Maharashtra Seamless Ltd (NSE: MAHSEAMLES) Q4 2025 Earnings Call dated May. 27, 2025
Corporate Participants:
Vikash Singh — Vice President
Kaushal Bengani — Maharashtra Seamless Ltd
Unidentified Speaker
Analysts:
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Maharashtra Seamless Properties Q4 and FY ’25 Earnings Conference Call hosted by PhillipCapital India Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Vikash from PhillipCapital Private Limited. Thank you and over to you, sir.
Vikash Singh — Vice President
Thank you, Shiti. Good afternoon, everyone. Welcome to Seamless Q4 FY ’25 conference Call. From the management side, we have with us Mr Kaushal, Deputy General Manager, Investor Relationship and Finance. Without taking much time, I hand it over to Kaushal for his opening remarks. Over to you.
Kaushal Bengani — Maharashtra Seamless Ltd
Thank you, Vikash. Good afternoon, and thank you for joining our earnings call. During quarter-four FY ’25, we have seen some slowdown in order bookings, but have been able to still dispatch almost 18,000 tons of seamless pipes, thereby exceeding our annual growth guidance of 7% to 8%. On margins and EBITDA per ton, we have again been in the region of the guidance given. In this quarter, our ERW segment has outperformed due to dispatches of a particular type of product getting concentrated in the last quarter.
This outperformance is one-off and consequently annual ERW margins and EBITDA per ton have been slightly above the given guidance with ERW tonnage dispatch being as envisaged. I will briefly summarize key financial points on reviewing our quarter-four FY ’25 performance against quarter three FY ’25, revenue improved by 3% to INR1,456 crores and EBITDA increased by 2% to INR285 crores. PAT increased by 28% to INR243 crores from INR190 crores in the previous quarter and EPS increased to INR18 per share from INR14 per share.
I’m comparing entire financial year 2025 performance with financial year 2024, although revenue remained more or less similar, earnings declined significantly despite increase of more than 10% in dispatches. This has been solely due to fall in sales realization and on a year-on-year basis. The performance of our treasury and other income items have been fair. On comparison of other income in FY ’25 with FY ’24, we have earned INR197 crores against INR141 crores, which is an increase in other income by 40%.
Therefore, against an average of INR35 crores, approximately per quarter in FY ’24, we have earned an average of INR50 crores approximately per quarter in FY ’25. Apart from financials, there are five key points, which I would like to draw attention to. The first is our credit rating. First, we’ve been upgraded by ICRA in December 2024 from AA to AA plus. This has been the highest credit rating which the company has received since in the last 10 years and sends a strong message to all stakeholders about our strengths and expertise.
The second point is about our treasury, which is at INR2,630 crores as on 31st March 2025. It is being judiciously managed with engagement and inputs at highest levels. The third point is regarding our order book. It is at INR1,584 crores, which is still within our range of INR1,500 crores to INR2,000 crores. We have seen some slowdown in order booking in the previous quarter, but in general, demand environment is conducive for manufacturing industry and oil and gas sector. The 4th point pertains to ICDs and corporate guarantees, of which there are none to any unrelated entities guarantees being given to any related entities.
The final point is regarding dividend. In FY ’24, we had quadrupled the dividend amount paid-in FY ’25, we have maintained the same dividend despite decline in annual profit of 19%. Consequently, our dividend payout ratio has improved from 14% to 17% that is the entire deal. I would now request to kindly open for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shram from 3A Financial Services. Please proceed.
Unidentified Participant
Hello, am I audible?
Operator
Yes, sir.
Unidentified Participant
Hello, sir. I just wanted to know about the update on the capex regarding the run line.
Kaushal Bengani
The equipment for old line has already been ordered. It will be received by us towards the later part of this calendar year.
Unidentified Participant
Okay. And post that you will continue with the remaining capex, right, of around INR700 crores to INR750 crores.
Kaushal Bengani
Our other CapEx at Telangana is also continuing in parallel to the cold drawn.
Unidentified Participant
No, sir, talking about like the hot mill upgrade or the other capex of INR852 crores that is mentioned in the PPT, INR100 crores is of the cold drawn pipeline. I mean other than that
Kaushal Bengani
Are not being
Unidentified Participant
When can we expect them
Kaushal Bengani
And the run is completed, then we’ll update you.
