Kamdhenu Ventures Limited — Q4 FY25 earnings call

Call held 14 May 2025

Management summary

Kamdhenu Ventures reported a mixed Q4 and FY25. The steel business showed resilience with revenue and profit growth, maintaining a strong market share and debt-free status. However, the paint business, Kamdhenu Ventures Limited, experienced significant declines in revenue, EBITDA, and PAT due to intense competition and a challenging market. Management outlined strategies for both segments, including capacity expansion for steel and premiumization for paints, while addressing investor concerns regarding share price performance.

Highlights

  • FY25 Steel business revenue grew 3% YoY to INR748 crores, demonstrating resilience in a challenging market.

  • FY25 Steel business PBT grew 20% YoY to INR80 crores, and PAT grew 21% YoY to INR61 crores.

  • Steel business royalty income increased 8% YoY to INR139 crores, highlighting a capital-efficient revenue stream.

  • The company maintained a debt-free status as of March 31, 2025, with ROCE at 25.5% and ROE at 19.2%.

  • Management is exploring strategic stake acquisitions in franchisee units and expanding capacity for the steel business.

Concerns

  • FY25 Paint business revenue declined 8.9% YoY to INR266 crores, and EBITDA fell 22.7% YoY to INR17 crores.

  • FY25 Paint business PAT significantly declined 50% YoY to INR7 crores, with profit margin reducing from 4.86% to 2.71%.

  • The paint business faced intense competition from new entrants and a slowdown in construction activity, impacting financial performance.

  • An individual investor raised strong concerns about an 80% decline in KAMOPAINTS' share price, citing foul play and market issues.

Key financials

  1. Revenue ₹266 Cr -8.9%YoY
  2. EBITDA ₹17 Cr -22.7%YoY
  3. PAT ₹7 Cr -50%YoY
  4. EBITDA Margin 6.3%
  5. PAT Margin 2.7%

What they filed

Q1 FY27: net profit up 40.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue0 0 0 0 0 0 0 1
EBITDA-0 -0 -0 -0 -0 −42%-0 −54%-0 −131%-0 +35%
Net profit-0 -0 -0 -0 -0 −78%-0 −90%0 +218%-0 +40%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Steel Business (Group Level)
    ₹748 Cr Revenue₹80 Cr PBT₹61 Cr PAT₹139 Cr Royalty Income34.4 lakh metric ton Franchisee Volume1,19,841 metric ton Own Manufacturing Volume25.5% ROCE19.2% ROE

Capital allocation

  • Capex ₹10 Cr
    • Tinting machines and balancing equipment for paint business ₹10 Cr
    So far, we have not made any capex plan, except certain addition to the tinting machines and some balancing equipment. There is no major expenditure to be incurred in the paint business. In fact, rather, we are exploring the possibility to outsource the material from some units. It would be ranging between INR10 crores to INR15 crores only.
  • Debt Debt disclosed
    We continue to remain debt free as on March 31, 2025.
  • M&A Franchisee units (Steel Business) Acquisition · In progress · Consideration ₹[object Object] (cash)

    Reshaping franchisee model and expanding in-house manufacturing capacity.

    INR45 crores received from preferential issue (total INR97 crores) invested in franchisee unit, office, and brand strengthening.

    So far, we have received INR45 crores from the total preferential issue of INR97 crores. And it has been invested in the franchisee unit and there are certain other expenditures for acquiring the office and brand strengthening, which as per the objective of that issue, we are using that fund.

Guidance & targets

Volume

  • Steel Business Volume Growth Volume · FY26 · High confidence 14%
    We are targeting around 14% over the last year, 14%. We have made projections for 14% increase in this financial year.

    — Harish Agarwal

Capacity

  • Steel Business Franchisee Capacity Increase Capacity · by end of FY26 · High confidence 20%
    Rather, we are focusing on the increase, the capacity of the existing units. And we are planning to increase by 20% of the capacity by end of this financial year, and also considering that out of that, around 10% to 12% will be operational within this financial year.

