Expect double digit growth in FY17: Hyderabad Industries

Hyderabad Industries Ltd (HIL) has reported a creditable first quarter performance despite adverse market conditions in rural and semi urban areas, the focus markets for the company, says Prashant Vishnu Vatkar, Managing Director. The company produces green building materials, roofing solutions, panels, walling blocks, plywood substitutes, high-quality pipes and fittings, and industrial insulation.

"FY17 would be significantly better than FY16 because the way I see is the headwinds should start going down, they will not get eliminated completely as we go through the rest of the year," he tells CNBC-TV18.He expects double digit topline growth this financial year.Below is the transcript of Prashant Vishnu Vatkar’s interview to Reema Tendulkar on CNBC-TV18.Q: Q1 is typically the seasonally strong quarter for HIL. Revenues have fallen by nearly 5 percent. How does this set you up for the rest of year, can we expect a pick up?A: You are right, quarter one is the most robust quarter for us being seasonal in nature, our business. Given the market conditions, today the way we see significant headwinds in the space that we operate in, which is rural semi-urban which is for our flagship brand Charminar Roofing Sheets as well as construction of the rest of the aerocon business. Given that situation, we have been able to post a very significant result. 5 percent decline, we have to see it in perspective because if you study our financials, last year, quarter one was one of the best ever quarters for us and overall, the year we could not keep the pace because the market did not support us. Conditions were not conducive, so in that context, there is only a 5 percent decline which is a very creditable thing. More important is we had, while doing the year planning, we had looked at market conditions and our results are almost in line with our expectations, so we are actually very happy. Against all odds, we have met our internal expectations.Q: What is your expectation for FY17 revenue growth? The company has already gone through a period of no growth. FY16, your revenues were largely flat. Will FY17 be a similar year considering the headwinds you spoke about?A: If you ask me, FY17 would be significantly better than FY16 because the way I see is the headwinds should start going down, they will not get eliminated completely as we go through the rest of the year. The unfortunate part is for our business, in those quarters, the subsequent quarters, our seasonality will not be with us. Nonetheless, in spite of all this, we will post close to double digit growth. We are expecting growth and by Q4, the market conditions should also be far better.Q: What is the outlook on margins? 16.2 percent is the current earnings before interest, taxes, depreciation and amortisation (EBITDA) level, what is the comfortable margin range?A: These margins are higher. First quarter margins are always higher, because of the seasonality of the business as we discussed. The capacity utilisations are much higher, the fixed costs are allocated better. So, margins will drop, but margins will be better than last year for sure. Now, how much exact number, where we will end up, let us see because in such turbulent times, it is very difficult to put a finger on or give even a guidance on the margin. But they will surely be better than the last year’s margins.