Unidentified Participant
Okay, sir. And sir, actually, I’m new to this company I have. I had on bookkeeping question. Every year you have shown a impairment expense. So what is that regarding
Kaushal Bengani
Us what do you mean which year? I’m looking at the financial statement right now. There is nothing in the
Unidentified Participant
Like in annual reports, annual reports in each annual report there’s a plant and machinery 1, 86 crores expense. What is this about is? Is that about USTPL TPL?
Kaushal Bengani
It could — it could pertain to US TPL. When we acquired it, we had to do a revaluation of the fixed assets and the stock which was there in the inventory or sorry, stock which was there in the plant at that point in time. It could pertain to that. If you can send me an email, I’ll get back to you more specifically.
Unidentified Participant
\Okay, sir. And any guidance on the volume
Unidentified Participant
Growth that we expect to achieve in FY ’26 and ’27?
Kaushal Bengani
In FY ’26, I will — I think we will do similar volume that we did in FY ’25 till our finishing line at is operational. Once that is operational, only then we’ll be able to generate volume growth.
Unidentified Participant
And do we expect better realizations on the volumes?
Kaushal Bengani
It is difficult to say because we work on short-cycle order books, therefore, to give guidance for the rest of the year is more difficult for us than it is for other companies who have larger duration order books.
Unidentified Participant
Okay, sir. That’s all from my end. I wish you the very best. Thank you.
Operator
Thank you. The next question is from the line of Saruk from Capital. Please proceed.
Unidentified Participant
Hello, good afternoon. Thank you for the opportunity. Over the past three years or we observed that the company’s top-line has remained flat or slightly decline. Could you please kindly share the key reason behind spend and additionally, when do you expect to see a meaningful recovery in this revenue growth and is there any internal forecast about for FY ’26 that we could shift
Kaushal Bengani
We expect to maintain the level of dispatch that we have done in FY ’25 in FY ’26. So the realization that we have seen in FY ’25 has been lower — significantly lower than the realization that we’ve seen in FY ’24. So even though we’ve been able to dispatch more than 10% — more than 10% increase in seamless pipe. The overall revenue of the company is broadly similar in FY ’24 and FY ’25. This has solely been due to a fall in realization. As of now, the only guidance which we can give you right now is that we’ll be able to dispatch the same amount of our line is operational towards the end of this calendar year then we will see an increase in the tonnage dispatched.
Unidentified Participant
So what’s the main reason for this drop-in realization? Is it due to demand or oversupply?
Kaushal Bengani
It is not the really due to a drop-in demand because the demand environment is broadly good. There has been a general decline in the prices of pipes across the entire industry, because what had happened a couple of years ago was that Russia-Ukraine war rather three years ago during the Russia-Ukraine war, there was a energy crisis for a brief period which led to a spurt in-demand for oil and gas sector products, which led to an increase in realizations, which continued for maybe a year, a year and a half. And thereafter the markets have normalized. But if you look at the tonnage which the — which the company has dispatched or which other competitors have dispatched, all of them will show an increase in FY ’25 from what they have dispatched in FY ’24.
Unidentified Participant
Perfect, sir. And one more question. The company maintains a healthy return on capital employed of around 16% and we note that there is a significant cash-in reserve approximately INR2,600 crores currently parking the bank deposits or mutual funds. You know why we know if there is any plan to deploy this acquisitions or something like that to get better returns.
Kaushal Bengani
There is a plan to deploy this in acquisition opportunities, but those opportunities should be at a cost at which we are comfortable. Such opportunities are not available right now because when markets are good, then undervalued assets are not usually available. That is what we have realized after searching for some time.
Unidentified Participant
Thank you, sir. Thank you and all the best.
Kaushal Bengani
Thank you.
Operator
Thank you. The next question is from the line of Chetan Doshi from Tulti Capital. Please proceed.
Unidentified Participant
Thank you for giving me the opportunity. I have two questions. One is, see, we are having a lot of cash on our balance sheet. So are you planning for some acquisition because asset slowdown is there. So where will be the focus in coming year wherein we have better realization in-spite of drop-in sales.
