BirlaNu Ltd — Q2 FY26 earnings call

Overall, the focus is on the Walls and the Pipes segment and also on the putty segment... the envelope is to the extent of nearly 300 basis points on current levels at EBITDA level, even if you apply a certain discounting factor anywhere between 150 to 200 basis points of EBITDA impact should get created by this program... full year impact we feel will be visible in FY'27. But the ramp-up to that will start happening from Q4 onwards.

Analyst sought quantification and timeline for the impact of the value enhancement program, which management provided with specific basis points and fiscal year targets.

Asked by Niteen Dharmawat

Our growth is coming from 2 or 3 axes. First, in our traditional home markets of DACH and Western Europe, we are focused on gaining share in the counters that we are playing in... The second part is some of these markets that we had invested in, have started to show revenue flow, be it U.S., be Middle East, be it Southeast Asia and China... And the third area where we have been investing a lot of effort is on building the commercial channel.

Analyst questioned how Parador is growing despite a difficult market, and management detailed the multi-pronged strategy of market share gains, new geography expansion, and channel development.

Asked by Niteen Dharmawat

So overall, in Pipes at an aggregate level would be at about 50% to 60% utilization, depending on which month of this quarter... it is hard for us to comment on if and when the antidumping duty will come... the government spending, which impacts the demand for Pipes that remains muted at the moment, no visible sign of that bouncing back... For us, the game is simple, we have to gain share from other players.

Analyst probed on the low utilization and future growth given market conditions and uncertainty around anti-dumping duties, revealing management's strategy to focus on market share gains rather than external factors.

Asked by Nayan Bhodia

See, the way to approach this is that at least from where we are sitting, we need to be prepared to fire arrows, which will create impact over the next 12 months, there will be a different set of arrows, which will create impact between 12 to 24 and then there will be a different set of arrows, which will create impact over the 24 to 36 months. These do not have to be in conflict with each other or cannibalize each other. But it is important that we do all 3.

Analyst questioned the balance between capex/M&A and existing asset optimization, leading management to explain their multi-horizon strategy for growth and profitability.

Asked by Nayan Bhodia

Sir, typically, this quarter, given all the vacations, etc. from a seasonality perspective a softer one on volume flow. So much of that can be attributed to the volume drop that happens in this... So, at an annual level of about, anywhere between € 140 million to € 144 million, it should be breakeven... So, that will be at around € 175 million.

Analyst sought clarification on Parador's sequential performance and breakeven levels, which management explained by seasonality and provided specific revenue targets for breakeven and profit contribution.

Asked by Aditya

This company from a revenue book perspective about INR 52 crore last year, profitable and a good profitability profile... The focus of the company over the last 25 years has largely been in the B2B segment... The overall portfolio of 275 additional products are direct complement to our portfolio so far... Overall, the strategic rationale... this acquisition allows us to leapfrog the development cycle of nearly 5 to 7 years... I think overall aggregate picture will run into thousands of crores by any estimate, the relevant product categories in India would be in the zone of INR 5,000 crore to INR 7,000 crore, INR 8,000 crore, but more importantly, at a high growth trajectory.

Analyst asked for detailed rationale and market context for the Clean Coats acquisition, leading to a comprehensive explanation of its strategic fit, financial profile, and market potential.

Asked by Aditya

See, the end market, overall, if I go by the first half of the year, overall, as an industry, we feel it is either been flat or there has been a marginal decline in volumes at an aggregate level... the second thing is prices have been much softer compared to last year... It is a 3 way challenge. I think given the kind of growth or demand that we have seen during COVID period, there has been some capacity additions. So yes, there is overcapacity in the market. Second, the raw material prices have also gone up disproportionate almost out of sync to the way prices have gone.

Analyst questioned the reasons for flat revenue and hit margins in roofing, and management provided a detailed breakdown of market challenges including volume decline, price pressure, overcapacity, and raw material cost inflation.

Asked by Aditya

I think partly the new capacity is not really that big a factor because our Chennai Line 2 was the only large capacity addition and that was already commissioned around early part of this year. So, it is not a big factor. I think there have been a few things that we have done internally to reboot our sales efforts. So that has helped... we have gained share in this quarter in an environment where the market itself has not grown by that much.

Analyst asked why Walls grew so strongly compared to peers, and management attributed it to internal sales reboot, re-planning, re-strategizing, pushing execution, and market share gains, rather than just new capacity.

Asked by Aditya