Electrosteel Castings Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from Electrosteel Castings Limited (ELECTCAST) Q3 FY22 Earnings Concall

Q&A Highlights:

• Mayur asked about the general outlook for 4Q22. Sivalai Senthilnathan CFO said that generally in the company’s industry, 4Q is considered the best quarter. Therefore, the company expects 4Q22 to be better quarter. However, there will be some impact of raw material price volatility like coking coal.

• Mayur also asked about the capex plan for FY23.  Sivalai Senthilnathan CFO answered that in the Tirupati unit, the company has already planned a capex of 3-5 lakh tonnes. Out of this 1 lakh tonnes has been already completed that commenced operations in 2021. The capex of 4-5 lakh tonnes is expected to be completed by the end of FY23 or 1Q24.

• Rajiv Kapoor of Kapoor and Company asked about the current order book in terms of tonnage and the executable period.  Sivalai Senthilnathan CFO replied that the company has orders of around 375,000 tonnes which is around 6 months. These are to be executed over the next 5-6 month time period.

• Rajiv Kapoor of Kapoor and Company also asked that going forward out of the total sales mix how much is export and current order book, domestic versus export. Sivalai Senthilnathan CFO said that in totality the company’s export as of now is contributing about 25% of the total DI Pipe volumes.

• Rajiv Kapoor of Kapoor and Company enquired about the debt numbers and maturities for FY23 and FY24. Sivalai Senthilnathan CFO answered that net debt was INR1,800 crores in December and going forward the company expects long-term loans to reduce further. FY23 will not see much reduction as the company has some capex lined up, but added that FY24 onwards debt reduction will be higher.

• Rajiv Kapoor of Kapoor and Company enquired about the blended realization for 3Q22 and for nine-months. Sivalai Senthilnathan CFO said that domestic realization for 3Q22 was around INR59,000 per tonne.

• NM Modi asked about at what capacity the company’s two plants are running. Sivalai Senthilnathan CFO replied that both the plants are running at nearly around 95% capacity.

• NM Modi also asked about the raw materials the company source from outside and if there is any internal generation of raw material. Sivalai Senthilnathan CFO answered that the company procure coking coal from Australia. ELECTCAST has its own coke oven batteries.

• Rajesh asked about the profitability going forward as the profitability has gone up with Srikalahasthi merger with ELECTCAST. Sivalai Senthilnathan CFO answered that there are lot of synergies as both companies were into same line of business. Going forward, the company is confident to maintain margins. Next year the company will see full capacity utilization of Srikalahasthi at 4 lakh tonnes.

• Anurag Patil with Roha Asset asked about the total combined capacity of DI Pipes now and if it’s 725,000. Sivalai Senthilnathan CFO said it’s around 720,000 and it should go up by around 100,000 tonne by end of next FY23 or early FY24.

• Anurag Patil with Roha Asset also asked about DI fitting capacity. Sivalai Senthilnathan CFO replied that DI fittings capacity is around 15,000 tonnes.