Surya Roshni Limited – one of the the largest exporters of ERW pipes – announced its financial results for the quarter ended 31 March 2024 (Q4FY’24) on 15 May 2024.
Key takeaways:
1. Revenue down y-o-y in Q4: The company’s consolidated revenue for Q4FY’24 dipped 3% on a y-o-y basis to INR 2,080 crore compared to INR 2,151 crore in Q4FY’23. The company reported a decline in revenue on account of muted value-added product sales and loss in inventory.
2. EBITDA margins drop y-o-y: The company recorded a drop in EBITDA margins by 32% y-o-y to INR 173 crore in Q4FY’24 as compared to INR 254 crore in the same quarter of the previous financial year.
3. PAT declines y-o-y: Profit after tax (PAT) declined 33% y-o-y to INR 104 crore in Q4FY’24. In addition, growth in the lighting and consumer durables segment remained flat y-o-y for this quarter.
The company is now in zero debt, as it reduced the same by INR 400 crore in FY’24 and currently has cash surplus of INR 65 crore.
4. Steel pipe and strips segments’ performance
The company currently has 12.76 lakh tonnes per annum (ltpa) capacity for steel pipes and strips. Out of which 9.61 ltpa are for ERW pipes and 2 ltpa for spiral pipes.
- Revenue declines y-o-y: Revenue for Q4FY’24 declined by 3% on a y-o-y basis to INR 1,665 crore compared to INR 1,721 crore in Q4FY’23.
- EBITDA margins decrease y-o-y: EBITDA margins for this segment decreased by 40% on y-o-y basis to INR 128 crore in Q4FY’24 as compared to INR 212 crore in the same quarter of the previous financial year.
However, during the fourth quarter of FY’24, the steel pipes segment achieved its highest-ever quarterly volumes of 2.36 lakh tonnes. This represented a 4% y-o-y increase in volume growth for Q4FY’24 and a 6% y-o-y increase for the entire fiscal year.
Exports also performed well, growing by 12% in FY’24.
5. Healthy orders in hand: The company boasts a strong order book of INR 800 crore for the oil & gas and exports sectors. In addition, it received substantial orders during February 2024.
6. Expansion projects: The company is currently investing INR 75 crore in constructing an expansion project in Hindupur, Andhra Pradesh, to produce galvanized and cold-rolled coils and pipes. Presently, the company procures GP and CR coils from external suppliers.
The company is in the process of expanding its operations at the Bahadurgarh facility by adding an 8-inch pipe capacity, which is expected to be fully operational by the end of June 2024. This new capacity will allow the facility to produce approximately 50,000 tonnes per annum (tpa).
Furthermore, the company has plans to commission a spiral plant at the Gwalior facility by the end of Q2FY’25. This plant will be dedicated to water projects and will have a capacity of around 60,000 tpa.
Additionally, in Q3FY’25, the company’s new cold rolling pipe facility will become operational, resulting in a net additional capacity of approximately 36,000 tpa. These expansions are part of the company’s strategic growth plan to meet the increasing demand for its products in the market.