Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved a record-breaking sales volume of 1,22,000 tons, marking a 45% increase compared to Q1 FY 24.
- Revenue rose impressively by 35%, reaching an all-time high of INR 867 crores.
- EBITDA more than doubled, increasing by 101% to INR 42.69 crores.
- Profit after tax surged by 125%, climbing to INR 18.05 crores.
- Successfully supplied steel pipes for prestigious projects like Noida International Airport and Cobra Solar Park.
Negative Points
- Price volatility in the domestic and international markets posed challenges.
- The election quarter in India led to a slowdown in government activities.
- Sharp correction in steel prices over the last couple of months impacted inventory valuation.
- Current capacity utilization is at 64-65%, with peak utilization capped at 70%.
- The company is conservative in its EBITDA per tonne guidance due to volatile steel prices.
Q & A Highlights
Q: What contributed to the volume growth in this quarter, and are you targeting 5 lakh tonnes of sales volume this year?
A: The volume growth was mainly due to our new facility commissioned in Q4 FY24. We expect decent volume from this unit going forward and are targeting approximately 5 lakh tonnes of sales volume this year.
Q: What kind of EBITDA per tonne are you targeting for this year?
A: We aim to maintain our EBITDA per tonne around INR 3,500. This could improve if steel prices stabilize or increase.
Q: How are you managing the impact of the sharp correction in steel prices over the last couple of months?
A: We have fixed price orders against some economic contracts, and the decline in raw material prices will help us adjust. Lower steel prices could result in higher volumes in the future.
Q: What is the current capacity utilization, and what are the plans for the Secunderabad and Sanat units?
A: Our peak utilization is around 70%, and we are currently at 64-65%. We are spending approximately INR 140 crores on the Secunderabad and Sanat projects, aiming to reach 1 million tonnes capacity by the end of this financial year.
Q: What led to the expansion in EBITDA per tonne, and is it sustainable?
A: The increase in EBITDA per tonne is due to a higher share of value-added products, which now stands at 36%. We expect this to be sustainable as we aim for 50% of our capacity to be value-added products.
Q: Can you elaborate on the green hydrogen initiative?
A: We are using green hydrogen gas for annealing, making us the first in the secondary steel sector to employ this technology. This will help mitigate our carbon footprint and result in significant cost savings.
Q: What is the status of the solar power plant expansion, and how will it impact margins?
A: The solar power plant expansion is expected to be completed by September or October. This will result in significant energy cost savings, reducing our total energy costs by 25-30% for that particular plant.
Q: What are your revenue projections for this year, and how do you plan to achieve them?
A: We are targeting a top line of INR 3,500 crores for this financial year, supported by our projected volume of 5 lakh tonnes and increased capacity utilization.
Q: How are you funding your expansion plans, and what is the CapEx estimate?
A: The expansion will be funded through internal and external sources. The CapEx for the next phase is under finalization, and we will disclose details as we approach the final stages.
Q: What is your strategy for maintaining margins amidst volatile steel prices?
A: We book raw materials back-to-back with orders to minimize the impact of price fluctuations, ensuring stable margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
