Jtl Infra Ltd (NSE: JTLINFRA) Q2 2025 Earnings Call dated Oct. 30, 2024
Corporate Participants:
Vikas Singh — Analyst
Pranav Singla — Executive Director
Dhruv Singla — Executive Director
Analysts:
Sneha Talreja — Analyst
Aditya Welekar — Analyst
Pallav Agarwal — Analyst
Hetal Gada — Analyst
Bhavik Shah — Analyst
Bhavin Pande — Analyst
Akshay Chheda — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the JTL Industries Limited Earnings Conference Call Hosted by PhillipCapital Private Limited. [Operator Instructions]
I now hand the conference over to Mr. Vikas Singh from PhillipCapital India Private Limited. Thank you. And over to you, sir.
Vikas Singh — Analyst
Thank you. Good evening, everyone. I warmly welcome everybody on JTL Industries quarter two FY ’25 Earnings Conference Call. From the management side, today we have with us Mr. Pranav Singla, Executive Director; Mr. Dhruv Singla, Executive Director; Mr. Atul Garg, Chief Financial Officer; and Mr. Amit Gaur, Chief Strategy Officer. Without taking any more time, I’ll hand over the call to Mr. Pranav Singla for his opening remarks. Over to you, sir.
Pranav Singla — Executive Director
Good evening, everybody. I hope you and your families are having a wonderful Diwali filled with joy and prosperity. It’s great to have you all here for a Q2 and H1 earnings call. Today, I will share our financial performance and give you an update on our ongoing initiatives. For those who are new to our journey, let me take a moment to introduce JTL. With three decades under our belt, we’ve become a trusted name in the steel tube manufacturing. Our product range is diverse that is ERW black steel tubes, galvanized pipes, large-diameter steel tubes, solar structures. We take pride in producing value-added products, ensuring top-notch quality in everything we offer. Our five advanced manufacturing plants are located across India.
Now let’s dive into our Q2 FY ’25 performance. We achieved a total income of INR4,874 million this quarter, demonstrating a resilience and adaptability in the market. Our EBITDA came at INR377 million, with an EBITDA margin of 7.7%. We are also pleased to report a profit after tax of INR264 million for Q2, giving us a PAT margin of 5.4%. Our sales volume reached an impressive 1,03,193 tons, reflecting a solid growth of 26% compared to the same quarter last year. Notably, value-added products made up to 25% of our total sales mix.
Turning to our H1 FY ’25 results. I am excited to announce that we achieved a record EBITDA of INR815 million, making the highest for any first half in our company’s history. Our total income for H1 stood at INR10,069 million, and year-to-date PAT at INR571 million, which is a 7.1% increase compared to last year. As part of our growth strategy, we are enhancing our manufacturing capabilities. Our new DFT lines are on track, with machinery already delivered to our Mangaon plant. Installation is underway, and we expect trial runs to begin by the end of November. This technology will allow us to produce large-diameter structural tubes, expanding our product portfolio, and improving our margins. And for the Raipur facility, we’ve doubled our capacity from 1 lakh ton to 2 lakh tons, enhancing our overall pipe manufacturing capacity to approximately 6.86 lakh tons for the company. The expansion is part of our goal to reach 1 million ton capacity mark by year-end. Specifically, the Raipur facility will now produce larger and more diverse tubes and pipes with an increased size range from four inches to eight inches and addition of 200 new SKUs to better serve various industries. In July, we raised INR300 crores through QIP at an issue price of INR211 per share. These funds are primarily directed towards capacity expansion, working capital, and general corporate purposes. In September, we also converted the warrants issued in January 2023. Looking ahead, we are optimistic about the continued demand of structural steel driven by infrastructure investments and sustained products actively across key sectors.
By this, I am open to questions from everybody.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sneha Talreja from Nuvama Capital. Please go ahead.
Sneha Talreja
Hi, team. Thanks a lot for the opportunity. Couple of questions from my end. Firstly, what was the inventory loss in this particular quarter?
