In an interview with CNBC-TV18, SV Kabra, Chairman Managing Director of Kabra Extrusions, spoke about the latest happenings in company and the road sector.
Below is a verbatim transcript of the interview. Also watch the video.
Q: You have undertaken some capacity expansion plans. Could you throw some more light on that? How will this augment your capacity and at the end of it what will your revenue profile look like?
A: We have planned an expansion investment of Rs 85 crore. This would mean to install more machines to manufacture the machines which we supply and also for infrastructure facilities but this Rs 85 crore investment will be spent in about 2-3 years time from this year and we are not investing anything in land and building. We are very much short of space and manufacturing capacity. We will be able to enhance our capacity at least by about 60-70%. In terms of components we will be able to double the production after the investment, after our planning is complete.
Since the order booking is quite good, we feel that it is very much necessary and we intend to use the premises which have been leased by August-September this year.
Q: Even in the current year your growth has been fairly decent. Not only have you managed a Rs 40 crore increase in your revenues, and that works out to a little over to 85%, your profits also have doubled. What went so right in FY10 and is this a performance that you can improve upon in FY11?
A: As I said, our efficiency would increase. We have got fairly good order book and last year we had sales of about Rs 194 crore. That was around about 23% growth and we expect the same kind of growth to remain looking at the order booking, looking at the demand for our plants and in the end the sectors where we are connected i.e. the pipe business, agriculture, infrastructure and construction which are going to grow at the same time packaging which is going to grow with the retail boom coming in.
Q: You have outlined an Rs 85 crore in terms of expansion, is anything of this going to be debt and would you be tapping the equity markets?
A: No, we are a debt free company, I think most of the investment would be coming from our internal accruals and if required we might take some borrowing from the bank but we are not intending to raise any capital.
Q: Your earnings per share has gone up from about Rs 14.5 to nearly Rs 29, where does it go from here in FY11 can you still report such an improvement?
A: Yes because we feel that since our efficiency would improve and the aw material prices as on today are quite stable and with the increase by about 23-24% in our turnover, we should be able to increase our profitability also atleast by few percentage maybe 10-15%.
Q: You said you are expecting efficiency to improve, have you any guidance to offer on what can your operating margins be?
A: Last year the operating margins were quite good and we are confident that the same trend would continue. But the efficiency improvement would only mean that we will be able to deliver our orders in a faster way and that way our efficiency would increase.
Kabra Extrusion stock price
On November 27, 2015, Kabra Extrusion Technik closed at Rs 92.95, down Rs 0.85, or 0.91 percent. The 52-week high of the share was Rs 119.00 and the 52-week low was Rs 63.00.
The company's trailing 12-month (TTM) EPS was at Rs 2.60 per share as per the quarter ended September 2015. The stock's price-to-earnings (P/E) ratio was 35.75. The latest book value of the company is Rs 44.70 per share. At current value, the price-to-book value of the company is 2.08.
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