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Electrosteel Castings Limited Q1 FY25 Earnings Conference Call Insights

Key highlights from Electrosteel Castings Limited (ELECTCAST) Q1 FY25 Earnings Concall

  • Financial Performance
    • Consolidated revenue increased by 18.9% year-on-year to INR2,036 crores in Q1 FY25.
    • Total income in standalone results grew by 21% year-on-year to INR1,851 crores.
    • EBITDA increased by nearly 102% year-on-year to INR378 crores in Q1 FY25.
    • EBITDA margin expanded by 761 basis points year-on-year to 18.5%.
    • Standalone EBITDA grew by approx.. 92% year-on-year to INR354 crores.
    • Company repaid INR30 crores of debt during Q1 FY25.
    • Net debt-to-equity ratio improved to 0.33 times.
  • Sales Volume
    • DI pipe sales volume reached 1.93 lakh tons in Q1 FY25.
    • Exports contributed 12% of the total volume.
    • Company remains a preferred supplier for major water infrastructure projects.
  • Expansion Plans
    • Ongoing CapEx initiatives progressing as planned to meet growth demand.
    • Company aims to expand production capacity to 1 million tons by FY26 end.
    • In process of acquiring land in Odisha for upcoming Greenfield DI pipe and fitting project.
    • Total ongoing CapEx of approximately INR700 crores, with INR410 crores spent till Q1 FY25.
    • Company plans to expand into Southeast Asian markets like Vietnam and Thailand.
    • Singapore chosen as a hub for these markets due to its strategic location.
    • Aim is to become more competitive with Chinese manufacturers in these regions.
    • Opportunity in Singapore being capitalized to support the expansion strategy.
  • CapEx Updates
    • Total ongoing CapEx of approximately INR700 crores, with INR410 crores spent till Q1 FY25.
    • Company spent 390 crores last quarter and 20 crores in the current quarter on CapEx.
    • Capacity expansion to reach 5.5 lakh tons by end of FY25 for the south unit.
    • Eastern unit capacity to be approximately 3.5 lakh tons.
    • New facilities expected to be commissioned by end of third quarter.
    • Benefits from expanded capacity to start accruing from 4Q.
  • Export Strategy
    • Export mix reduced to 12% in the current quarter.
    • Reduction in exports is a deliberate decision due to robust domestic demand and better margins.
    • Fluctuations in ocean freight costs affecting export decisions.
    • Company plans to increase export presence in tandem with capacity growth in the long term.
    • Temporary reduction in exports not expected to cause significant loss in market share.
  • Production Capacity
    • Additional 75,000 tons capacity expected from Srikala Plan for FY25.
    • Company plans to sell most of the additional capacity within the year.
    • Total production expected to reach approximately 8.5 lakh tons this year.
    • Capacity expansion driven by strong domestic demand.
    • Increased material availability expected to drive up overall demand in the industry.
    • Company sees potential for growth in water pipeline infrastructure across urban and rural sectors.
  • Regional Demand
    • No single state is dominating demand, with work spread across the country.
    • Andhra Pradesh expected to show increased demand in the near future.
    • Odisha, Madhya Pradesh, Rajasthan, and Uttar Pradesh remain strong markets for the company.
  • Demand-Supply Gap
    • Current gap between demand and supply estimated at 1 to 1.5 million tons.
    • Demand scenario has been picking up due to increased spending on irrigation and Amrut projects.
    • Industry expected to meet demand in 3-4 years, with projected demand of 5-6 million tons annually over the next five years.
  • Export Outlook
    • Export volume reduced YoY to 12% from 20% in Q1.
    • Demand in Europe and Middle East markets remains stable.
    • Middle East experiencing an upswing in demand.
    • Temporary downswing in Europe due to seasonal factors and elections.
    • Company aims to maintain 20% export contribution in the future.
    • S. market challenging due to protectionist policies and strong indigenous manufacturing.
  • Fittings Contribution
    • Current fittings capacity at 24,000 tons.
    • Plans to expand fittings capacity in the Greenfield project in Odisha.
    • Fittings currently contribute 4-5% of total sales.
    • Company aims to increase fittings contribution to 5-10% in the next two years.
  • Order Book Composition
    • Current order book covers approximately 11 months of production.
    • 15% of the order book is from exports, with the remainder from domestic markets.
    • Company maintains full capacity utilization.
    • Total expected sales volume for the year is 8.5 lakh tons of ductile iron pipes.
    • Additional expected sales of 36,000 tons of cast iron pipes and 22,000-24,000 tons of fittings.
    • Majority of domestic orders come from EPC contractors, not directly from the government.
    • 85% of order book is backed by LCs, bank guarantees, or advance payments.
  • Margin Outlook
    • Company expects to maintain EBITDA margins around 18,000 per ton for the current financial year.
    • Management is optimistic about sustaining these margins for the next 3-5 years.
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