India: Ratnamani Metals reports Q2 FY’21 results

India’s leading pipes and tubes manufacturing company – Ratnamani Metals & Tubes Limited has announced its quarterly results today for Q2 FY’21 today. Major highlights of the investor’s conference call are mentioned below:

• Total income down 6% Y-o-Y: The company’s total income declined 6% Y-o-Y at INR 590.86 crores during the period ended September 30, 2020 as compared to INR 631.85 crores during the period ended September 30, 2019 while net profit falls 26% Y-o-Y at INR 56.71 crores for Jul-Sep’20 quarter, as against of INR 76.46 crores in Q2 FY20

• Carbon steel sales volume down 4% Q-o-Q: Carbon steel (CS) sales volume stood at 55,989 t, down 4% Q-o-Q, up 10% Y-o-Y, lower than their estimate of 61,250 t. Meanwhile, Stainless steel (SS) sales volume was assessed at 5256 t, down 10% Y-o-Y, up 31% Q-o-Q, lower than their estimate of 5775 t

• EBITDA margin stood at 14% in Q2: The Company reported EBITDA margin at 14.2% in comparison to 12.7% in Q1FY21 and 19% in Q2FY20. Subsequently, EBITDA stood at INR 82 crore, down 30% Y-o-Y, up 11% Q-o-Q, lower than their estimate of INR 91 crore due to change in product mix and disruptions in dispatches of LSAW pipes

• Muted performance on the back of lower than expected sales volumes:
  The company reported subdued performance for Q2FY21 owing to low EBITDA and PAT numbers PAT stood at INR 57 crore, much lower than their estimate of INR 65 crore

• Order for exports increased since Oct 1: The company’s total order in hand aggregates to INR 1178 crore (INR 439 crore for SS pipes and INR 739 for CS pipes). This includes new order of value INR 400 cr for Oil & Gas project in cross-country City Gas Distribution (CGD). However, Ratnamani is already L1 in Barauni Oil Refinery project and has extended the validity of the order to be released in November and 70% of the orders to be executed in this financial year

• Bidding for tenders from time to time: Ratnamani, being L1 in big pipe line projects, has already made bookings till June’21 for CGD projects. Meanwhile, small orders in SS pipes are seen coming from for domestic and international markets

• Planning for expanding on API license: New plant worth INR 420 crore and capacity of 150,000 t has been installed for LSAW cross-country line pipe. The production will start from Q3 in LSAW CS division on getting API license in a month’s time. Whereas, in ST division due to Covid-19 and international supply disruptions especially In Europe, the production is slow. Hence, the company will resort to in-house trial production in Dec and plans to start production of stainless steel pipes by Q4 in good quantities. CaPex is assessed at approx. INR 200 crore this year compared to INR 92 crore last year.

• Volumes expected from the new plant: Catering to the domestic and international markets, there will be around 30-40% capacity utilization in the new plant as new grades, sizes, and diameter needs to be developed and then put in the market. However, the company targets to produce 5000-6000 t on a monthly basis