Surya Roshni –
Q1 FY 25 concall and results highlights –
Revenues – 1893 vs 1875 cr ( despite slowdown due to elections, price erosion in Steel Pipes and Lighting divisions )
Gross Margins @ 24 pc
EBITDA – 151 vs 114 cr, up 36 pc ( margins @ 8 vs 6 pc )
PAT – 92 vs 59 cr, up 56 pc
EBITDA uptick led by sharp uptick in EBITDA / Ton in the steel pipes business and steady margin improvement in lighting and consumer durables segment
Company is debt free. Cash on books @ 156 cr
Segment wise results –
Lighting and consumer durables –
Revenues – 385 vs 374 cr ( despite 9 pc price erosion in LED lighting segment )
EBITDA – 35 vs 33 cr
Margins @ 9 vs 8.8 pc
PBT – 26 vs 26 cr
Steel pipes and Strips –
Revenues – 1509 vs 1503 cr ( volumes up 7 pc despite slowdown in Govt spending in Q1 )
EBITDA – 124 vs 83 cr
EBITDA / Ton @ Rs 6065 vs Rs 4388 ( on account of better product mix. Value added pipes – Galvanised, API and Spiral accounted for 46 pc of revenues )
PBT – 97 vs 55 cr
Steel Pipes manufacturing facilities –
Bahadurgarh, 53 acres
Anjar, 96 acres
Gwalior, 51 acres
Hindupur, 17 acres
Lighting manufacturing facilities –
Kashipur, 46 acres
Gwalior, 44 acres
Company is largest manufacturer and exporter of ERW pipes. Company is also No-2 lighting brand in India – mainly focussed on rural / semi urban areas
Company is the leading player in Large Diameter pipes, API pipes in India. Their products in these segments command a premium pricing of 6-8 pc over its peers – which is a very big deal in the pipes business. The company has earned this through 40 years to hard work
Fans business showed a 43 pc volume growth
Appliances business showed a 15 pc volume growth
Have launched – residential pumps in Q1
Aim to grow the consumer durables and lighting business by 10-12 pc in FY 25
Expecting 12-15 pc volume growth in steel pipes segment in FY 25
Gross margins improved in Q1 due company’s greater focus on value added products – both in Steel pipes and Lighting segments
Gross margins should further improve wef Q2
Additional capacities of 50k MT ( CR pipes and 8″ pipes ) should come online in Q3. Additional capacities of spiral pipes ( additional 60k MT ) should also come on stream in Q3
Company has lined up a capex of 250 cr and 200 cr respectively for this FY and next FY – for steel pipes division. Post this capex, company’s capacities will increase from 12 lakh MT / yr to 19 lakh MT / yr
Not likely to add any more capacities in Lighting and CD segment for next 1 – 1.5 yrs ( as they have adequate capacities )
Likely to maintain EBITDA / Ton > 6000 for FY 25
Aim to generate an EBITDA of 675 – 700 cr for FY 25
Company believes, there is a strong case for de-merger of both the businesses. The board will finalise the same
Company has good brand equity in the FMEG space. Hence the new launches in recent years ( like fans, pumps ). Company can leverage the same going forward. At present Fans + Consumer Durables account for 18 pc of this division’s sales
Lighting business had a rough past 2-3 yrs due steep price erosions. Going fwd, things should improve as a lot of unorganised and non-core competition is likely to abate. This should augur well for the company
Company is hopeful that lighting division’s EBITDA margins should improve to 12 pc levels in 1-2 yrs. In Steel pipes division also, EBITDA / Ton should improve to > Rs 7000 / Ton due greater focus on value added products ( this should structurally improve the margins trajectory of the company )
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation
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