Black Rose Industries Ltd Q1 FY23 Result Updates. Profitability affected by lower price realisation in acrylamide and resorcinol.

Black Rose Industries Ltd Q1 FY23 Result Updates.
Profitability affected by lower price realisation in acrylamide and resorcinol.

Black Rose industries reported a net profit of Rs. 3.6 crores from Rs. 5 crores in March 2022, declined by 28% QoQ. Net profit margin stood at Rs. 5.5% as compared to 5.77% in the previous quarter.
Revenue from operations stood at Rs. 66 crores, slipped by 24% QoQ from Rs. 86.8 crores in the March quarter.
EBITDA stood at Rs. 5.7 crores as compared to Rs. 7.4 crores in the previous quarter, down by 23% QoQ. EBITDA margin is at 8.7%.
Profitability is affected by lower price realisation in acrylamide and resorcinol. Also, oversupply of acrylonitrile in the domestic market and delay in supply of meta cresol from Germany resulted in the loss of combined sales of approximately Rs.15 crores during the quarter. Exports remained constant for the quarter.

Sales and profitability for the quarter impacted by war in Europe and the poor domestic market conditions in China.

The overall revenue from the distribution segment was down by 31% from the previous quarter. EBITDA margin unchanged over previous quarter. There was a reduced demand coupled with oversupply in China led to reduced sales volume for resorcinol. The distribution business had drop in sales of 30% over the march quarter. Sales would have been higher in meta cresol and ethanolamines if there were no delivery issues, and in acrylonitrile if the markets had not been oversupplied.

Overall manufacturing revenue decreased by 11% compared to previous quarter. Acrylamide prices declined due to the spill over effect of the market slowdown in China. The high freight cost continued to make exports of AAM-L unfeasible to the US market. Higher cost of carry-forward raw material stock led to reduced margin in the quarter. Revenue in the manufacturing business was affected due to reduced demand for acrylamide, while realization was affected due to a fall in Chinese acrylamide powder prices. Exports remained restrained with global recessionary pressure but sales were at the same level as the previous quarter

During the quarter the demand for the products fell with declining prices causing customers to adopt a wait-and-watch stance.

Domestic sales of acrylamide liquid dropped by 29% over the March quarter as demand from downstream sectors fell. The CIF India price of acrylonitrile came down to $1600/MT levels as the oversupply position in the Indian market and low plant capacity utilisation in China continued to plague the spot markets. Price realisations for acrylamide liquid reduced due to low acrylonitrile prices and with the dumping of Chinese acrylamide powder into India.
The reduction in Chinese domestic demand has caused dumping of Chinese acrylamide powder into India, resulting in large domestic inventories of Chinese product.

The shares of Black Rose Industries Ltd are trading at Rs. 188.75, up by 0.40%.

Valuations:

The return on equity (ROE) is 11.84% for the quarter ended June 2022. The price-to-earning (P/E) ratio stood at 33.4. The return on capital employed (ROCE) for the company is 15.54%. The price to book value of Black Rose Industries Ltd is 14.2. The EV/EBITDA is 23. EPS for the quarter is Rs. 0.71.