Pranav Singla
Thanks, Sneha, for the question. Inventory loss was to the tune of INR900 to INR930 this quarter.
Sneha Talreja
Per ton?
Pranav Singla
Per ton.
Sneha Talreja
Understood. Secondly, what I wanted to understand was, given the leader [Phonetic] changed the strategy towards pushing volumes basis on certain discounts that it is offering. What is the impact that you’re seeing on the market with respect to volumes and any change in your volume guidances or EBITDA per ton based on those strategies?
Pranav Singla
See, Sneha, we at JTL always have been a margin player and being debt-free and having a wide SKU range, we never wish to participate in a price war when the prices are plummeting in the market. And given the comparison of primary and secondary market, we didn’t offer any further discount to what the bigger companies offered, and we didn’t have any extra discounts passed down this quarter.
Sneha Talreja
Understood. And on Nabha, I wanted to understand, the sales, when is it likely to get completely integrated? Because our earlier sense was that Nabha sales volumes will be integrated, and we are currently seeing Nabha sales separately. So, when is this likely to get integrated, or we’ll continue to see this as a separate sales counter?
Pranav Singla
There were some benefits that we had to take under the Punjab government. And for that purposes, we couldn’t just get the company under us in this quarter itself. But we’ve got the benefits that the company had to receive. And within this quarter, Q3, you’ll see Nabha coming into JTL as a subsidiary.
Sneha Talreja
So, we no longer will see separate sales coming from Nabha. It will be your overall sales volume?
Pranav Singla
Exactly. We will see the total sales volume happening as a whole from one company.
Sneha Talreja
Will it be completely backward integrated, or will we see the sales volume coming up?
Pranav Singla
It will be basically the same process that we are doing at the Raipur plant. And as I mentioned earlier as well, we were in a situation where the production from Nabha was currently being sold to the market because they were not fitting the same requirements what we use at JTL. But going forward, starting this quarter onwards, we’ve already started accepting deals for Nabha, so you will actually see an effect in which the volumes will come under JTL. So, the final product will be under JTL. There are a few modifications that we have planned, and most of them are already done. So, as soon as they are completed, we will be fit to use the product in JTL as well.
Sneha Talreja
Understood. So that will take how much time approximately when you’ll be utilizing this particular plant completely for backward integrated purpose?
Pranav Singla
By the mid of last quarter.
Sneha Talreja
Understood. That was helpful. I have few more questions. I’ll get back in the queue. Thanks, team, and all the very best.
Pranav Singla
Thank you.
Operator
[Operator Instructions] The next question is from the line of Aditya Welekar from Axis Securities. Please go ahead.
Aditya Welekar
Yeah, thanks for the opportunity and congrats for such a resilient quarter, Pranav, despite being very tough quarter. So, I have two, three questions. So, first one is on the sales volume guidance. So, we are targeting some 30%, 35% year-on-year growth for FY ’25. But now our focus is shifting to FY ’26. So, any growth rate you are expecting — what kind of growth rate you’re expecting in sales volume for FY ’26?
Pranav Singla
Thank you for your questions. We maintain our previous sales target. This year as well, if you look at the run rate, we’ve already closed close to 2 lakh tons in H1. So, given a 10% increase in — the minimum 10% increase in volume in Q3 and a further 10% increase on Q3 again in Q4. So, we’ll easily able to clock our before mentioned target of reaching 4.4 lakh tons to 4.5 lakh tons range for the year ending. And further, as next year proceeds, our DFT, as we mentioned, will be up and running by the end of this quarter. So, as the volumes will pick up, the numbers will pick up, and the volumes in the next financial year will come out in a better way as well. And plus today itself we announced the trial run of our Raipur facility where we have increased the capacity from 1 lakh tons to 2 lakh tons. So, all these factors will play a part, and our yearly targets to achieve a 25%, 30% growth every year in volumes is still on target.
Aditya Welekar
Okay. So in ’26 also, we can assume 30% year-on-year growth in sales volume?