Kaushal Bengani
Realization is not within our control. We have improved the proportion of value addition products that we are dispatching in our total dispatch portfolio by developing new products and in ensuring that we are the developed source with PSUs that has already been done around two years ago. Right now, we are open to acquisition opportunities. But as I said earlier, it has to be at a price point at which we are comfortable because we don’t want to pay — pay or buy overvalued assets and then get caught in the wrong phase of the cycle. Therefore, we are extremely cautious whenever we make any acquisitions.
As of now, we have not encountered any attractive opportunity. Having said all of this, you must also bear in mind that our plant and machinery is very old. There is no problem in efficiency right now, but going-forward, maybe 10, 15, 20 years into the future, there will come a point in time when we’ll have two major overhaul of our plant and machinery for which we will require the cash. So we have taken the view that we want to conserve our cash or wait for an opportunity that is available at our price point.
Unidentified Participant
And in the beginning remarks, you said that this ERW is one-time. So current year, you don’t expect any orders on that segment.
Kaushal Bengani
So we expect orders from that segment, but the tonnage is limited and because the tonnage is limited and the frequency cannot be predicted, it is better to consider it as a one-off rather than a general rule, because if you see the EBITDA per ton on ERW that we have done, it is at INR9,897 rupees, which is broadly in-line with what you can expect in the ERW segment. When the segment is a combination of two sub-segments, one for the water sector and one for the oil sector. In the oil sector, we make higher margins. In-the-water sector, we make lower margins and we dispatch both kinds of products in FY ’25, we have been able to dispatch slightly higher percentage of oil sector products, which is why the ERW margin is close to INR10,000. So but in the previous year it would be lower than that, so it is at 7,315
Unidentified Participant
And the governments for answered program of Jan that is not moving at the pace what we expected.
Kaushal Bengani
We are getting orders. There is no problem in terms of orders in the ER W segment, but our impact us to dispatch those pipes on which we make the highest-margin.
Unidentified Participant
Thank you and good luck.
Kaushal Bengani
Thank you.
Operator
Thank you. The next question is from the line of Gaurav Khanna from Capital. Please proceed..
Yes, sir.
Unidentified Participant
Hello. Am I audible?
Operator
Yes, sir, you are audible.
Unidentified Participant
Hello, I’m asking you. So can you throw some light on the rig business because you are planning to divest earlier and recently it has deployed with. Can you throw some light on?
Kaushal Bengani
I cannot understand what you’re saying. Can you please repeat?
Unidentified Participant
So I’m saying that the rig business in the rig business, we were planning to divest this and recently we have deployed it to for next three years. So what is the outlook on what you want to say about
Kaushal Bengani
Rig has not been deployed with ONGC for next three years. Rig has received its subsequent contract with drilling. It is under refurbishment. There was a view of getting out-of-the rig business, but we have not received any update from the Board in the Board meeting which concluded yesterday.
Unidentified Participant
Okay, sir. Thank you.
Kaushal Bengani
Thank you.
Operator
Thank you. The next question is from the line of Vikas Kasturi from Capital. Please proceed.
Unidentified Participant
Good evening, sir. Sir, I had a follow-up question on the rig itself. I believe the new rate for the rig is somewhere around $80,000 per day kind of a rate. So would there be an update or would — would Maharashtra Seamless also receive a higher-rate from
Kaushal Bengani
Good evening. Unfortunately, no, the tender in which this rig had participated resulted in an L1 of $35,000 per day, day approximately and that is the rate which general drilling had to match and therefore there is no increase in the rental that Maharashtra Seamless will receive from drilling there may be a decline of a few $1,000 per day-in the rental which it receives subject to the negotiation that takes place between both companies.
Unidentified Participant
All right, sir. And so just from my understanding, so this new contract for the for three years. Am I correct, sir?
Kaushal Bengani
Yes, it is.
Unidentified Participant
And so, so does it mean that we cannot sell the rig for three years?
