Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jindal Saw Ltd (BOM:500378, Financial) reported a 15% increase in top-line revenue, reaching INR4,417 crores.
- EBITDA saw a significant rise of 37%, amounting to INR842 crores.
- PAT (Profit After Tax) increased by 60%, reaching INR446 crores.
- The company is moving towards value-added products, which is beginning to show positive results.
- The order book continues to grow, indicating strong demand and a healthy pipeline of projects.
Negative Points
- Debt on a stand-alone basis increased from INR3,200 crores to INR3,900 crores, primarily due to higher working capital requirements.
- There are temporary delays in project allocations due to budgetary and decision-making delays, which could impact short-term performance.
- The company faces challenges in maintaining a balance between export and domestic markets, especially with fluctuating commodity prices.
- There is a need for significant capital conservation, which has limited the dividend distribution, potentially disappointing some investors.
- The company has not announced any new major projects, indicating a cautious approach towards expansion despite strong performance.
Q & A Highlights
Highlights of Jindal Saw Ltd (BOM:500378) Q1 FY25 Earnings Call
Q: What is the business split between oil and gas and water in India and the UAE subsidiary?
A: In India, oil and gas constitute about 30-35% of the order book, with water making up the rest. The UAE subsidiary is entirely focused on water, specifically DI pipes, and is performing well.
Q: Can you provide insights into the demand for SAW pipes in the water infrastructure sector?
A: The demand for SAW pipes remains stable. Although there may be occasional gaps between tenders, the overall trend is positive. The current order book for large diameter pipes exceeds 6.5 lakh tonnes, indicating strong demand.
Q: What is driving the export business, and which geographies are being targeted?
A: The export business maintains a 70-30 ratio between water and oil and gas sectors. Water sector exports primarily go to the Middle East, while oil and gas exports are global. DI pipes are not exported much due to the Abu Dhabi facility.
Q: Are there any significant CapEx plans for the DI pipes segment given the high utilization rates?
A: No new projects have been announced yet. The company is conserving capital and building reserves. While exploring possibilities, no specific CapEx plans have been finalized.
Q: How much raw material has been locked in for project requirements?
A: The company maintains a cycle of 1.5 ships of cooking coal in the yard and one ship on the sea. Steel is locked project-wise to avoid commodity price fluctuations.
Q: What is the current status and future potential of the stainless steel segment?
A: The company does not disclose segmental EBITDA. However, it is expected to achieve between 20,000 and 25,000 metric tonnes of stainless steel sales this year, combining capacities from various locations.
Q: What is the industry size and potential for the Hunting joint venture?
A: The OCTG market in India is approximately $200 million annually. The joint venture is operating at over 85% capacity utilization, with plans to make India self-reliant in the OCTG market.
Q: What is the current realization for products from the Hunting joint venture?
A: Realizations vary significantly based on product grades, ranging from INR 2 lakhs to INR 6 lakhs per tonne. The mix of products sold can change each quarter, affecting average realizations.
Q: What are the future plans for the Sathavahana segment?
A: Sathavahana is operating at over 2 lakh tonnes and is expected to reach 2.5 lakh tonnes after debottlenecking. The segment is performing well with strong demand.
Q: What are the export geographies for the UAE subsidiary?
A: The UAE facility exports to over 30 countries, including Norway, Brazil, Chile, and Australia. The facility can produce pipes up to 2.2 meters in diameter, offering a unique advantage.
Q: How does the company set prices for tender-based business?
A: Prices are set based on raw material costs, time value for money, minimum profit requirements, and strategic considerations. The company adjusts prices based on the strategic importance of winning specific tenders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
