Release Date: May 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved highest ever EBITDA, profit after tax, EPS, and margins in FY24.
- EBITDA increased by 18% to INR1,223 crores, PAT increased by 23% to INR975 crores, and EPS increased by 23% to INR73 per share.
- Treasury level almost doubled to INR1,859 crores, even after large utilizations towards prepayment of debt and dividend.
- Included in various NSE indices, increasing FII and DII holding to 16% from 7%.
- No ICDs to unrelated parties or corporate guarantees outstanding as of 31 March '24, resolving a major concern.
Negative Points
- Revenue declined by 4% in FY24.
- Performance in terms of tonnage, revenue, and profitability was lower in Q4 FY24 versus Q3 FY24 due to a delayed large order.
- Lower production in Q4 FY24 led to lower revenue and profit.
- Exports were only 5% to 6% of total dispatches in FY24 and have not yet revived.
- Preventive maintenance shutdown in Q1 FY25 expected to lead to a loss of production of at least 15,000 tons.
Q & A Highlights
Highlights of Maharashtra Seamless Ltd (BOM:500265, Financial) Q4 FY24 Earnings Call
Q: What is the EBITDA per ton for high-value orders?
A: We cannot disclose that figure. However, margins for high-value orders by definition, would be more than the mean margin. (Kaushal Bengani, Deputy General, IR and Finance)
Q: What is the target EBITDA per ton margin for FY25 and FY26?
A: It is difficult to give a specific figure due to our short-cycle order books. However, margins are generally expected to remain above INR15,000 per ton. (Kaushal Bengani, Deputy General, IR and Finance)
Q: When can we expect the hot mill upgrade and Telangana facility to commercialize?
A: The Telangana finishing line is expected to be completed within this financial year. The hot mill upgrade will be considered thereafter. (Kaushal Bengani, Deputy General, IR and Finance)
Q: What is the export mix in the INR700 crores order received and when do we expect exports to recover?
A: Exports were around 5% to 6% of total dispatches in FY24. We hope for a revival soon, but domestic demand remains strong. (Kaushal Bengani, Deputy General, IR and Finance)
Q: What is the future capital allocation policy and are any inorganic opportunities being evaluated?
A: We are conserving cash for judicious use, including potential inorganic opportunities in core business, and have improved our dividend payout. (Kaushal Bengani, Deputy General, IR and Finance)
Q: Why are we expecting lower EBITDA margins in the future?
A: The high EBITDA margin in Q3 FY24 was an exception due to a timing mismatch in raw material prices. We expect margins to stay above INR15,000 per ton. (Kaushal Bengani, Deputy General, IR and Finance)
Q: What is the peak revenue expected from the Telangana unit once fully operational?
A: We expect revenue to go up to INR1,600 crores to INR1,700 crores annually from the Telangana unit, subject to market conditions. (Kaushal Bengani, Deputy General, IR and Finance)
Q: Are there any plans for pipes for the hydrogen market?
A: Discussions are ongoing, but it is too early to make any definitive comments. (Kaushal Bengani, Deputy General, IR and Finance)
Q: What is the impact of billet prices on margins?
A: There has been no significant move in the price of round steel billets. Our margins are locked through back-to-back booking of raw materials. (Kaushal Bengani, Deputy General, IR and Finance)
Q: What is the market size for seamless pipes in the US and Canada, and who are the key competitors?
A: The market size is very large, with key competitors including ArcelorMittal, JFE, Tenaris, TMK, Jindal Saw, and Vallourec. (Kaushal Bengani, Deputy General, IR and Finance)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
