Hi-Tech Pipes Limited (NSE: HITECH) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Anish Bansal — Whole-Time Director
Arvind Kumar Bansal — Chief Financial Officer
Analysts:
Unidentified Participant
Vikash Singh — Analyst
Pallav Agarwal — Analyst
Gargi Singh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q3 and 9M FY ’25 Earnings Conference Call of High-Tech Pipes Limited. We have with us from the management, Mr Anish Bansal, Whole-Time Director; Mr Arvind Kumar Bansal, Executive Director and Group CFO; and Mr Arun Sharma, Company Secretary and Compliance Officer. [Operator Instructions]
I now hand the conference over to Mr Anish Bansal, Whole Director. Thank you, and over to you, sir.
Anish Bansal — Whole-Time Director
Thank you. Good afternoon, ladies and gentlemen. It is my pleasure to welcome you all to the Q3 FY ’25 Earnings Conference Call for Pipes Limited. I’m joined today by Mr Arvind Bansal, Executive Director and Group CFO; and Mr Arun Sharma, Company Secretary and Compliance Officer. I would like to extend my heartfelt and gratitude to our investors and stakeholders for their continued trust and support in our company. Today, I will walk you through the key highlights of our financial performance, ongoing expansion plans and our vision for the future. Thank you. Now coming to the financial performance in Q3 FY ’25. We are delighted to report another robust quarter underscoring our commitment to operational excellence and sustained growth. Here are the key financial highlights for the Q3 FY ’25.
Revenue from the operations stood at INR761 crores, marking a 21% growth compared to INR630 crores in Q3 FY ’24. Profit before-tax grew by 35% to INR25.6 crores, up from INR18.9 crores in Q3 FY ’24. Profit-after-tax increased by 34% to INR19.1 crores compared to INR14.3 crores in Q3 FY ’24. EBITDA per ton stood at INR3,238 compared to INR3,429 in Q2 FY ’25. The company has invested materialistically to the amount of INR303 crores towards branding activities pan-India, which comes to around INR242 per tonne. Meanwhile, we have undertaken significant branding activities across India to reinforce our market leadership and to enhance our brand visibility. A major milestone in our branding journey has been the onboarding of City Caution as a brand, a move aimed at further strengthening our brand’s appeal and market positioning. This initiative aligns with our vision to create a strong emotional and aspirational connect with our stakeholders, including distributors, retailers and end consumers. In addition to branding, we have actively worked on expanding our distribution network, enhancing our retail presence and strengthening our engagement with fabricators and dealers through customer needs., with these measures, our network of distributors and dealers is expected to increase by more than 10% from current 450 to 500 by end of current financial year. However, our portfolio has also seen an expansion with the introduction of new SKUs catering to evolving market needs. On the operational front, we continue to drive energy cost-reduction through newer renewable energy schemes, ensuring sustainability and cost-efficiency.
Further, our continuous focus on debottlenecking, processes and microincentive schemes has led to effective improvements in operational efficiencies. Our financial discipline remains a cornerstone of our strategy. We are maintaining close monitoring of working capital, ensuring optimal utilization and liquidity management. Additionally, our credit rating has been upgraded to A-plus for long-term exposure and A-plus one plus for short-term exposure, reflecting the strong financial health and confidence in our business fundamentals. Thank you. Now coming to our expansion plans. We remain committed for strengthening our manufacturing capabilities and expanding our footprint to meet the growing demand in the steel pipe sector., our brownfield expansion of Sanand Unit 2 Phase-2 is progressing as per schedule and is expected to be commissioned in the month of April 2025.
Further, our new greenfield manufacturing facility at, UP, a state-of-the-art facility for our long-term growth strategy is also expected to be commissioned in the month of April 2025. These strategic investments will significantly enhance our production capacity, operational efficiency and market reach. We anticipate these projects to contribute meaningful to our revenue growth in the coming quarters. Looking ahead, we are optimistic about the future of Pipes Limited, the ongoing infrastructure development in India presents significant growth opportunities and we are well-positioned to capitalize on this momentum. The recent unit budget 2025 has introduced several initiatives that align with our strategic objectives. These initiatives, combined with our strategic expansions, robust financial framework and dedicated team will position us to capitalize on emerging opportunities and deliver long-term value to our stakeholders and it will further lead to positioning of our company as leading and a branded player in the industry. Secondly, capacity expansion to achieve our vision. Lastly, downstream capacity addition for value-added products to increase our value-add products here.
