IFBIND - IFB Industries Limited Share Price

Management Outlook and Key Points:

1. Revenue Growth & Challenges:

• Q3 FY25 revenue grew 8% YoY (Rs.1,232 cr vs. Rs.1,140 cr), but November-December saw subdued demand for washing machines, impacting margins.
• Full-year revenue growth stood at 12% (9-month: Rs.3,665 cr vs. Rs.3,277 cr).

2. Margin Improvement Initiatives:

• Cost Reduction: Engaged Alvarez & Marsal to drive savings of ~Rs.200 crore over 12"“18 months via material cost optimization (Rs.140"“170 cr), logistics, and design improvements. Early benefits expected by March 2025.
• AC Segment: Cost-down measures (e.g., compressor sourcing) to boost margins; EBITDA-positive now, targeting 4"“5% EBIT margins in FY26.

3. Demand & Segment Performance:

• Washing Machines: Unanticipated slowdown in Q3; management aims to revive sales via targeted promotions and improved marketing.
• ACs: Strong demand; capacity expansion planned to meet growth (targeting 6% market share).
• Refrigerators: Subsidiary IFB Refrigeration remains loss-making but aims for breakeven by mid-FY26 (monthly sales target: 35,000"“40,000 units).

4. Strategic Priorities:

• Product Launches: New washing machine models (Oct 2024) and extended refrigerator warranties (4 years) to drive traction.
• Retail Expansion: Focus on improving IFB Points (retail outlets) performance; addressing pricing conflicts with large retailers.

5. Operational Efficiency:

• Streamlining plant operations (e.g., consolidating Goa facilities) and workforce restructuring to reduce overheads.

6. Outlook:

• Near-term: Expect margin recovery in Q4 FY25 and FY26 via cost initiatives and higher AC/washer sales.
• Long-term: Confident in premium appliance segments (built-in kitchen products) despite slow adoption.

Question 1 (Manoj Gori, Equirus Capital):
"During channel checks, national chains indicated strong IFB washing machine sales, but reported results show muted growth. Why is there a mismatch between channel feedback and primary sales?"
Answer: October performed well, but November and December saw unexpected washer sales declines, impacting primary sales. Management attributes this to industry-wide softness in washer demand despite strong AC sales, though exact reasons remain unclear.

Question 2 (Manoj Gori, Equirus Capital):
"Margin improvements have been delayed. When will cost-saving initiatives materialize, and what is the timeline for margin recovery?"
Answer: Margins were impacted by lower-margin AC sales outpacing washers. Cost-saving initiatives with Alvarez & Marsal targeting ~INR 200 crore savings over 12"“18 months (focus: material costs, logistics, design optimization) will start yielding benefits by March 2025. Full impact expected by FY26.

Question 3 (Anand Mundra, Soar Wealth):
"Should IFB exit low-volume segments like built-in dishwashers/chimneys? Do these businesses meaningfully impact financials?"
Answer: Management believes these premium segments have long-term potential as India's housing evolves. While current performance is weak, they plan to revamp strategies (dedicated teams, marketing) to capture future growth.

Question 4 (Anand Mundra, Soar Wealth):
"Break down the INR 200 crore cost-reduction plan. Which cost heads contribute most?"
Answer: ~INR 140 crore from material cost reduction (weight optimization, electronics sourcing), INR 20 crore from logistics, and INR 40 crore from overhead rationalization (e.g., plant consolidation, workforce efficiency).

Question 5 (Natasha Jain, PhillipCapital):
"Are weak washer sales linked to consumers prioritizing AC purchases? How is AC demand shaping up?"
Answer: AC sales grew due to market tailwinds, but washer demand slowdown was unexpected. AC capacity is sold out for summer 2025; margins will improve with cost-down initiatives. Washer sales recovery is critical for margin rebound.

Question 6 (Resham Jain, Svan Investments):
"Why are IFB Points (exclusive stores) underperforming? What's the profitability mix?"
Answer: ~20"“25% of IFB Points face local management issues. Restructuring is underway, with December/January showing improvement. Challenges include competition from larger retailers offering discounts, which IFB aims to curb through stricter pricing policies.

Question 7 (Nisarg Vakharia, NV Alpha Fund):
"AC business EBITDA turned positive. Is this sustainable? What's the margin outlook?"
Answer: AC is now EBITDA-positive. Margins will improve further with cost reductions (e.g., compressor sourcing, design changes) and higher volumes. Targeting 4"“5% EBIT margins in FY26.

Question 8 (Shreyansh Jain, Svan Investments):
"Can IFB meet its FY25 AC volume target (4"“5 lakh units)? How is product acceptance vs. competitors?"
Answer: Volumes lag due to a slow start, but H2 FY25 demand is strong. AC capacity (500k units annually) will be fully utilized by summer. Pricing is competitive vs. Samsung, but LG remains premium.

Question 9 (Abhishek Ghosh, DSP Mutual Funds):
"What's the update on hiring a CEO for the Home Appliances division?"
Answer: Over 400 candidates screened, but none met the dual requirement of sales/marketing expertise and technical acumen. The search continues for a leader capable of end-to-end business management.

Question 10 (Venkatakesava Turaga, Bestpals Research):
"How will IFB sustain AC/refrigerator growth if industry tailwinds fade?"
Answer: Confidence stems from product quality (e.g., 4-year refrigerator warranty) and regional traction (strong in East/North). Market share gains will rely on localized strategies and retailer partnerships, even in underpenetrated states like Andhra/Telangana.