Surya Roshni Limited, the largest exporter of ERW and ERW galvaniszed steel pipes (GI) from India, announced its audited financial results for the quarter and year ended 31 Mar ‘21.
Key takeaways:
1.Revenue increases 31% y-o-y in Q4-The company’s revenue for Q4 FY ‘21 rose to INR 1,366 crore, up 31% year-on-year (y-o-y) compared to INR 1,041 crore reported in Q4 FY ‘20. Decentralization of production base from Bahadurgarh plant to other location resulted in savings in logistics costs.
2.Continued thrust on increase in EBITDA/t by 22% y-o-y in Q4–The company witnessed an improvement in margins due to better realizations. EBITDA/t stood at INR 4,251, up 22% y-o-y as against INR 3,490 in the year-ago quarter.
Thrust on galvanized and value-added pipes, higher capacity utilization in 3LPE coated API pipes and increase in exports, savings in logistics and coating charges, have generated higher margins.
3.Healthy orders of 3LPE API coated pipes in hand-The order book for API coated pipes in the steel pipes segment, stands at a value above INR 416 crore as on 31 Mar’ 21. Out of the total API pipes exports from India, Surya Roshni accounts for 30-50%.
4.Reduction in overall inventory and working capital in Q4-Inventory days reduced to 41 in Q4 FY ‘21 as compared to 52 in Q4 FY ‘20 and debtor days were down to 32 days in Q4 as compared to 34 days in the year-ago period.
Meanwhile, net working capital fell to 56 days in Q4 FY ‘21 as compared to 76 days in Q4 FY ’20.
5.Improvement in RoCE-In the steel pipes and strips segment, the pipemaker’s return on capital employed (RoCE) was registered at 15.2% in Q4 as compared to 11.6% in the same period last year.
Strategic capital expenditure (capex) growth has led to higher RoCE in Q4. The company is focused on further expansion in the existing Hindupur plant in the south, 3 LPE coating facility in Anjar, and is leveraging existing infrastructure by increased production.
6.Focus on expansion plans-Commercial production of the second line 3LPE coating manufacturing facility commenced from 31 Mar ‘21(in 9,00,000) square metres. The new capacity will utilize the existing offline capacities of the company, resulting in cost efficiencies and improved margins.
Meanwhile, expansion of the 72,000 mn t pa of section pipes (upto 300 X 300 mm) with direct forming technology (DFT) at Gwalior unit is ongoing as per schedule.
Outlook-
Surya Roshni plans to continue the positive momentum in the near-term in the steel pipe and strips segment. A robust supply chain and strategically located manufacturing facilities are likely to register more than 25% growth in FY ‘22 in API pipe exports. The company is booked for the next 3-4 months and expects to achieve a turnover of approximately INR 1,000 crore in the current fiscal on account of robust demand and higher realizations in the market. Along with value-added products, Surya Roshni anticipates high volume growth of 12% with rising steel prices and EBITDA margin of INR 4,000/t in FY ‘22.
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