Earnings Call Transcript Analysis Report #
Financial Performance #
Key Financial Metrics (Q3 FY25 vs Q2 FY25) #
- Revenue: Improved by 2% to Rs. 1,410 crores.
- EBITDA: Increased 21% to Rs. 280 crores.
- PAT: Declined to Rs. 190 crores from Rs. 224 crores.
- EPS: Declined to Rs. 14.19 from Rs. 16.73 per share.
- Reason for PAT/EPS Decline: Attributable to lower returns on treasury, pronounced in Q3 due to outsized returns in Q2.
Other Income (9M FY25 vs 9M FY24) #
- Increased by 60% to Rs. 157 crores (average Rs. 52 crores/quarter) from Rs. 97 crores (average Rs. 32 crores/quarter).
Revised Guidance/Forecasts #
- Seamless Pipes Volume (FY25): Expected to be close to 4,30,000 to 4,35,000 tons.
- ERW Pipes Volume (FY25): Expected to be close to 90,000 tons.
- EBITDA per ton (FY25): 9-month blended figure is closer to Rs. 16,500/ton.
Areas of Growth or Decline #
- Growth: Operational performance (EBITDA), seamless pipe dispatches (16% QoQ), value-added product dispatches, other income (9M comparison).
- Decline (QoQ): PAT and EPS due to lower treasury returns in Q3. Export volumes.
Strategic Initiatives & Business Updates #
Major Strategic Announcements/Updates #
- Credit Rating Upgrade: ICRA upgraded from AA to AA+ in December 2024.
- Treasury Management: Treasury at Rs. 2,417 crores as of 31st December 2024.
- No ICDs/Corporate Guarantees: No Inter-Corporate Deposits or outstanding corporate guarantees.
- Shareholder Returns: Dividend payouts quadrupled between FY22 and FY24.
New Products, Services, or Markets Discussed #
- Premium Connection Threads: Discussions ongoing with a foreign player (not Tenaris) to add this capability.
Significant Operational Changes #
- Reversal of Q1 inventory markdown impact continued in Q3.
- Improved product mix contributing to better margins.
Ongoing or Completed Projects #
- Telangana Finishing Line (Seamless):
- CAPEX: Part of Rs. 852 crores overall plan. Purchase order for Rs. 72 crores issued, Rs. 30 crores spent.
- Commissioning: Expected after December 2025.
- Ramp-up: Expected to start from January 2026, potentially adding 15,000 tons in Q4 FY26.
- Solar Power Plant (Telangana): Approval from the government not yet received.
- Cold Drawn Pipes Facility: To commence after the Telangana finishing line is activated.
Market & Competitive Landscape #
Industry Trends #
- Strong demand in capital goods, infrastructure, and particularly oil & gas sectors for the medium term.
- Buoyant demand for seamless pipes driven by CAPEX in oil & gas.
- Indian seamless pipe market size: ~900,000 tons annually, expected to grow at ~4% per year.
Competitive Positioning Statements #
- Order book (Rs. 1,674 crores as of Jan 20, 2025) remains good.
- Well-positioned to capitalize on increased drilling activities.
- Market leader with over 50% market share in India.
Market Challenges or Opportunities Mentioned #
- Challenge: Chinese dumping impacting domestic industry margins.
- Opportunity: Potential for higher margins if suitable anti-dumping measures are implemented.
- Opportunity: Increased drilling in U.S. & Canada.