Pranav Singla
Yes, we can expect that. There are obviously some slowdowns that happen in Q1 and Q2 because of monsoon and other factors. But if you look at the whole year’s picture, we will be able to deliver the same run rate of 30% growth, 20% growth in the coming years as well.
Aditya Welekar
Fair enough. And on the value-added product share, we have a target of 40% for FY ’25. So, how confident we are for touching that in ’25? Any color on ’26, how it will grow in ’26?
Pranav Singla
Adityaji, our year ending target for VAP is 40%. And as the DFT will start, as I mentioned, by the end of this quarter and the produce from DFT is totally value added, so the DFT can, if utilized in full capacity, can also make up to 700 tons a day as well, because the volume is picking up in that way, and our 40% target of VAP will be covered from DFT itself. And recently in this quarter itself, we announced when we had started our GI plant in Maharashtra — the second GI plant in Maharashtra. And the result of that, we saw the volume increase happening towards exports from Maharashtra itself. So, all these factors clubbed in, we will be able to maintain our target of 40% for VAP. And when I say my VAP share, my VAP products are only products which give me EBITDA per ton of INR7,000 plus. So, with that guidance, we’ll still maintain a 40% guidance for year end.
Aditya Welekar
And for ’26 because we will have full exposure to DFT in ’26, so that share will increase from 40%?
Pranav Singla
So, Adityaji, we have a lot of capex going on right now and there will be a situation when the capacity for black pipes will increase in a quarter. And on the 1 million ton production, we’ll easily be able to maintain a higher share of over 40% plus as well. But given that we’re doing capex quarter-on-quarter in other segments as well, such as color-coated pipes and color-coated segments. So, those things will kick-in in coming quarters. So, it’ll be very hard for me to give exact number right now on what exact percentage I shall be achieving in VAP next year, but it shall be less [Phonetic] than 40%
Aditya Welekar
Yeah, understood. On the warrants front, so all our warrants are now fully converted, right? Or is there anything outstanding?
Pranav Singla
Only the warrants that the promoters and one person from public category subscribed in December or early Jan this year, those are pending. So, these are the INR2.5 crores warrants that we issued to the promoter family and a public category shareholder. Other than that, all the warrants from previous situations have been converted and depleted [Phonetic].
Aditya Welekar
Perfect. And one last question, Pranav. So, EBITDA per ton trajectory, what do you think when we will be able to touch INR4,500 for this fiscal year and for next can we assume INR5,000?
Pranav Singla
So, Adityaji, again this number is totally dependent on the production that we do. As I mentioned, the DFT is starting in Q3. So, we did face a little delay in DFT which we expected to start in this quarter. But given that the DFT will start in this quarter and as I mentioned the total value of the product. So, the numbers will start adding up towards the similar levels of 4,500 next quarter onwards. And given that I’m mentioning that we had an inventory loss close to INR900 EBITDA per ton, and if you add that with EBITDA per ton of current situation, so we were already at INR4,200, INR4,300 mark. So we expect that these things will normalize in this coming quarter, and we’ll be able to maintain a healthy EBITDA per ton.
Aditya Welekar
Yeah. Thanks a lot, Pranav. And wish you very Happy Diwali.
Pranav Singla
Happy Diwali to you as well.
Operator
Thank you very much. The next question is from the line of Pallav Agarwal from Antique. Please go ahead.
Pallav Agarwal
Yeah. Good evening, Pranavji and the whole team, and Happy Diwali. I think most of the questions have been answered, but just on the working capital level, I think the net debt also has gone up. So, in terms of number of days, can you give some clarity on how the number of receivable days and inventory days have been moving?
Pranav Singla
Hi, Pallav. Thanks for your question. Happy Diwali to you as well. So, our inventory days increased this time because our inventory levels from what we saw last year have increased significantly. And this has happened because we had a few imports which came in towards the end of second quarter. And those imports were coils from Korea and Japan. So, those imports led to higher inventory levels. And given that the prices have bottomed out, it was a strategic move from the company’s end to accumulate inventory this time because the prices have bottomed out from what we think and from what the industry thinks as well. So, going ahead, the working capital cycle will improve. But for now, everything has gone up keeping in mind the pricing which had bottomed out. The major impact came just because our inventories were towards the higher side.