    — Harish Agarwal

Profitability

  • Steel Business Bottom Line Increase Profitability · FY26-FY27 · Medium confidence 20-25%
    And with regard to revenue, we are also expecting the increase of the bottom line by 20% to 25% in FY '26-'27.

    — Harish Agarwal

Capex

  • Paint Business Capex Capex · FY26 · High confidence INR10-15 crores
    It would be ranging between INR10 crores to INR15 crores only.

    — Harish Agarwal

Market Share

  • Steel Business Growth Market Share · this year (FY26) · Medium confidence 20-25%
    We are trying to maintain a growth of 20%-25% this year.

    — Satish Agarwal

Market Growth

  • Indian Paint Industry CAGR Market Growth · through 2030 · High confidence 9.4%
    The industry is projected to grow at a CAGR of around 9.4% through 2030, offering significant opportunities for expansion.

    — Sunil Agarwal

What to watch in Q1 FY26

Paint Business PAT Margin Improvement

next 6 months (2 quarters of FY26)
Current 2.71%
Target Improvement as competition subsides

Why it matters

Profitability of the paint business is under severe pressure due to competition; improvement is key for investor confidence.

So I think that in the next 6 months, in the 2 quarters of FY26, the competition will almost begin subsiding as the players choose to position themselves by the end of FY26.

Risks & concerns

  • Intense Competition in Paint Business

    high

    New entrants have led to a very competitive market, causing significant pressure on sales, discounting, and margins, reducing PAT margin from 4.86% to 2.71%.

    Management acknowledged

  • Significant Decline in Share Price

    high

    An individual investor highlighted an 80% decline in KAMOPAINTS' share price, attributing it to foul play and market issues, which management acknowledged and stated actions were taken.

    Analyst acknowledged

  • Slowdown in Construction Activity

    medium

    FY25 was a challenging year due to a slowdown in construction, impacting demand for both steel and paint products, though government initiatives are expected to boost demand.

    Management acknowledged

  • Freight Disadvantage for Paint Business in South India

    medium

    The paint manufacturing unit's location in North India creates a freight disadvantage for supplying to Southern India, limiting market penetration.

    Management acknowledged

Q&A highlights

5 direct
Paint Business Competition and Profitability Impact Direct
Ultimately, all the new entrants have access to the same market. And the old established players, in which Kamdhenu also plays a small role, I feel that everyone has fed the same demand in the dealer network. There is definitely competition in the market. ... Compared to last year, our profit is reduced from 4.86% to 2.71%.

Analyst questioned the reasons for the challenging paint business environment, and management directly attributed it to intense competition from new entrants, leading to significant margin compression.

Asked by Rohit Mehra

KAMOPAINTS Share Price Decline and Investor Concerns Partial
See what happens your question is correct and your grievance is also right. In paint the way price escalation was there in between in this financial year in that. It might be in your knowledge that some people have foul play and social media messages is also there because of that some people have misused it and extraordinary price movement you and I have also seen. ... We have done our efforts that we should maintain our bottom line.

An individual investor directly challenged management on the 80% share price drop, alleging foul play and incompetency, which management acknowledged and partially attributed to external factors and past internal issues they are addressing.

Asked by Mahnovar

Steel Business Growth Trajectory and Targets Direct
As Harish ji told you, the bottom line targets for the steel industry have increased by 20%, and the royalty income has also increased by 9%. ... We are trying to maintain a growth of 20%-25% this year.

Analyst inquired about the steel business's future growth, and management provided specific targets for bottom line and overall growth, indicating confidence despite a slow year.

Asked by Rohit Mehra

Paint Business Geographic Expansion Strategy Direct
No, we have not closed any sales depot in any region. Our entire effort is to improve our retail network, and we are strengthening where we were falling weak. There is no such area where we are falling weak, and there is one drawback our unit is in North India, and we are not able to supply to the entire country just because of freight disadvantage. ... we will put a new project in the middle or South India and cater it.

