let's begin the call. Good evening, ladies and gentlemen. I'm Rana Aryan, and I will be your moderator for today's conference call. A warm welcome to Ice Make Refrigeration Limited's Q1 FY '27 Earnings and Investor interaction for the quarter ended June 30, 2026. We are pleased to have with us, investors, analysts, shareholders and media representative from -- and other stakeholders. Ice Make is an established provider of industrial and commercial refrigeration and cold chain solutions with offerings across cold rooms, commercial and industrial refrigeration, transport refrigeration, ammonia systems and PUF panels, cold storage infrastructure and allied solutions. The company's sectors include -- the company's sector includes food processing, agriculture, pharmaceuticals, health care, hospitality, retail, dairy, seafood and logistics. The company has also created significant value for shareholders over the years, with the stock delivering over 3,000% returns over the past 5 years. The company enters this phase with a strong revenue momentum and an important strategic development, the proposed INR 180 crore investment by Japan's Galilei Holdings Company Limited and the proposed strategic joint venture. So before we begin, please note that certain statements made during this interaction may be forward-looking and are subject to risks, uncertainties and assumptions. Actual results may differ. Participants are advised to refer to the company's regulatory filings for detailed information. So we have our management team with us, Mr. Chandrakant P. Patel, Chairman and Managing Director; Mr. M. Srinivas Reddy, Chief Executive Officer; Mr. Nikhil Bhatt, Vice President of Strategy; Mr. Ankit Patel, Chief Financial Officer; Mr. Mandar Desai, Company Secretary and Compliance Officer. The format for today's session is the management will cover Q1 FY '27 performance, financial priorities and business strategy followed by an interactive Q&A and closing remarks. So in the opening, we'll have our CEO, Mr. M. Srinivas Reddy, followed by financial performance by our CFO, Mr. Ankit Patel, business and strategy update by our VP, Mr. Nikhil Bhatt, Investor analysts, then we'll have a Q&A session. And finally, we'll have closing remarks by our CMD, Mr. Chandrakant P. Patel and vote of thanks by the Company Secretary at the end of the conference. This conference call is being recorded. [Operator Instructions] With that, let us begin. I invite Mr. M. Srinivas Reddy, Chief Executive Officer of Ice Make Refrigeration to share his opening remarks. Over to you, Mr. Reddy.

Thank you, Aryan. Good evening, ladies and gentlemen. Thank you for joining Ice Make Refrigeration's Q1 FY '27 Earnings Interaction. Q1 FY '27 began with a strong revenue momentum. Consolidated revenue from operations increased about 60% year-on-year to INR 178.88 crores from INR 111.50 crores in Q1 FY '26. This builds on FY '26 total revenue of INR 668.20 crores which is the company's highest annual revenue to date. Growth was supported by healthy demand across refrigeration and cold chain segments. With newer categories such as chest freezers and continuous panels, gaining excellent market acceptance. The key issue for us now is the profitability, higher commodity and raw material costs together with investments made to build future capacity and capabilities impacted margins in the quarter. Our immediate focus is, therefore, on capacity utilization, operating efficiency, product mix and cost management. As assets and capabilities built over recent quarters are utilized more efficiently and effectively, we expect operating leverage to improve coming -- going forward. A significant development is a proposed INR 180 crores strategic investment by Galilei Holdings of Japan. We view this as a strategic partnership that can combine Galilei's excellent technology and global expertise with Ice Make's manufacturing capabilities and Indian market presence and, of course, execution strength. The proposed 60-40 joint venture with Galilei's holding 60% and Ice Make holding 40% will initially focus on commercial refrigeration products, such as the commercial upright and table refrigerators. The proposed capital will also support capacity expansion and modernization, the JV, center of excellence and development and testing laboratories, balance sheet strengthening and selected growth opportunities. Our approach remains disciplined. The objective is profitable, sustainable and scalable growth, supported by strong execution, better utilization, improved margins and careful capital allocation. With that now, I hand over to our CFO, Mr. Ankit Patel, for the detailed financial review. Thank you.

