Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EBITDA for Q1 FY25 increased by 36% year-on-year to INR159 crores, indicating strong operational performance.
- Surya Roshni Ltd (BOM:500336, Financial) is a zero-debt company with a cash surplus of INR160 crores, providing financial flexibility.
- The professional lighting segment saw an 18% growth, driven by infrastructure and industrial projects.
- The appliances segment witnessed a 15% volume growth, with the fan business recording a 43% volume growth.
- The company has a robust order book of approximately INR600 crores to INR700 crores, primarily from the oil and gas sectors.
Negative Points
- There was an 8-9% price erosion in the steel segment, impacting overall revenue.
- Revenue growth in the Lighting and Consumer Durables segment was modest at 3%, despite challenges in price erosion.
- The steel pipe segment faced a slowdown in government projects due to the general election.
- The company anticipates significant capital expenditure (CapEx) of INR300 crores for the year, which may impact cash flow.
- The modernization of the cold-rolling plant and the spiral pipe plant are expected to commence operations only by Q3 and December '24, respectively, indicating potential delays in capacity expansion.
Q & A Highlights
Q: Sir, congratulations on a good set of numbers. We have witnessed a very strong improvement in the gross margins. Can you give some commentary on the steel pipe segment and the Lighting and Consumer Durables segment?
A: Overall, margins have improved. For the remaining quarters, the gross margin will continue to improve. (Raju Bista, Managing Director, Whole-time Director)
Q: Just want to confirm the INR300 crores CapEx that you have outlined for this year. INR100 crores is for those two plants. Where is the other INR200 crores targeted?
A: The remaining INR200 crores is targeted towards various strategic expansions and technological advancements. (Raju Bista, Managing Director, Whole-time Director)
Q: Is there any CapEx planned for the LED division, Lighting and Consumer Durables division?
A: No, there is no CapEx planned for the LED division this year. (Raju Bista, Managing Director, Whole-time Director)
Q: And this INR500 crores of CapEx is going to be funded entirely from internal accruals?
A: Yes, the CapEx will be funded entirely from internal accruals. (B. Singal, Chief Financial Officer, Company Secretary)
Q: Congrats on a good set of numbers. Can you provide more details on the volume growth in the steel segment?
A: We have witnessed a 7% volume growth in the steel segment. Value-added products such as API, spiral, and galvanizing pipes constitute about 46% of our total revenue in Q1 FY25. (Raju Bista, Managing Director, Whole-time Director)
Q: Can you elaborate on the new product segment of Mono Block Residential Pumps?
A: We have entered into the Mono Block Residential Pumps segment with the launch of Surya Water Pumps in July. The market size for such pumps is around INR1,000 crores in India, driven by the Har Ghar Nal Se Jal scheme of the Government of India. (Raju Bista, Managing Director, Whole-time Director)
Q: What are your revenue growth and EBITDA targets for FY25?
A: We anticipate revenue growth of 12% to 15% for FY25, driven by rising consumer aspirations and government focus on infrastructure. Our target is to achieve an EBITDA of INR180 crores for the lighting business by focusing on higher-margin products and cost management. (Raju Bista, Managing Director, Whole-time Director)
Q: Can you provide an update on the modernization of the cold-rolling plant at Bahadurgarh?
A: The modernization of the cold-rolling plant at Bahadurgarh is expected to commence operations in Q3 of FY25. (Raju Bista, Managing Director, Whole-time Director)
Q: What is the status of the spiral pipe plant at the Gwalior facility?
A: The spiral pipe plant at the Gwalior facility, with an annual capacity of 60,000 tons, is on track to begin operations by December '24. (Raju Bista, Managing Director, Whole-time Director)
Q: What are your expectations for the steel pipe segment in the coming quarters?
A: We anticipate robust growth across our pipes segment, supported by significant infrastructure initiatives by the Indian government and stabilization of steel prices. We expect 12% to 15% volume growth in the steel pipe segment for FY25. (Raju Bista, Managing Director, Whole-time Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