Analyst asked about sales depot closures, and management revealed a strategic plan to overcome freight disadvantages in North India by establishing a new project in the South or Middle of India.

Asked by Akshay Raut

Steel Business Franchisee Capacity Expansion vs. New Additions Direct
In fact, we are not focusing into the increase of the number of franchisees. Rather, we are focusing on the increase, the capacity of the existing units. And we are planning to increase by 20% of the capacity by end of this financial year, and also considering that out of that, around 10% to 12% will be operational within this financial year.

Analyst sought clarity on franchisee expansion, and management specified a focus on increasing existing unit capacity by 20% rather than just adding new franchisees, with a timeline for operationalization.

Asked by Sakshi Pratap

Paint Business Capex and Pricing Strategy Direct
It would be ranging between INR10 crores to INR15 crores only. ... In fact, price hike in the paint business is driven by the major players like the new entrant Opus Birla and Asian Paints. If they increase their price, then the rest of companies also follow that line.

Analyst asked about future capex and pricing, revealing modest capex plans for the paint business and a strategy to follow industry leaders on price hikes.

Asked by Sakshi Pratap

2 min read 5 chapters

Detailed narrative

Steel Business Demonstrates Resilience Amidst Challenging Environment

The steel business reported a 3% year-on-year revenue growth, reaching INR748 crores in FY25, despite a challenging year marked by a slowdown in construction activity. Profit Before Tax (PBT) for the steel segment grew 20% YoY to INR80 crores, and Profit After Tax (PAT) increased by 21% YoY to INR61 crores. Royalty income, a capital-efficient revenue stream, also saw an 8% growth to INR139 crores, reflecting the brand's strong recognition and market share of 20% in the organized retail branded TMT segment. The company remains debt-free with a healthy ROCE of 25.5% and ROE of 19.2%.

Paint Business Faces Significant Headwinds and Profitability Decline

Kamdhenu Ventures Limited, primarily the paint business, experienced a difficult FY25 with revenue declining 8.9% YoY to INR266 crores and EBITDA falling 22.7% YoY to INR17 crores. PAT saw a substantial 50% reduction to INR7 crores, with the PAT margin compressing from 4.86% to 2.71%. This underperformance is largely attributed to intense competition from new market entrants, softer demand, and slower construction activity. Management acknowledged the competitive pressure but expects the market to stabilize within the next 6 months.

Strategic Initiatives for Future Growth and Market Penetration

For the steel business, management is focusing on increasing the capacity of existing franchisee units by 20% in FY26, with 10-12% expected to be operational within the year, targeting a 14% volume growth. They are also exploring strategic stake acquisitions in select franchisee units, funded by INR45 crores from a preferential issue. In the paint business, the strategy involves climbing the value chain by increasing the share of high-value, premium finish products, expanding the dealer network, and strengthening the supply chain to drive revenue growth and improved EBITDA margins. Plans include increasing presence in South and West India to counter freight disadvantages.

Capital Allocation Focused on Capacity and Brand Strengthening

The company plans a modest capital expenditure of INR10-15 crores for the paint business in FY26, primarily for tinting machines and balancing equipment, with potential for material outsourcing. For the steel business, INR45 crores from a preferential issue has been invested in franchisee units, office infrastructure, and brand strengthening, aligning with the objective of expanding in-house manufacturing capacity. The company maintained a debt-free status as of March 31, 2025, providing financial flexibility for these strategic investments.

Management Addresses Investor Concerns on Share Price Performance

Management directly addressed concerns from an individual investor regarding an 80% decline in KAMOPAINTS' share price. They acknowledged the grievance, attributing some of the price escalation to 'foul play' and social media misuse, for which actions including filing an FIR were taken. While acknowledging the impact of market competition on profitability (PAT margin reduced from 4.86% to 2.71%), management reassured that efforts are underway to restore market share, sales, and bottom line, expressing confidence in the company's future.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Durables earnings calls