Thank you, Reddy, sir. Good evening, everyone. I will focus on key financial numbers of Q1 FY '27 and company's financial priorities. Consolidated revenue from operations for the quarter was INR 178.88 crores, up by 60.4% year-on-year from INR 111.50 crores. Profitability, however, remained under pressure. EBITDA was INR 3.09 crores versus INR 4.53 crores in Q1 FY '26, with EBITDA margin at 1.7% compared to 4.1%. Profit before tax was a loss of INR 2.23 crores versus INR 1.84 crore loss previously. While profit after tax was a loss of INR 1.65 crores versus INR 1.47 crores in corresponding period. The main margin pressure was elevated mainly due to commodity and raw material prices and the costs related to investment in capability and organizational capabilities. Financially, our reality is to convert the strong top line momentum into a healthier profitability. We are working on capacity utilization, cost discipline, product mix and operating efficiencies. We have utilization expected to support in operating leverage. Our proposed Galilei transaction, the INR 180 crore investment is proposed through a preferential issue with an additional INR 10 crore proposed to be raised from other investors. The funds are intended for capacity expansion and modernization, the proposed JV completion of corporate office and center of excellence, development and testing laboratory, repayment of certain borrowings and selective inorganic growth. The capital deployment will be paced and disciplined with a focus on strengthening the operating platform and generating sustainable returns. The transaction remains subject to applicable approvals and customary closing conditions. In conclusion, our 3 financial priorities are sustained revenue momentum, improved margins and operating cash generation and deploy capital prudently while strengthening the balance sheet. Now I hand over to Mr. Nikhil Bhatt, Vice President Strategy for the business and strategy update. Thank you.

Thank you, Ankitji, and good evening, everyone. I will focus on the business mix, market opportunities and the strategic directions for the next phase of growth. Ice Make is building a broader refrigeration solutions platform across commercial refrigerations, cold chain, food processing, hospitality, pharmaceutical, retail and industrial applications. Newer categories such as chest freezer and continuous panels are also gaining traction. Our strategy has 4 priorities. First is capacity to expand and modernize manufacturing capability to support demand and improve service levels; products, broaden the portfolio and build sustainable positions in attractive segments; technology, strengthen product development through the center of excellence and development and testing laboratories; and fourth is the market reach to deepen our presence across India's refrigeration and cold chain ecosystems. As mentioned by Mr. Reddy earlier, the proposed Galilei partnership is strategically important because it combines complementary strengths, Galilei's refrigeration technology, product development and manufacturing expertise with Ice Make's Indian market presence, manufacturing platform, customer relationships and aggregation capabilities. We expect the benefit to build progressively as investment product development, manufacturing setup and market development take place. Investors should, therefore, view the initiative with a long-term perspective. The objective is not only simply to add capacity of products, but to build businesses capable of generating sustainable revenue, stronger margins and attractive returns on capital. Looking to the order book on hand is about INR 220 crores plus. We are quite confident to achieve our goal for this current financial year. Thank you. I will hand the session back to the Aryan for the investor and analyst question and answers.

[Operator Instructions] So we have first question from Kanishk Gupta. I will just unmute you, sir. You can go ahead with your question. Kanishkji? Kanishkji, are you there? You can also type your questions in case you have any question. I will just read one question that I have from investor, and that is -- one second, I'll just give it to you, let the question queue -- So the first question is from one of the investors from Ahmedabad. He's saying company has reported a revenue of INR 178 crores in Q1 FY '27. That is 60% growth from FY '26 Q1. So if I take this revenue split in FY '26 percentage-wise for each quarter and do a rough mathematical calculation, the FY '27 revenue comes to INR 1,000 crores. Can you confirm if this is possibly -- a possibility while maintaining EBITDA level of 8% to 8.5% for simplicity of understanding, if you can? Sir, over to you. Did you get my question, sir?

Yes.

So what are you saying actually FY '27, Q1, if you have INR 178 crores, since Q1 normally contributes 16% to 16.7% of the full year revenue, can we reverse calculate the implied full year revenue for FY '27?