Now we may open the floor for questions-and-answers. Thank you.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone wishing to ask a question may please press star in one on your touchstone telephone. If you wish to remove yourself in the question queue, you may press star and two. Participants requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sarah [Phonetic] from UBR Investments. Please go-ahead.
Unidentified Participant
Thank you. Hi, sir. Thank you for the opportunity. And congratulations for reporting all-time high volumes. Sir, my question is, can you give us a broad view of your regional sales mix between East, West, North and South India and which is your dominant area? And what are the pockets wherein you want to increase your presence in coming next three years.
Anish Bansal
All right. Thank you, Sara. So as you know, we are governantly — we have our manufacturing facilities in North, West and South. So North India, we are having 40% of share and in West, 40% and 20% is South. And going-forward, our new expansion strategies, I think the mix will be, you know, divided in three states. So almost like a, 35% in North and West and 30% in the South.
Unidentified Participant
And sir, for improvement of our yields, they can in multiple ways like introducing of DFT using cold roll technology and graveling lines for reducing consumption, right? So DFT we are already adding. Can you please talk about your capacities in roll and gravity lines. What are the other ways, if any, that we can improve our yield?
Anish Bansal
Yeah. So currently, we have three galvanizing lines and one more is coming up. So we’ll total we’ll have four galvanizing plants. So with this, our share of value-add products will also go up because of pre-coated products where we get higher EBITDA per ton. And regarding DFT, so one, DFT will be coming in Gujarat and we are hopeful that we should complete this by end of FY ’26 or Q1 of FY ’27.
Unidentified Participant
Okay, okay, sir. Sir, what are the other ways that we can think of to improve our from the acting the active?
Anish Bansal
So here firstly is the volumes. As the volumes will go up, the operational leverage that will help us. The branding that the company is aggressively has taken this task. And going-forward, I think this activity will really help us in higher volumes and higher — higher-value addition. So apart from these, the new product developments like solar top tubes that we have undertaken and several other new SKUs and new areas, new applications, the company is constantly eyeing new, new markets and new products. So that will also give us a big boost. And apart from this DFT lines you know that we know it’s higher value-added, it’s a much higher valuation there. So that will also all-in all, and all these things, you know last in the current financial year, we know there was the capex, especially from the government side was very, very minimal. And once this the capex resumption starts, I think our company will be very — is a very well-positioned to capitalize on the demand that will come from government capex, especially when these — all these election activities are over now and the government’s focus is towards you know, infrastructure creation and consumption growth. So all these things will give us good boost in the coming — in the coming quarters.
Unidentified Participant
Okay. Sir, one last question. What percentage of renewable energy are we using in our power cost and what is our aim by 2028 or 2030 since we are adding lot of solar power plant?
Anish Bansal
So right now, we are approximately out of our total energy mix, our, 25% 27% energy is coming from renewable sources. And we have taken a target to be like net carbon-free by 2030. So in next five, six years, I think the company will be entirely on-net carbon footprint.
Unidentified Participant
All right, okay. Thank you so much. And all the best.
Anish Bansal
You’re welcome. Thank you.
Operator
Thank you. The next question is from the line of Vikash Singh from PhillipCapital. Please go-ahead.
Vikash Singh
Good afternoon, sir. Yeah, good afternoon,. Yes. Sir, my first question towards now that we are closer to-1 million ton capacity by next quarter, basically, have we finalized the product mix and for the Phase-2 of another million ton? And if so, could you give us a little bit of insight.