Kaushal Bengani
We are not restricted by any regulation, but since the rig will be given to general drilling on rent, we will have to take their approval and general drilling will give it on rent to ONDC so we will have to take ONDC’s approval. Which you just did it and approval from whoever the rig has been contracted out to at approval is required.
Unidentified Participant
Got it, sir. Thank you for the updates.
Kaushal Bengani
Thank you.
Operator
Thank you. The next question is from the line of Oja from SKS Capital. Please proceed.
Unidentified Participant
Hi, thank you. So just quickly, sir, out of this INR850 crores of capex that you have announced. What’s the timeline of commissioning of those?
Kaushal Bengani
We are working only on two items right now. One is the Coltron project for which everything is in-place except for the plant and planted machinery, which has been ordered and which will be delivered to us towards the later part of this calendar year. The other item of capital expenditure is the finishing line at Telengana, which we have commenced last year and there is work undergoing. Once these two items are completed, then we will get back to you on the timeline for the other items.
Unidentified Participant
Okay. Okay. Got that. Thank you. And in terms of the INR15 crore INR84 crores of order book, how much of this is ERW and how much is similar?
Kaushal Bengani
We’ve given a breakup up on a certain slide in the presentation. I look at it slide 15 of the presentation the order book of ERW is INR54 crores and the order book for seamless is 1,530 crores
Okay. All that sir. Thank you. Thank you so much and best of luck.
Operator
Thank you. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Saket Kapoor from Kapoor; Company. Please proceed.
Unidentified Participant
Yes. And thank you team for the opportunity. Firstly, sir, when we look at your capex part, then you have alluded to the fact that this is by this calendar year, we would be trying to commission the cold road finishing line at period at Telangana. So as on 31st March ’25, our capital expenditure has been only to the tune of INR23 crores for this financial year and previous year was INR32. So we have as of now not drawn money for the same can you explain when — is it back-ended the payment that we need to make?
Kaushal Bengani
Yes, yes, it is back-ended because the way it works is you issue a purchase order and then you give them a token advance. And then there are stage wise payments. So the machinery is prepared in-part and as and when the parts are physically delivered to the location, our engineers will do an inspection some of the inspection is done before it is dispatched from the manufacturer’s unit and once it is received another round of inspection takes place and then payment.
Unidentified Participant
Sir, in your slide page number 16, in policy implementation, you have alluded to the fact of Ministry of Steel has revised their BMI and SB policy. So what has effectively changed for — I think so we have got — you have mentioned it, but if you could just throw some more light and how will this help the similar companies how will we benefit out of it?
Kaushal Bengani
The key benefit is that imports of seamless pipes will decline into India because of the DMI and SP policy. The policy requires that all seamless and ERW pipes are in the melt and pore category. Therefore, what it means is the entire value chain from raw-material to finished products has to be domestically procured in India. This means that the import of pipes will decline because those pipes could not be used in the PSE segment.
Unidentified Participant
Okay, the entire value chain has to be created has to be domestically sourced. That is what the sum and should.
Kaushal Bengani
Yes. The name of the policy is domestically manufactured iron and steel products policy.
Unidentified Participant
Okay. Sir, as you mentioned that we work on short-duration order book and the existable period is three to four months. So — and even last year, you gave an understanding of how the EBITDA per ton would shape up in the band of INR15,000 crores to INR18,000 crores — INR18,000 per ton for the seamless segment and we averaged around INR16,000. So taking these into account, do we still hold the band or what should be the outlook for per ton in terms of EBITDA per ton, their trajectory if you could just out?
Kaushal Bengani
Reasonably speaking, I think INR15,000 rupees per ton should we see guidance on our current order book?
Unidentified Participant
And last two points could be, sir, last two years we did some planned shutdown to improve the efficiency and I think to the yield to improve the yields also. So for the current year, do we have any such exercise outlined for any part of
Unidentified Speaker
The current year or are we done with the same for at least two years — one year for a longer period of time.
Kaushal Bengani
In Maharashtra, I think we will take preventive maintenance shutdown in one of our mills, maybe in the second-quarter or in the 3rd-quarter depending on how the order book is. In Telangana, I don’t think we will take any preventive maintenance shutdown in this year.
