Expect 20-22% topline growth in FY16: Star Ferro

Sanjay Gupta, CEO of Star Ferro and Cement said there has been decline in cement prices in eastern and North-Eastern states. September-onwards, prices have reduced by Rs 20-25 per bag in North East, Bihar and West Bengal, he said. However, the company still maintains its topline growth expectation of 20-22 percent for FY16, Gupta said. Demand in North East has increased by 4 percent whereas demand in other parts is yet to pick-up, he said. Gupta expects fourth quarter to be slightly better than the third quarter where he expects 23 percent dispatch growth. For the second half of the year, dispatch growth is expected to be 25 percent and for full year, it will be 22 percent, he said. Below is the verbatim transcript of Sanjay Gupta’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18.Ekta: You have a strong market share in the North-East and you are building up your market share, we understand in more of the east part of India. Can you just tell us how exactly cement prices are shaping up in both the regions at this point in time?A: The cement prices in East and particularly in North-East has seen a decline in the last quarter. If I look at it from September onwards the prices in North-East must have come down by around Rs 20-25 and similar situation is also in Bengal and Bihar. So, entirely if I take everything put together it will be somewhere around Rs 20-25 for the entire eastern region. Anuj: For your investors if you could tell us over the next few quarters what kind of revenue growth rate you will see and even for net profit if you could tell us?A: We are looking at a top-line growth of around 20-22 percent so we are hopeful of achieving that top-line growth. Ultimately, what is happening is that the demand which we expect to come in and till November whatever we have seen demand in the North-East has only grown at around 4 percent. On the other part of east which is Bengal, Bihar and Jharkhand we have not seen exactly the demand which is going to – what we are expecting is that we will come back to around 8-9 percent kind of a growth but that has not come in. Going forward, in the quarter four, our expectation is that definitely we will see some improvements over quarter three but we are not expecting that somewhere it will not range anything between 9-10 percent what we had earlier estimated. However, what we are expecting that top-line growth be still maintained at 20 percent and definitely that will entail some amount of pricing pressure which we have already seen in both the market. However, we are confident to achieve that top-line growth. Ekta: For FY16, right the entire annual year you are talking about?A: We are looking at 20 percent for the entire FY16. Ekta: Can you give us the sense in terms of what your dispatches are looking like at this point in time and may be your projection for the entire second half which would include Q4?A: Quarter three we must have seen a dispatch growth of around 20-23 percent that is what is expected. I don’t have the number for December as yet because we have just ended the December. However, we expect that on totality I think up to H2 we will be definitely somewhere around 25 percent on totality and in H1 we were at 18 percent. So, put together we think that FY16 will end at somewhere around 22 percent.