Release Date: May 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ratnamani Metals & Tubes Ltd (BOM:520111, Financial) achieved its best-ever performance for the third consecutive year, with consolidated revenues surpassing INR 5,100 crores and profits around INR 600 crores.
- The company has a strong order book of approximately INR 2,300 crores as of the beginning of the financial year.
- Ratnamani Metals & Tubes Ltd (BOM:520111) is investing in specialized products and improving efficiency and utilization, focusing on technology and infrastructure.
- The company is nearing the commissioning of a new expansion project for higher diameter pipes, which will enhance its product offerings.
- The subsidiary, Ravi Technoforge Private Limited, reported total revenue of INR 258 crores with an EBITDA margin of 11% and a net profit of INR 6.7 crores.
Negative Points
- The domestic oil and gas transmission line pipe and city gas distribution business remains muted and has yet to show signs of recovery.
- The company's carbon steel segment has seen a slowdown in order bookings, partly attributed to the election cycle and cyclical nature of the business.
- Utilization levels for some products in the carbon steel segment are as low as 50% to 55%, indicating underutilization of capacity.
- The company faces challenges in providing a clear segment-wise breakup of utilization levels due to the varied nature of its products.
- Ratnamani Metals & Tubes Ltd (BOM:520111) has not yet received orders from recent approvals, such as the LSAW approval from Saudi Aramco.
Q & A Highlights
Q: Congratulations on good numbers in a tough time. Any volume guidance in terms of how we're looking at for the rest of the year?
A: We are expecting a consolidated revenue of close to INR6,000 crores with a growth of 10% to 15% overall. However, we prefer giving guidance in terms of amounts in crores instead of volume only. (Manoj Sanghvi, Business Head - CS Pipes; Vimal Katta, CFO)
Q: Could you provide clarity on the capacities and utilization for stainless steel and carbon steel for FY '24?
A: The capacities mentioned are correct for stainless steel, with utilization levels on average between 60% to 70%. Some products in carbon steel may be at 50%-55%, while others are close to 80%. (Manoj Sanghvi, Business Head - CS Pipes)
Q: Are there any CapEx plans for the next two to three years?
A: We have ongoing projects and debottlenecking CapEx of roughly INR100-125 crores. Major CapEx decisions will be finalized in the next three to six months. (Manoj Sanghvi, Business Head - CS Pipes; Vimal Katta, CFO)
Q: Can you highlight the demand scenario for both carbon steel and stainless steel?
A: Demand for stainless steel is strong, especially from the Middle East, Europe, and India. Carbon steel demand is good for industrial pipes but muted for line pipes and city gas distribution. (Manoj Sanghvi, Business Head - CS Pipes)
Q: What is the current order book and its split in terms of oil and gas, water, and carbon vs. stainless steel?
A: As of May 1st, the order book is close to INR2,400 crores. Roughly 70% is carbon steel and 30% is stainless steel, with 20%-25% of the carbon steel order book related to water projects. (Manoj Sanghvi, Business Head - CS Pipes)
Q: What are the plans for Ravi Technoforge in FY '25?
A: We have a sales target of INR310-330 crores with expected margins of 13%-14%. The focus will be on optimizing operations and increasing exports. (Manoj Sanghvi, Business Head - CS Pipes)
Q: What is the outlook for the oil and gas demand in the Middle East by FY '26-'27?
A: We expect good demand until at least 2030 due to ongoing and announced projects in Saudi Arabia, UAE, and Qatar. (Manoj Sanghvi, Business Head - CS Pipes)
Q: Are there any plans for inorganic acquisitions?
A: Currently, there are no plans for inorganic acquisitions. (Manoj Sanghvi, Business Head - CS Pipes)
Q: What is the expected impact of the new capacities on the stainless steel segment?
A: The new extrusion capacity has improved utilization and revenue. We expect this trend to continue as we expand into more critical grades and geographies. (Manoj Sanghvi, Business Head - CS Pipes)
Q: How do you see the margins evolving with the increased share of stainless steel in the order book?
A: Our guidance remains 16%-18% for margins. While stainless steel contributes higher margins, the competitive nature of water segment orders in carbon steel balances it out. (Manoj Sanghvi, Business Head - CS Pipes; Vimal Katta, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