Yes, the question is valid, of course. We have delivered excellent growth of 60% in Q1. But what investor has to note is that the last year Q1 base was actually low in terms of the new businesses. So if you look at the chest freezers and continuous panel business, was the first year from them. So the base was very low for them. Obviously, we posted excellent growth in the low base. Going forward, our guidance for the year continues to be the same as stated before. But having said that, we will look at every possibility or opportunity to maximize the revenue. As for the EBITDA guidance is concerned, currently, Q1, we are impacted on the profitability. We are giving a guidance of around 6% to 6.5% for the whole of the year this year.

All right, sir. Okay. So the question from Kanishk is, first, despite the price increase of 10% to 11% that management had indicated and the fact that a substantial part of the distribution and channel investments were already made during FY '26, Q1 FY '27 EBITDA margins came in at only 1.7%. Could you help us understand the key factors behind this significant margin pressure in Q1 apart from raw material prices largely offset by our price hikes? This is the question from Kanishk, sir.

Mainly the issue was related to raw material price hike only. A couple of times, we have increased our prices. But sudden after increase in our price, again, due to war and dollar strengthening, there are some other impacts as well. So our peers has increased their prices more than a couple of times, maybe 3 times, but we have just raised our prices in 2 times. There are a few verticals where we have not fully transferred that prices being our new verticals. So we feel that in upcoming time from H2, we feel that the impact of our price revision and margin improvement will start showing. And for the whole year, we feel that EBITDA margin somewhere around 6%, 6.5%, we are comfortable to deliver this financial year.

Okay. All right. So the second question is from [ Swati Madnani ] and her question is, can you share the vertical-wise revenue bifurcation and how much the new verticals have contributed to this quarter?

The cold room contributed around 43%. Industrial refrigeration, around 3%. Commercial -- traditional commercial refrigeration, 7%. Transport refrigeration, similar to 7%. Ammonia and project combinedly, around 5%. Continuous panel, around 17% and commercial freezers around 19%.

Okay, sir. So another question from Kanishk Gupta is -- so he's asking whether -- what is our key rationale behind reducing EBITDA margins guidance instead of, again, expecting a price hike to protect EBITDA margins?

The main impact was due to war. [Foreign Language] but now we feel that [Foreign Language] we are also in process. [Foreign Language] that is consist of import, indirect import as well. [Foreign Language] We have ample of orders [Foreign Language]

The next question is from Kaustubh Yeole from BlueBridge Capital. So what are you saying that I have 3 questions. One is on margin. You implemented 10% to 11% price increases, yet Q1 margins declined. How much of the raw material inflation has been passed through? And what is the current pricing lag? That is one. On Galilei JV, Ice Make is investing INR 35.3 crores for its 40% stake. What revenue EBITDA and ROCE are you targeting from the JV over the next 3 years? And third question is on order book. What is the current order book and Q1 order book inflow versus the earlier INR 230 crores to INR 237 crore order book in the last -- Q4 and INR 50 crores to INR 60 crores monthly run rate? So these are the 3 questions from Kaustubh.

[Foreign Language] was somewhere around 15% to 18%. Still, we like somewhere around 6%, 6.5% [Foreign Language] I'm talking about overall [Foreign Language]

Hello?

[Foreign Language] regarding the investment in Galilei [Foreign Language]

[Foreign Language]

[Foreign Language] What was the third question, Aryanji?

[Foreign Language]

Pending order book, I guess.

Order book, yes. What is the current order book and Q1 order inflow versus the earlier INR 237 crore order book and INR 50 crores to INR 60 crores monthly run rate [Foreign Language]

[Foreign Language]

[Foreign Language] Given you have taken fewer price hikes than peers, have you seen any meaningful market share gains [Foreign Language] Also what is your expectation for the raw material cycle over the next 2,3 quarters [Foreign Language]

[Foreign Language]

Waiting in the queue, [ Manish Kela ], can you go ahead and unmute yourself? Manishji? [Foreign Language] I'll just take that one. [Foreign Language]

So it is difficult to quantify the market share gains. But otherwise, the demand was pretty strong for all the categories that we address. But I can comfortably say that we have made good strides in the continuous panels as well as chest freezer business. So that these 2 businesses have grown significantly, while we maintained the market share and even bettered, of course, by a few basis points in the cold room and other segments that we operate in. Raw material prices, we expect that the situation of volatility will continue over the next quarter. I mean, this Q2 and some ruboff on the Q3 as well. So we don't see any hope that the raw material will become stabilized or the volatility will come down. We don't expect any of that possibility right now because you all know better, you share my opinion that the global uncertainty continues as ever.

