IFB Industries Ltd.
IFB Industries Ltd. (originally know as Indian Fine Blanks Ltd.) has over 35 years of
presence in India witnessed various ups and downs in its business and is now
emerging as a stronger player in the Indian consumer durable space. IFB Industries
is India’s largest front loading washing machine manufacturer with a current market
share of 48% in the category. The company has over the years transformed from
being a single product company to a company with a bouquet of product offering
across the consumer durable space. The company’s business can be divided into two
segments, namely Home Appliances and Fine Blanking. The Home Appliances
segment accounts for almost 85% of revenues and the remaining 15% is fine
blanking segment. IFB has facilities in Kolkata, Goa and Bangalore. We believe the
company’s recent initiatives to drive profitable growth with new launches in the
consumer durable space. The company is at an inflection point moving ahead.
Some of the key highlights for the company’s future growth prospects, are as below:
Home Appliances:
This segment currently contributes about 85% to the yearly consolidated
turnover of which 60% of the revenues come from Washing machines.
IFB is the single largest manufacturer of front loading washing machines
in India for both domestic & institutional use. The growth in this segment
will be driven by a healthy growth in the existing front loader segment as
well as the new capacity for the top loader segment which is expected
to be commissioned by the end of FY15 and the expected lineup on the
newly designed products ready for launch in FY15. This coupled with
growth in the new air conditioner, microwaves and refrigerators will
drive further growth.
o Washing machines: The total Indian washing machine market is
estimated at ~3.65 million pieces of which 3 million are of top
loading and 650,000 is the market for front loading. The washing
machine industry has witnessed a de-growth last year as the
economic growth slowed down. Q2FY15 numbers are privy to
growth returning. For IFB, washing machine sales grew by ~31% YOY
and ~24% QOQ in Q2FY15 to `216 crs. Sequentially volumes
growth was at 22%. The company is in the process of setting up own
production line for the top loading machines as well. This facility is
expected to be operational by end of FY15. The capacity is
estimated to be ~ 250,000 pieces. We expect washing machines,
which accounts for ~50% of the topline to grow at ~15-17% CAGR
over the next 2 to 3 years.
o Export Potential: The Company is in development stage in
building its export operations. Test marketing in Middle East & Asia
are showing promising returns. We believe there is scope for
exports from its currently unutilized capacity. The company plans to
contract manufacture for some brands and hence utilize it’s excess
capacity. We have not accounted for this in our projections yet.
o New segments to further drive growth: The Company’s new
product segments like air conditioning, refrigerators, & microwaves
are also tracking fast growth. The company’s focus on diversifying its
product portfolio has shown positive results. These three product
sales now account for ~25% of the appliances segment sales. Air
conditioning and refrigeration clocked a growth of 72%, though on a
low base, this quarter with sales at `40.4 crs. Microwaves sales were
stagnant but expected to recover in the coming quarters. We expect
these three products put together which clocked a growth of ~37%
in Q1FY15, to grow at a CAGR of ~20-22% for the next 2 to 3
year.
IFB Industries Ltd. (originally know as Indian Fine Blanks Ltd.) has over 35 years of
presence in India witnessed various ups and downs in its business and is now
emerging as a stronger player in the Indian consumer durable space. IFB Industries
is India’s largest front loading washing machine manufacturer with a current market
share of 48% in the category. The company has over the years transformed from
being a single product company to a company with a bouquet of product offering
across the consumer durable space. The company’s business can be divided into two
segments, namely Home Appliances and Fine Blanking. The Home Appliances
segment accounts for almost 85% of revenues and the remaining 15% is fine
blanking segment. IFB has facilities in Kolkata, Goa and Bangalore. We believe the
company’s recent initiatives to drive profitable growth with new launches in the
consumer durable space. The company is at an inflection point moving ahead.
Some of the key highlights for the company’s future growth prospects, are as below:
Home Appliances:
This segment currently contributes about 85% to the yearly consolidated
turnover of which 60% of the revenues come from Washing machines.
IFB is the single largest manufacturer of front loading washing machines
in India for both domestic & institutional use. The growth in this segment
will be driven by a healthy growth in the existing front loader segment as
well as the new capacity for the top loader segment which is expected
to be commissioned by the end of FY15 and the expected lineup on the
newly designed products ready for launch in FY15. This coupled with
growth in the new air conditioner, microwaves and refrigerators will
drive further growth.
o Washing machines: The total Indian washing machine market is
estimated at ~3.65 million pieces of which 3 million are of top
loading and 650,000 is the market for front loading. The washing
machine industry has witnessed a de-growth last year as the
economic growth slowed down. Q2FY15 numbers are privy to
growth returning. For IFB, washing machine sales grew by ~31% YOY
and ~24% QOQ in Q2FY15 to `216 crs. Sequentially volumes
growth was at 22%. The company is in the process of setting up own
production line for the top loading machines as well. This facility is
expected to be operational by end of FY15. The capacity is
estimated to be ~ 250,000 pieces. We expect washing machines,
which accounts for ~50% of the topline to grow at ~15-17% CAGR
over the next 2 to 3 years.
o Export Potential: The Company is in development stage in
building its export operations. Test marketing in Middle East & Asia
are showing promising returns. We believe there is scope for
exports from its currently unutilized capacity. The company plans to
contract manufacture for some brands and hence utilize it’s excess
capacity. We have not accounted for this in our projections yet.
o New segments to further drive growth: The Company’s new
product segments like air conditioning, refrigerators, & microwaves
are also tracking fast growth. The company’s focus on diversifying its
product portfolio has shown positive results. These three product
sales now account for ~25% of the appliances segment sales. Air
conditioning and refrigeration clocked a growth of 72%, though on a
low base, this quarter with sales at `40.4 crs. Microwaves sales were
stagnant but expected to recover in the coming quarters. We expect
these three products put together which clocked a growth of ~37%
in Q1FY15, to grow at a CAGR of ~20-22% for the next 2 to 3
year.
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