Usha Martin –
Q1 FY 25 concall and results highlights –
Revenues – 826 vs 814 cr, up 1.5 pc
EBITDA – 154 vs 146 cr, up 6 pc ( margins @ 19 vs 18 pc )
PAT – 104 vs 101 cr ( capitalisation of new facilities led to higher depreciation in Q1, ramp up of these capacities is expected to better absorb these costs in future )
Segment wise revenues –
Wire Ropes – 595 vs 553 cr, up 8 pc
Wire and Strand – 71 vs 65 cr, up 9 pc
LRPC – 88 vs 116 cr, down 24 pc
Wire rope segment is the value added, high margin segment – now contributes to 72 pc of company’s revenues
Geography wise business breakup –
India – 44 pc
Europe – 25 pc
Asia Pacific – 13 pc
Middle East – 8 pc
America – 10 pc
Steel prices / Ton @ 51.9k vs 59.2k
EBITDA / Ton @ 32.6k vs 32.2k – largely flat( indicating high degree of value addition )
Gross Debt @ 317 cr
Net Debt @ 73 cr
Key demand drivers going forward –
OEM approvals and successful project references to drive performance in US and Europe
New opportunities in Oil and Offshore sectors
New orders from Wind energy sector – due increased focus on green energy
Launch of Synthetic slings in later half of FY 25
Indian govt’s focus on ropeways, bridges and high speed railways
Major projects like – Parvatmala – are expected to drive demand over next few years
Increased high – rise constructions leading to increased demand for elevator ropes
During the Qtr, company’s primary focus was on ramping up the newly established facilities for their value added products. This should result in stronger performance in H2 for the company
GoI has planned aprox – 250 ropeway projects for next 5-7 yrs – should augur well for the company
Company’s Galfan wire capacity is coming up in next 3-4 months. These wires are used across Europe to make rockfall barriers in the hilly areas. The same are also required extensively in the Himalayan regions. This should again be a good demand driver for the company
Company is expanding its capacity in their European venture. Even in Europe, demand is good for Oil, Gas and Wind energy sectors
Expecting double digit demand growth for the elevator ropes for next 3-5 yrs – both in India and International mkts
Company expects volume and value growth ( both ) to pick up wef Q2. Even in relatively commoditised segment of LRPC ropes, company is focussing on plasticated and galvanised LRPC to drive better value
Company is reasonably confident of maintaining EBITDA / Ton of around 32k for the remainder of the this FY ( despite weakness in steel prices )
Company sees it various initiatives ( that its taking these days ) to bear good economic fruit inside next 2 yrs
Company’s incremental capex are all in the value added areas – this should be margin accretive going fwd. Even in LRPC segment, margins should improve going forward due Galvanisation and Plasticisation of their products
Guiding for a volume growth of 10 pc for FY 25 ( that’s because – even if the value added products grow strongly, the demand is tepid in the general purpose ropes and LRPC segments ). This volume growth should accelerate wef FY 26 – provided there are no major geo-political tensions / headwinds
Employee costs should moderate going into Q2 and onwards as there were some one time performance bonuses that were given to the employees in Q1
Price for normal LRPC is around 65-70k / Ton. For plasticated, this price rises to between 135-170k / Ton – depending on the specifications
General purpose ropes sell for around 135 k / Ton where as specialised / value added ropes sell for double that price
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation
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