Absolutely. So we are now half away through Q2 with the winter season approaching. Could you give us some sense of the demand environment so far and the outlook for the upcoming winter season? How should we think about seasonality in H2? This is a question from [ Swati Madnani ].

Swati, it is a good question. I think we have a few verticals, business verticals, which are season agnostic, especially cold rooms, the demand for the cold rooms is season agnostic, which will continue to grow because we operate across pharma, essentially food processing, seeds and a couple of those segments which consume our cold room solutions. And our new business line, which is continuous panel is also season agnostic. So you will have some seasonality effect on the business. But I would confidently say these 3, 4 lines that we operate with are season agnostic itself. One business, which is highly season centric is a chest freezer business. But that business, the demand for those products also will start picking up from the festive season. As the festive season begins, the impact of seasonality also slowly wades away because festive drives some demand for the chest freezers as well as we have seen in the market in the last 2 to 3 years' time.

Okay. So now the next question, one more question from [ Manish Kela ], and that is on sponsored market. If we look at the sponsored market, for Visi Coolers? If not, why we are not targeting this segment? [Foreign Language] why are we not targeting [Foreign Language]?

So Aryanji, first of all, to cater the sponsored market, you need to have a bigger capacity and for that, you need a good amount of capital. And currently, what we are trying to do is whatever we invested in the last 2 years, we are trying to optimize it to the full capacity. And if you talk about the margin scale, margin is lying in actually the retail market and not in the mainly sponsored market. So our first focus will be strongly dealer market and retail market where we want to establish our brand on the dealer channel and not on the name of any Coke and Pepsi, right? So first thing is it needs heavy capital and so much capital. And second thing is we want to establish the retail market first. And then in the next case, we will go for this sponsored market and mass scale. So even though this is a new product for Ice Make, we want to establish our product in a retail market, get the good margins. And from this margin, we want to expand into the next lines and this new markets.

Okay, sir. All right. The next question is from [Foreign Language] how much revenue can the existing capacity support? [Foreign Language]

[Foreign Language]

Hello, can I ask a question?

Yes, yes. Please go ahead. No problem.

Yes, the issue earlier was that I refreshed the page, now I'm unable -- now I'm able to unmute myself.

You're Kanishk, right?

Yes, sir.

Go ahead.

Yes, sir, coming back to the question that Manishji asked on the sponsored market. Sir, commented that our priority first is the dealer market. And secondly, we need capital to expand our capacities to cater to the sponsored market. So now investments coming from Galilei of approximately INR 180 crores. So how do we plan to exactly utilize that, if you can throw some light on it?

[Foreign Language] We will have funds available, most probably in the next month. [Foreign Language] most probably commence in 5 to 6 months, it will take time to deploy for capacity building [Foreign Language]

And sir, apart from the INR 58 crores, what would be the rest of the capital used for?

Actually, there are multiple objects. [Foreign Language] there are various in [indiscernible]. Further, there are some acquisition-related opportunities as well, which is under discussion phase, and we are still exploring. So we cannot comment exactly the status. But once the things get finalized, we will update you in the due course.

And sir, as Phase 1 has largely completed [Foreign Language]?

[Foreign Language]

[Foreign Language]

[Foreign Language]

Now we have Mr. Tej Patel. Sir, you can go ahead with your question. Can you unmute yourself? Tej are you there? Can you unmute? In the meanwhile, we'll take one more question from Mr. Mausam Shah. And his question is, what is the peak revenue potential from the existing capacity? [Foreign Language]

After first phase of CapEx [Foreign Language] It's our installed capacity.

Okay. Kaustubh, you are not able to unmute yourself? You have another question for Mr. Chandrakant Patelji. With the Galilei JV [Foreign Language] How has your strategy changed to compete with the larger player [Foreign Language] Having all price cost strong [Foreign Language]