Sahyadri Industries Limited (SAHYADRI.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sahyadri Industries Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Tuljaram Maheshwari, CEO, CFO and Whole-Time Director of Sahyadri Industries Limited, for his opening remarks. Thank you, and over to you, sir.

Thank you for joining us on the Sahyadri Industries Limited Q1 FY '26 Earnings Conference Call. I'm pleased to be joined today by Mr. Arvind Garg, our Financial Controller; I trust you have had the opportunity to review our financial results and investor presentation, which are available on our website and the stock exchanges. I will begin with a brief overview of the industry landscape, followed by a summary of our performance during the quarter. The Indian asbestos-based roofing sector continues to navigate a complex and evolving landscape. Over the past few years, the industry has been impacted by geopolitical instability affecting global trade and commodity flows, elevated input costs, particularly for the imported asbestos fiber, supply chain disruption and increased freight charges, depreciation of the Indian rupee, further amplifying import-related expenses, limited ability to pass on cost increases to end consumers, especially in the price sensitive housing segment. These factors have contributed to heightened price volatility and exerted pressure on manufacturing costs and operating margins across the sector. The commencement of FY '26 was a positive note with total income being stabilized at similar level of INR 216 crores in Q1 FY '26 on a Y-o-Y basis. The sales during the quarter were partially impacted by early onset of monsoon, especially in the month of May, along with subdued demand scenario. Despite such headwinds, we have delivered a resilient performance during the last quarter for both roofing and non-roofing products. EBITDA for the quarter stood at INR 21.7 crores with an EBITDA margin of 10.1%. This performance was partly affected by the weak demand and ongoing pricing pressures. On the operational front, capacity utilization improved to 93% in Q1 FY '26, up from 89% in Q1 FY '25. Now moving to the financial performance. Q1 FY '26 highlights. Total income stood at INR 216.1 crores, a marginal decline of 0.8% Y-o-Y and growth of 41.6% on quarter-on-quarter basis. EBITDA was INR 21.7 crores, down 12.7% Y-o-Y and up 56.7% quarter-on-quarter basis. EBITDA margin stood at 10.1% compared to 11.4% Y-o-Y and 9.1% quarter-on-quarter basis. Profit after tax was INR 10.8 crores, down 13.8% Y-o-Y and up 152.2% quarter-on-quarter basis. PAT margin stood at 5% compared to 5.7% Y-o-Y and 2.8% quarter-on-quarter basis. We anticipate that despite ongoing challenges, FY '26 presents path to recovery driven by good monsoon, stabilizing global supply chains, diversification of the sourcing base, import price realization and sustained demand for asbestos-based roofing sheets, particularly in the rural housing and infrastructure projects. While operating margins moderated in FY '25, the margins in FY '26 are likely to witness some recovery added by cost optimization and pricing adjustment. With that, I conclude my remarks and would now be happy to take your questions.

[Operator Instructions] The first question is from the line of Kaustav Bubna from BMSPL.

So I wanted to understand, could you update us on your capacity expansion plans? And when will the new facilities come up? And what is the expected fixed asset turnover from those facilities?

As we stated earlier, there is a delay in land acquisition and still it's going on, particularly in the Palghar facility. And the revised time line for that is Q4 of FY '27. And the total investment would be around INR 100 crores, and out of which INR 50 crores is already spent. And once this line is in full operation, roughly INR 125 crores would be the addition into the top line.

And what is the real hurdle that's come up with in relation to the acquisition of land? Could you speak a little bit about that?

There's a one or two parcels of the land, which is in between is getting sorted out.