Anish Bansal
Yes, sir. So after this one million tons, the focus is towards large hollow sections where infrastructure the comes into place. So large hollow sections are solar — solar stock tubes. And apart from this special SKUs galvanized and ungalized where there is a niche market right now, but then those markets down the line, they’ll be, you know, growing by a much higher percentage. So all-in all, going-forward, the focus is now the base capacities are there. So now the focus is towards higher — you know, like higher value-add products. Larger basically what we were targeting. The larger diabeter, the solar top tubes, this is highly growing segment in India. And there are special niche applications also now that have come in. So the focus is entirely there.
And we are geography-wise, we are well spread. So where all these big infrastructure projects are coming, so our establishments are already there. And we are strengthening them slowly and sadly. And you know, once all this government capex and all this resumes, we’ll be in a much, much better position to cater these requirements.
Vikash Singh
Understood. Sir, now the steel prices have more or less settled basically, so how we should look at the EBITDA per tonne improvement from hence on — hence and any guidance which you do like to give?
Anish Bansal
Yeah. Vikaji, so basically the prices have more or less stabilized, I think you know after these new tariffs, there is a new event that has taken place very recently. And we are — we are yet to see what impact it will have in the in the market and especially in the Indian market. So if there is any additional if China does some more dumping in some places, so whether it will affect India or not. And also the safeguard duty, which is which is on the cars, what happens to the safeguard duty, whether this comes now or it is deferred. So this event is also you know is awaited by the industry to understand whether their prices will remain where they are or it will move-in north or south direction. So a lot of you know changes are happening and we are keeping close watch on this. So we are — we hope that the pulp prices do not become volatile.
Vikash Singh
Understood. Sir, have you seen the demand traction coming back like we would have wanted or it is still slower than what we have anticipated? Plus with the new — you said you would be increasing 10% a reach to distribution network. So how should we look at into the volume translation way?
Anish Bansal
So, Vikashi, so basically the company is operating at its peak utilization capacity. So out of 7.5 lakh tonnes, we did a sale volume of 1.25, which means 67% of utilization. And you know and whatever the conditions are, but we are — we are sure that whatever products we can make, we will sell-in the market. Of course, yes, I agree with you, the government capex has been very slow this year. But this also gives us an opportunity going-forward. So once the government spending comes back, we will especially the side. So I think like we’ll be the first among the first players to take advantage of that situation. Okay.
And so coming to the second part of the question regarding distribution network, yes, we are — we will be adding another 50 dealers in this quarter, which will also set base for our expanded capacity, which is coming in Q1. So with this, I think our network is already there. So our new expanded capacity, we are hopeful that we’ll get on to capacity utilization of those of those units very, very quickly.
Vikash Singh
Understood. Sir, just one last question on our basically volume side. We — it seems to be ending this year with almost a the required pace which you have promised. However, how should we look at the next year because capacities are just now coming. What kind of volume growth we are expecting in FY ’26?
Anish Bansal
Yes, sir. So this year, we have taken a target of 5 lakh tonnes and I’m very confident that we’ll be meeting and maybe we’ll beat this figure. And going-forward, this additional 2.5 lakh tons capacity that will come. So I am fairly confident that with this new expanded capacity, we can have at least a 50% utilization in the first year. So we’re keeping our fingers crossed and let’s hope things pan-out well. So another 20% next year is kind of the minimum target which we minimum.
Vikash Singh
Thank you, sir. That’s all from my side. I’ll come join in the queue if I have further questions and all the best.
Anish Bansal
Right, sir. Thank you so much.
Operator
Thank you. The next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go-ahead.
Pallav Agarwal
Yeah, good afternoon, Anishi.
Anish Bansal
Yes, good afternoon.
Pallav Agarwal
Thanks. Anil. So one question on this quarter realization. So for steel prices were down and for most of the companies, we saw a sequential decline in blended realization. So — but I think our realization has improved significantly so and also means an increase in purchase of trader goods. So is — could you just explain what led to the increase sequentially in steel realizations?
Anish Bansal
Yeah. Arvind jee is going to answer this big question.
