India: Ratnamani Metals posts consolidated PAT down by 40% y-o-y in Q3

Key Highlights:

• Revenue from operations, down 23.5% q-o-q in Q3 FY ’21
• PAT at INR 6,013 lakh, up 6.06% q-o-q in Q3 FY ’21
• Expansion projects of Stainless Steel and Carbon Steel commissioned

One of the leading manufacturers of carbon steel welded pipes (ERW, L-SAW and H-SAW), stainless steel and carbon steel pipes-Ratnamani Metals & Tubes Limited, has announced its financial results for the quarter ended December 31, 2020

The major takeaways from the investors call held on 3rd February, 2021 are as follows:

1.Revenue from operations, declined 23.5% q-o-q in Q3-Total revenue from operations stood at INR 45,437 lakh in Q3, down 23% q-o-q against INR 59,087 lakh in Q2 and 41% y-o-y in Q3 FY ’20

2.PAT stood at INR 6,013 lakh in Q3-Profit after tax (PAT) was assessed at INR 6,013 lakh in Q3 FY ’21, up 6.06% q-o-q and 40% y-o-y

3.Commissioning expansion projects of Stainless and Carbon Steel-The company has commissioned their expansion projects in both stainless steel (SS) and carbon steel (CS) LSAW. Though, LSAW expansion is likely to be completed by end of Mar ’21. Ratnamani plans to start the production of new commercial products of different grades, size and diameter from both the divisions and bring it to the market by Q1 FY ’22. “We are quite hopeful to do production of about 2,800 cr-3,000 cr, in the coming years like we did earlier”, said the Chairman, Prakash Sanghavi.

4.Booked INR 500-700 cr orders in Sep ’20-The company had reasonable sales in Q1 and Q2 owing to robust order bookings in Mar ’20. However, in Q3, due to Covid-19 lockdown, the company reported negative financial results. From Sep ’20 onwards, Ratnamani has booked orders of INR 500-700 cr in value which  will be reflected in Q4 results.

5.Current order bid book stands at INR 1,200-1,300 cr-Presently, Ratnamani’s order bid book stands at INR 1,200-1,300 cr (INR 400 cr for stainless steel and INR 1,100 cr for carbon steel)

6.Volatility in raw material prices puts projects on hold-The sudden 25-35% increase in raw material cost in the last 4-5 months has led to the delay in finalization of domestic projects by EPC contractors, as they are unwilling to accept the current price levels owing to the hike in raw material prices.

7.Potential in domestic and export orders for next six months-Currently, the company anticipates to receive good order bookings of nearly INR 3,000 cr in carbon steel and INR 1,500 cr in stainless steel projects for Oil and Gas and Pipe Line sector, City Gas Distribution, water applications and refineries.

8.Net cash balance stands at about INR 350 cr- As the current net cash balance is assessed at about INR 350 cr, the company is focused on servicing its debts as per the planned schedule.

9.Foresees 15-20% y-o-y increase in capacity utilization next year-The company plans to start the capacity utilization at 20-30% with new expanded capacity in FY ’22 and get approvals for next six months especially in line pipe sector. From next year onwards, the company is confident of increasing their turnover by 15%-20% with the expanded capacity utilization.