HIL Aims For $1 Billion Revenue In Next Three To Four Years
This may even be possible, with the announcement of its acquisition of Crestia Polytech for Rs 265 crore.
HIL Ltd. is aiming for a topline of $1 billion over the next three to four years, according to its third-quarter investor presentation.
This may even be possible with the announcement of its acquisition of Crestia Polytech Pvt. for Rs 265 crore.
The company, part of the $2.9 billion CK Birla Group, will also take over Crestia's four wholly owned subsidiaries: Topline Industries Pvt., Aditya Polytechnic Pvt., Aditya Industries and Sainath Polymers Pvt.
Crestia and its subsidiaries, with an estimated turnover of Rs 330 crore in FY24, are strong players in the pipes, fittings and water tank sector, with three flagship brands: Topline, Rockwell, and Soniplast.
The acquisition immediately doubles HIL's pipe and fitting portfolio, along with doubling its stock-keeping units, according to Akshat Seth, managing director and chief executive officer of the company.
This would also triple HIL's current pipe capacity from 35,000 MTPA to 1.15 lakh MTPA.
Segmental Breakup
Currently, the polymer business constitutes 16% of the company's revenue. It is split between the pipes business and the putty and construction chemicals business, with 60%/40% between the two, according to the investor presentation.
In roofing, the company has a 24% market share and commands significant premium pricing over peers, but volumes have been flat. The company expects both volume and value growth in the January-March quarter, with the Charminar brand being key to this, management said during the third quarter concall.
Building solutions saw 14% year-on-year growth in volumes in the October–December period. However, pricing has been hampered, showing muted profitability, the company said.
Flooring has been affected due to a transient phase in Europe and has seen revenue degrowth and loss-making in 9M FY24.
Polymer Solution: Next Leg Of Growth
The management expects to increase share in the polymer business from 16% currently to 25%—roughly Rs 1,000 crore in revenue.
The acquisition would aid this growth and also support profit after tax. The management also expects the pipes and fitting business to be five times of current business, growing at a fairly fast clip.
HIL currently has manufacturing plants in North, South and West India. Crestia gives access to the East and North East parts of India, which is a key growth contributor with high growth markets in Bihar, Jharkhand and the North East. It also has an advantage in logistics, serving all touchpoints in the country, Seth told NDTV Profit.
Value-enhancing measures have led to 250% growth in segmental profit before tax. Currently, PBT margin is in the low single digits, but the company is very positive about increasing it going forward.
Scale And Growth
Scale is key in the pipe business and is the major driver of profitability and margins, Seth said.
Volumes have been affected as overall realizations have been a function of declining raw material prices, the management said.
HIL has outperformed the pipes sector, with the industry seeing 9% CAGR, as against the company's 32% CAGR, due to product quality and product distinctions, according to the CEO.
The realization has been at Rs 160 per kg, with CPVC pipes accounting for 40% of sales and putting HIL in line with the top 3–4 industry players, the company said.
Going Forward
The acquisition is expected to close over the next few weeks. Seth expects to see a full impact in Q2 FY25.
It will be key to HIL's plan to get back to profitability on an overall basis, he said.