Pallav Agarwal
Sure. So, with the new DFT plant starting, so maybe we’ll probably initially have some accumulation of inventory over there also till the sales and production ramps up over there?
Dhruv Singla
So, see — hi Pallav. This is Dhruv Singla this side. With the new DFT, the range of product that we are making initially is 350 by 350 section. So, we are making a 350 by 350 section in which the market is fairly available, and the plant is there. So, we don’t anticipate any inventory development in terms of stocks. And the purpose of DFT is such that we are able to maintain lower stocks, and by rotating the rolling as and when the material is required. So, if it was a traditional machine, I would think twice before putting up the rolling again. But in a traditional machine where I can consistently change rolling as per the demand accumulates within a span of three to four hours, so accumulation of material in the DFT segment seems not to be there.
Pallav Agarwal
Sure. Also, given that probably global markets or the demand for at least steel products seems a little subdued, so how competitive are Chinese steel producers, at least in terms of exports? Because our export proportion has been going up. So, at least in the case of steel, we hear that because of the dumping from China, the prices are low and there is a lot of volume competition as well. So, is this scenario different in the case of steel pipes?
Dhruv Singla
See, first of all, I would like to mention that from India, we are majorly supplying galvanized steel tubes to countries like Europe, U.K., Africa, Australia. So, in all these countries, there is an antidumping duty already applied to the Chinese products for the galvanized steel tubes wherein the competition from Chinese market is not there. We, however, only face challenges where the raw material is supplied by the Chinese market. But at the moment, we see that there is a huge stimulus that the Chinese government has offered, and Chinese product is no more so competitive in the market, as per the raw material quotations that we’re getting today. So, that’s not the scenario. And it keeps on changing. The benefit that we have is that we have our export unit right next to the port. Whenever these scenarios change, we are able to import for the purpose of reexport, so as to be able to maintain our viability in the export market.
Pallav Agarwal
And when we export, are we allowed to import without paying the import duty again?
Dhruv Singla
Yeah, absolutely. So, when we are importing for the purpose of reexporting, a company is allowed not to pay any duties on top of it. There is no BIS requirements for the purpose of reexport of that product. So, that is completely valid.
Pallav Agarwal
Sure. And lastly, a major competitor has recently put up a facility in Dubai. So, I think the rationale was that maybe when steel prices internationally were lower than domestic prices, so that would give them a cost advantage. So, are we thinking anything on those lines, or are we more comfortable putting up a 1 million ton incremental facility in India? So, how does the economics work over there?
Dhruv Singla
See, our target currently is up to 2027 that we have to finish all our brownfield expansions that we currently are doing, and our focus is in that manner. As you see by our performance, we have been consistently increasing our export share as well in the region. We are not thinking of moving abroad at the moment because we see the Indian scenario of things being on the very aggressive front with development and the government policies. So our motivation is to actually to bring in a full range of product, pursue the Indian market, and then think of going to a certain market for the purposes that you mentioned, if those are viable till then or make sense to us. Right now, frankly, we have not thought in that direction.
Pallav Agarwal
Right. So, yeah, thank you so much, Dhruvji and Pranavji. That’s it from me.
Operator
Thank you very much. The next question is from the line of Hetal Gada from Max Life Insurance. Please go ahead.
Hetal Gada
Hello. Good evening, sir. I have a couple of questions. Sir, firstly, just wanted to understand currently what is the primary versus secondary mix that you have and do you see that mix changing in the market?
Pranav Singla
Good evening, Hetal. Thanks for your question. The current mix that we have is close to 50%-50%. To be exact, I think it’s 53% of secondary and the remaining 47% is primary. And so, both the segments they have a different market itself in the market. So, we are not competing with ourselves in the market. It’s just a different segment market that we cater with secondary material and it’s a different market that we cater with primary material. So, there is no confusion as such that we are mixing the products or something like that.