Arvind Kumar Bansal
If you see this our steel actually in the current quarter, our sales number includes — trading sales also, but in previous two quarters, it doesn’t include trading sales. And if you remove the trading sales, then I think you can fairly compare these numbers. So this 3Q includes trading sales.
Pallav Agarwal
So if I — if we exclude that then we’ll get the correct realization picture. Is that fair?
Arvind Kumar Bansal
Yes, yes.
Pallav Agarwal
So could you quantify, sir, how much was that at least in terms of broadly your the revenue number Q3.
Arvind Kumar Bansal
In Q3, our trading sales is in the tune of around INR60 cR.
Pallav Agarwal
Okay. And this is broadly what HRC or what would be the nature of these?
Arvind Kumar Bansal
This is — basically, it is broadly HR coils and some non-moving, WIP okay.
Pallav Agarwal
Okay. So second query was on our blending spend. So this 242 is would not be a recurring number per ton, right? So the normalized EBITDA should be closer to INR3,500 level is that what we can assume going ahead?
Anish Bansal
Yes,. I think that is the fair estimate going-forward. And with the higher volumes, this spend on per ton basis will also be rationalized.
Pallav Agarwal
Sure, sure. Also, sir, could you just give us the capex targets for this year and next year?
Anish Bansal
Yeah, yeah. So this year our total capex will be in the tune of INR100 crores.
Arvind Kumar Bansal
And if you can see here you know, we are all — in the current financial year, our two expansion projects are going on. One project is at brownfield project at Sanand and one greenfield project at our UP so in both these projects, around INR100 crore capex is going to be incurred. And the thing is, most of the — most of the capex we have only incurred. So now we are in the commissioning one and his consulti has mentioned in the con-call it is expected to be commissioned in the month of April ’25.
Pallav Agarwal
Sure, sir. And ’26, ’27, any broad guidance on capex?
Arvind Kumar Bansal
Actually, first we would like to has mentioned, first, we would like to focus on utilization of this new capex and we would like to focus on utilization of — getting at least 15% utilization for the new. Then after this, we will put the new product.
Anish Bansal
Yeah,, but the plans are on firm. We’ll be adding — as we said, we’ll be adding 25%, 30% capacity every year and utilizing the same. So this process and this trend will continue going-forward.
Pallav Agarwal
Okay. So broadly in the INR100 crore range.
Anish Bansal
Yeah, absolutely. Yes, absolutely.
Pallav Agarwal
And sir, just finally, our interest cost declined significantly. So I’m assuming the QIP money would have been used to repay some debt. Is that correct? And what is the level of current net-debt if you could just give us?
Anish Bansal
Yeah. Sir, right now the long-term capital is almost gone now. And short-term, we are utilizing in the range of INR100 crore INR100 crores to INR125 crores.
Pallav Agarwal
Okay. Yes, sir. Thank you so much.
Operator
Thank you. The next question is from the line of Gargi Singh from Value Investments. Please go-ahead. Gargi, we are not able to hear you.
Gargi Singh
Hi, is you better?
Operator
Yes, please proceed.
Gargi Singh
Yes, sir. Yes, sir, thank you for the opportunity. Sir, my second question is that in your product portfolio, you have hollow sections, black pipes,, GP, cold roller and other products. So could you give us a rough idea of what is the product-wise capacity and which products do you consider as your as your strongest one in the year.
Anish Bansal
So, so our you know our ERW tubes and pipes is constitutes of 80% of our total capacity. And in this, these are fungible technologies. So round hollow sections we can produce from the same kind of equipment. So depending on the market situation, market scenario and the demand outlook, we change this flexible. So broadly, you can take ERW as 80% and our flat products and engine products as 20%.
Gargi Singh
Quite flat and.
Anish Bansal
Flat products and coated products and engineering products at 20%.
Gargi Singh
Okay, sir. Sir, in this question, I saw in your presentation that you have products up to 200 MMPs. However, in the market, the products are available is up to 1,000 MMP. So out-of-the total market questions I wanted to understand how —
Operator
Ma’am, your audio is breaking up. Hello? Yes, ma’am, your audience is breaking up.
Gargi Singh
Yes, sorry, I’m using the handset now. Is it better?