Hetal Gada
But with the expansions that we are doing, do you see the mix changing, or should we understand that both these segments will remain closer to 50%-50%?
Pranav Singla
So, with the expansion that we are doing in our facilities, our mix will change, which will be that our major expansion is happening in primary segment. So, what primary and secondary is 50%-50% right now, it eventually will be 20% secondary and the remaining will be primary.
Hetal Gada
And in terms of your total SKUs, how are you looking at it post expansion? The percentage shares within the products, how should we look at the product mix post the expansion?
Pranav Singla
We’re now at close to 1,200 SKUs right now. And with the added capacity today and with the added DFT line, which will be added by end of this quarter, I will be running with 2,000 SKUs, and once my second million ton starts as well, I’ll be having close to 3,200 [Phonetic] SKUs.
Hetal Gada
Okay. And the product mix?
Pranav Singla
The product mix will be as such, in which the VAP products will be 45% for the next year and 55% will be general products.
Hetal Gada
And so that is you are saying FY ’26 you will have total VAP products will be closer to 45%. And post that, how should we see the trajectory over the next three, four years, your target VAP mix that you have?
Pranav Singla
My target VAP is 50%. Once the full capacity is installed of 2 million tons, on that production, the target is to have a 50% mix of VAP and the remaining general products. And how I differentiate? We have a very conservative approach to including products in the VAP category. So, our VAP is anything above INR7,000 EBITDA per ton.
Hetal Gada
Perfect. So that you’re saying almost INR7,000 per ton will be included in the VAP and that will go to almost 50%?
Pranav Singla
Exactly, INR7,000 and above as well.
Hetal Gada
INR7,000 and above. Okay. So, for this, you were mentioning that you are planning to raise the 2 million tons capacity. In that, from here, what other capacities in the VAP side would you be adding to reach this targeted 2 million tons?
Dhruv Singla
Ma’am, firstly, our capacity today stands at about 6 lakh tons of capacity. We just commissioned a new [Indecipherable] machinery at Raipur, which makes it at 7 lakh tons. By the addition of DFT, we’ll be adding another two lakh tons of capacity by DFT in Mangaon. So, this will be majorly our ERW pipe manufacturing capacity by the end of this year. By 2027, we are going into certain forward and backward integrations, which include narrow width galvanizing, CR lines, wider galvanizing for sheet manufacturing and color coating. So, all the products from 1 million tons to 2 million tons are value added products at different stages. So, in that, peak utilization of about 60% to 65%. We are anticipating that by the end of ’27, we’ll be having close to 50% to 55% of a value-added kitty, targeting above that. But yeah, achievable at 50% to 55% of value-added kitty, with all those sheet manufacturing, galvanized pipes, pre-coated pipes, DFT pipes. So, that would be where our kitty of value-added would be.
Hetal Gada
Okay. Just last two questions from my end. You mentioned the Mangaon facility that is coming up. You mentioned last quarter, Q4 will be the time when the capacity comes up. Correct?
Dhruv Singla
DFT would be starting by Q3 end, and we will be start utilizing the capacity in Q4.
Hetal Gada
And how do we see the ramp up? Any guidance on it?
Dhruv Singla
Ma’am, it’s too early to say, though. But by the end of it, say we should be able to utilize about 25% of the peak utilization capacity of 25% in DFT lines in fourth quarter.
Hetal Gada
Okay. So you’re saying by the exit run rate should be closer to 25%. Should I take that?
Dhruv Singla
Yes, ma’am. Close to that. That’s what the guidance is.
Hetal Gada
Okay. And sir, just lastly with all the cold rolling mill and galvanizing mill coming up, what ‘s percentage of integration that will give us in the overall capacity?
Dhruv Singla
I did not understand your question, ma’am. Sorry.
Hetal Gada
Once the entire expansion is through and your cold rolling mill is set up as well as the galvanizing mill, what percentage of forward integration will that give you in overall scheme of things?
Dhruv Singla
That will be adding to SKUs. We cannot really say that it’s a forward integration or backward integration. There are multitude of products in our range which we currently can do, but we are avoiding to do because of the lower margin. We are able to achieve by procuring that product from outside. Say pre-galvanized coils are procured from outside, I do not get the margin, so I’m not currently doing it. So, certain steps are backward integrated so that I can make a pre-galvanized pipe at a higher margin. And certain products like the color coating sheet and the wider sheet, CRN [Phonetic] are forward integrated, not towards pipe, but towards a new SKU development in the similar industry.
Hetal Gada
Okay. That’s it from my end. Thank you, sir. Thank you.
Operator
[Operator Instructions] The next question is from the line of Bhavik Shah from Emkay Ventures. Please go ahead.
Bhavik Shah
Yeah. Sir, my question is what kind of realization per ton are we seeing in October? It has fallen, or it has improved from say Q2.
Pranav Singla
Hi, Bhavik. Can you please repeat your question?
Bhavik Shah
Sir, what kind of realizations per ton are you witnessing in October? Are we seeing any improvement, or are we seeing further fall in realizations?
Pranav Singla
No. For the month of October, we have seen a further upward shift in realization. There is no downward shift on that.
Bhavik Shah
Okay, got it. And sir, can you just help us understand of our total expenses how much percentage of our expenses will be fixed in nature just to understand the operating leverage, if any, it can come when we add value added products.
Pranav Singla
Can you please repeat the question? It was a little unclear.
Bhavik Shah
Sir, what percentage of our total cost will be fixed in nature so as to understand the level of operating leverage that can come if we, say, increase our share of value-added products?
Dhruv Singla
See, Bhavik ji, our fixed cost is just on the machinery, land, and building. The rest is all variable cost. So, when we’re going forward, the guidance of the capital investment that we’ve given is a fixed cost. So, the thumb rule is in our industry, we look at a return of three years on the fixed cost. So, anything above that, say, whatever we have to provide for the running of the machine, be it raw material, be it labor, be it power, is all variable in that case. So, only the administration expenses are fixed, which are, as we increase the production, we will need to add certain managerial level employees. But that does not increase in that higher trajectory as the production would increase. So, am I able to answer your question?
Bhavik Shah
Yeah, okay, understood. Thank you.
Operator
Thank you. The next question is from the line of Bhavin Pande from Athena Investments. Please go ahead.
Bhavin Pande
Hi. Am I audible?
Dhruv Singla
Yes, you are audible.
Bhavin Pande
Yeah. Congratulations, team, on a resilient performance despite macro headwinds in a tough industry scenario. Just extending on that, the EBITDA per ton, the number looks pretty good despite pain in the sector. So, I’m just trying to understand how margins and EBITDA per ton have managed to stay elevated despite headwinds.
Dhruv Singla
Hi, Bhavinji. Again, very Happy Diwali to you. To answer your question, see, we at JTL, as Pranav previously mentioned, are say 50% in the secondary market and 50% in the primary market. The secondary market scenario is such that it’s a daily buy and sell. So, the loss of inventory there is not so much or negligible, or we are able to maintain a fixed level of EBITDA that there are. So, only when we have to procure a larger amount of chunks of say material from the primary manufacturers, therein we get certain issues while the market is correcting in terms of the prices and realizations. Luckily enough, in this first half, we were able to substantially increase our exports by 104%, wherein we were able to have a higher margin as compared to the previous time that we were able to offer the product range in the market and also able to cover those materials on a back-to-back basis via the process of imports for the purpose of reexport. So, these certain maneuvers helped us to keep our level intact.
Pranav Singla
Bhavin, if you look at our exports this time, we had one of the highest exports ever for each month, and we got better realization of exports this time and given that we did import some coils, so all of that was reexported with the finished product and margins were better than that. So, altogether being close to port and having presence in secondary market, these are few things that added up to EBITDA per ton.