Operator
Please proceed.
Gargi Singh
Yeah. Yes, sir. Sir, second question was that in Holder sections, you have products up to 200 mm. But in the market, the products are available up to 1,000 MM. So out-of-the total market for hollow sexins, how big is the market for the pipelines that we are currently present? And also you’re going to launch 300 and 500 MM also. So I wanted to understand with that perspective, how will the new product launches increase our addressable market size?
Anish Bansal
Yeah. So, firstly, the in India that are being produced are up to 500 by 500, 1,000 by 1,000 is still not been introduced in the under market. But nevertheless, out of 500 for 500, we are already doing up to sections up to 200 by 200 and we’ll be adding 250 by 250 in this expanded capacity. So in April, we’ll be offering INR252. And the DFC line that we are coming up with in Gujarat plant, that is part of that you know that higher hollow sections. And going-forward, we see these hollow sections, they will take a lot of share from the RCC construction. And we are seeing some early, early signs of this large hollow sections replacing traditional RCG structures, especially in the commercial, institutional and office building. So this trend is picking-up in India and by the time we are ready with our — with our large holo sections, I think you know this market will grow quite significantly.
Gargi Singh
So sir, in the 500 into 500, currently we have — and okay, we can say that by April 215 to 250 will be there. So is it fair to assume that 60% to 70% of the total market for hollow sections is up to 250 to 250 and that is the market that we are already present in. And going-forward, when we introduce 300 and 500, so our addressable market size would increase by another, let’s say, the balanced 30%.
Arvind Kumar Bansal
As per my estimates, you know up to 250 by 250, we can cover 90% of the market. Okay. And the sections above 250 is quite at nascent stage, but it is growing and it has to — where it has to come in. So we have it with that convergence of the market demand and the supply. And once we are there with our 400 by 400 series, I think for this we’ll be able to capitalize this additional market. So 90% of the market we are already getting to.
Gargi Singh
Okay, sir. Sir, in the hollow sections, sir, you mentioned your market presence to be more in the West and the North. And also you said that your products are — you’re already present in 90% of the market. So what would be the USP of high-tech as compared to peers in Western and in-markets.
Arvind Kumar Bansal
So, we are spread in North, West and South. So here we have like six manufacturing plants in all these territories and there is one more new plant coming up. So with this, I think we are fairly confident that we’ll be able to cater to any demand from any segment and any sector. With the new size range, expanded size range, as I said earlier, so the addressable market, we are there to address at least 90% of the market demand.
Gargi Singh
Okay, sir, last question is that in the previous con-calls, you have mentioned that 35% of your products are sold through OE and remaining via distributors. So wanted to understand that usually the perspective is that the margins in — when we sell via distributors is higher as compared to the OEs. However, the product — the distribution — the product distribution of high-tech with respect to B2B or the OE is higher when compared to your peers. So wanted to understand what is the delta between B2C and B2C margins. And if B2C margins are better, then in future, do you plan to increase the B2C mix for the company.
Arvind Kumar Bansal
So Gargi, thank you for your question. So basically, our EBITDA per ton in both the cases is nearly the same. In OEM, as you said, there is a perception that the margin is lower. Here I would like to make a point that the company is quite aggressive in the solar fuel segment. And solar team — solar teams is through our big corporates and OEMs. So there the — the valuation is much larger. So blendedly, the company’s EBITDA per ton is fairly equal in both the. So B2C and B2B both.
Gargi Singh
Understood, sir. Thank you and all the best to you.
Arvind Kumar Bansal
Thank you. You’re welcome.
Operator
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr Anish Pansal for his closing comments.
Anish Bansal
Thank. To conclude, High-Tech Price Limited remains committed to sustained growth, operational excellence and strategic expansion. With strong financial performance, well-planned capacity enhancement and a favorable policy environment, we are poised for a promising future. We deeply appreciate the trust and support of our investors and our stakeholders in our journey. Together, we look-forward to driving innovation and delivering long-term value. Thank you.
Operator
[Operator Closing Remarks]