Bhavin Pande
So, Pranav, in H2 FY ’25, do we see export mix staying in the same proportion, or it could be a tad higher or lower?
Pranav Singla
You can expect another all-time high exports in H2, given that our DFT will start as well and our galvanizing has already anyway started. So, our exports can have a good increase from what we have. And we have a good order book as well for exports.
Bhavin Pande
Okay. So our growth guidance is intact at 30% for the year, right?
Pranav Singla
Yes, that’s right. Our growth guidance is intact for 30% for this financial year.
Bhavin Pande
And what capex outgo should be build in for H2?
Pranav Singla
Around INR140 crores to INR150 crores is something that is expected. It can further stretch up to INR200 crores as well.
Bhavin Pande
Okay. So, if we add up the INR90 crores-odd this year, it could be around INR250 crores to INR300 crores for the full year, right?
Pranav Singla
Yes, that’s right.
Bhavin Pande
Great. Congratulations again and thank you. Greetings to our entire team at JTL.
Pranav Singla
Thank you to you too.
Operator
Thank you. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Sneha Talreja
Hi team, thanks a lot for the follow-up. Just wanted to understand what is the current price differential between the HRC and the secondary prices, and what’s the shift that you’re seeing based on that in your internal product mix?
Pranav Singla
So, Sneha, so on the basic steel prices for secondary to primary, if you talk about the difference on as of today is INR4.5. And if you go further on in thinner sizes, for example, if I have to — I’ll give you exact number as well. So if you’re selling 2 mm pipe in market, it’s INR50 per kg for HSC. And at the same time, the secondary pipe is at INR45.5 per kg in the market right now. But the game changes when you go in less thicknesses. So, 1.21 thickness of pipe for secondary will be for INR47, whereas the 1.1 thickness of pipe of HRC will be close to INR56. So, that’s where the delta increases and that’s where productions are like — we benefit as well. It’s a total, altogether different segment that we cater with less thicknesses. So, it’s a different segment that’s altogether catered. And there’s nothing that overlaps at all.
Sneha Talreja
So, you don’t see any shifts happening internally basis that?
Pranav Singla
Given the delta of INR5, which is on the basis as well, that’s also enough. But as I mentioned to you the delta further increases up to INR8, INR9. So, that’s something that can never normalize what we expect. And whatever we supply according to customer’s demands, and we don’t see anything going back from here. And currently what we estimate is that’s something that is keeping the EBITDA per ton healthy for the whole company as well.
Sneha Talreja
Understood. And lastly, on your EBITDA per ton with this DFT coming into play, in Q4, what can be the EBITDA per ton level that we can estimate given that you currently are at about INR4,200, INR4,300 odd easily. What can we see this ramping up to when your actual DFT comes into play?
Pranav Singla
There should be a slight increase, Sneha, given that even if we produce close to 20,000 tons of material in that quarter or maybe 30,000 tons of material in that quarter in Q4. So, that will easily be a produce which will be extra on 1 lakh tons that we do right now. And that product will be having an EBITDA per ton of INR7,000 to INR8,000 plus. So, given that calculation, you can see maybe a 10% increase in the total EBITDA per ton in Q4.
Sneha Talreja
Understood. That was quite helpful. Thanks a lot. Wish you guys a Happy Diwali.
Pranav Singla
Same to you as well.
Operator
Thank you. The next question is from the line of Vikas Singh from PhillipCapital. Please go ahead.
Vikas Singh
Hi, sir. Sir, just one question. I wanted to understand that in the first half, while the JPC data shows that the steel demand has been growing at almost 13%, 14%, ERW industry, per se, has grown a little bit relatively lower. Usually the growth rate for ERW because of substitution had been in the highest in the past three, four years. So just wanted to understand, is this that the secondary is winning back the market share from the ERW players or this little bit of slow progress is because of other factors. If you just clarify?
Dhruv Singla
Vikasji, the secondary segment isn’t replacing the lower thicknesses and low gauges, which is a very high realization for the primary segment and also takes a longer time to produce in that. So, see when we talk about little macros, as we started speaking about the steel demand at 14% increase and everything, we talk about India being the second-largest producer of steel in the world, but still having the lowest per capita income. So, where the demand is coming from is left, right, and center is from say domestic demand, replacement work for low-income housing, replacement of bamboo as scaffolding, pipes as scaffolding. So, these demands are there persistently coming from changes in perception of usage, higher disposable income, and also the rules and regulations which are consistently changing in the domestic scenario for better utilization of manpower, time, and resources.
So we, being in the building material industry, are a proxy to all these developments. Since we manufacture pipes, we see pipes left, right, and center, applied anywhere and everywhere in today’s scenario, be it from a table, chair to say a road signage, or from a hand barrier to blockades, everywhere we see our pipes or similar pipes being applied. So, when we talk about primary and secondary, I believe there is a parallel market for both rather than competition. So, yes, the lower segments of the pipes, from 0.5 inches — not even 0.5 inches. Say, 1-inch to the 3-inch segment is covered from the secondary segment nowadays, and going upwards from there, where there is more higher thickness required, higher dye are required, the secondary layer cannot perform in that area. So, there only a primary product will be applicable. So, this is the whole gist of the scenario. I believe I was able to answer your question.
Vikas Singh
Understood. That’s all from my side.
Operator
Thank you. The next question is from the line of Akshay Chheda from Canara Robeco Mutual Funds. Please go ahead.
Akshay Chheda
Yeah, thank you for the opportunity. Just one question. I just wanted to understand if you can — if it’s not possible for you to give exact numbers, but directionally, if you can give a sense what is the margin that you make in a primary pipe and in a secondary pipe? And is it that primary….
Pranav Singla
Can you please repeat? Your voice is not very clear. Can you please be a little slower?
Akshay Chheda
Sure. Just wanted to understand what is the margin that you make in a primary pipe versus a secondary pipe. Is it that secondary fetches better margin or both are equal, or is it primary is a better margin?
Pranav Singla
Thanks, Akshay, for your question. So, basically, when we talk about our pipes that we make, we are mere converters of steel. And the conversion that we get in primary and secondary is just the same. It’s just that, as of this quarter, we did see inventory losses in primary segment and close to nothing in secondary. So, that’s how the differentiation happens. Otherwise being converter, we get the same margin across both the products. And also, when I talk to you and tell you that we are a secondary material producer and primary material producer, our machines are fungible. So, it’s not that our secondary mills cannot make primary pipes. They can make primary pipes overnight as well and same goes for primary mills as well. So, it’s just that what we wish to supply in the market and what demand we see in the market.
Akshay Chheda
Okay. And how do you see the costs in the secondary? Are they inching up or are they relatively stable, or do you expect some correction the way that has happened in the primary one?
Pranav Singla
We don’t see any further correction happening as of now. I think the market has bottomed out. And the demand should be picking up. We should be expecting government orders coming in soon as well. And the exports are anyways, with our expanded capacities, we are almost touching all-time high exports. So, given the current situation, we think everything should be fair in the coming quarters.
Akshay Chheda
Yeah, I was referring to the secondary side. In the secondary, how do you see the cost to be?
Pranav Singla
Secondary cost it changes every hour per se. And it’s just delta between primary and secondary, which is INR4.5 right now per kg, and it’s a good demand over there as well right now.
Akshay Chheda
Okay, got it. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Vikas Singh from PhillipCapital India Private Limited for the closing comments.
Vikas Singh
On behalf of PhillipCapital, I would like to thank JTL Management for giving us the opportunity to host them. And without taking any more time, I will hand over to Pranav sir for his closing remarks. Over to you, sir.
Pranav Singla
Thank you, all the shareholders, for joining us today. And I wish you a joyful and prosperous Diwali. And thank you, Vikas, and thank you PhillipCapital for hosting the call as well. Thank you. Happy Diwali to everybody.
Vikas Singh
Thank you.
Operator
[Operator Closing Remarks]