Unidentified Participant
Okay. And last point is about — I think, sir, you spoke about the rig part also to earlier participant and also our investments, cash accruals which we are generating into mutual funds and other activity. But taking into account the thought process in a broader sense, what should exactly be investors looking for? I think so the dividend payout ratio has gone up on — because of the decline in profits, absolute amount being despite — declined the same.
So just wanted to understand what should investors understand in terms of the cash accrual because I think so we are not into the business of deploying money into mutual funds, Manit, to just have an understanding as alluded earlier by the promoters also that the way we will only participate in activities which are in-line with our line-of-business. In short-term, it is — it is correct to take advantage, but over a period of time, there should be a policy-making. So what’s the thought if you’d like to share?
Kaushal Bengani
Our plant and machinery is very old and there is no problem in the capacity or in the efficiency of these machines. But you must bear in mind that when we acquired our plant. They were at craft value or close craft value going-forward plants and machinery will gradually continue to depreciate and will eventually have to be fully replaced, maybe 10, 15, 20 years later. That back-ended capital expenditure will be significant. And since we operate in a cyclical industry, we are conserving cash for that eventuality, subject to any acquisition opportunities which may present itself. Right now, there are no acquisition opportunities because market is generally good. Even after trying for more than a year, we have not been able to find suitable acquisition opportunity within India. So we have taken a view that we will conserve our cash for the moment.
Unidentified Participant
Yes, your point is well taken, cyclical nature of business. We are learning on a — to a totally net cash position for last two years. But since you yourself mentioned that it would take 10 to 15 years. So 10-year is a very, very long-time for to get the preparation. Maybe if the overhauling is around more than $1 billion to get the plant and done, then definitely that kind of corporate would be needed at that time. But just a last point, if I may conclude it, if we made the rig investment and I think in the year 2020 — 20 or ’21.
And at that time, even the rig prices were trading at rock-bottom if you — as you mentioned that you always count for assets where the NAV is lower than when market is lower than the MAV. So taking into account the current price change in the Daily rig, the can — will the management may also look out for accounting for more opportunity in the rig business going ahead or this money will be the cost that we will only be deployed for only for the seamless pipe opportunity and the continuity of the rig may happen for that next term, but counting for more asset under rig is not going to be through MSMB. So this can be categorically —
Kaushal Bengani
I understand your point, sir. We will continue in the steel pipes segment only. We will not go into the rig segment any further. When we will exit the rig segment that is for the Board to decide, which has not given any update yesterday.
Unidentified Participant
Correct. That is the reason why even investors are looking for the reasons why the valuation for our companies with having the FX and net cash flying so low. So just — I was just working out parameters. Thank you for the extended opportunity. You will join the queue, sir. Then you work you.
Kaushal Bengani
Thank you.
Operator
Thank you. The next question is from the line of Raja from B&K Securities. Please proceed.
Unidentified Participant
Hello, sir. Thank you for the opportunity. Sir, continuing with the previous discussion, what is the replacement cost of planted machines?
Kaushal Bengani
It is difficult to say because we are not looking at buying new planted machinery right now.
Unidentified Participant
Yes, just an estimated figure at current prices with.
Kaushal Bengani
I don’t have any estimate. I think you will be a better judge since you speak with many metal industry companies?
Unidentified Participant
The second is your presentation mentions about a new discovery, money,, et-cetera. So just a very basic question to understand how it works. So whenever there is oil discovery and if ONGC decides to develop the fines, then how long does it usually take for for us to get the orders
Kaushal Bengani
These discoveries that have been mentioned in the presentation which you are referring to they were made public a couple of days ago whilst we continue to hear news of discoveries being undertaken, we are slightly disappointed that they have not materialized into orders with the pace at which we expected them. That’s the only thing that I can tell you right now. The communication in respect of oil and gas expenditure is frequent and rapid, but the actual expenditure is not as frequent and as rapid, which is not to say that there is a slowdown, tempering of our expectations has to take place because ground level expenditure has not increased with the pace of the communication that is being received.
Unidentified Participant
Okay, sir. And sir currently our gross block is around 3,700 crores and roughly we can not even 50% of the assets are depreciated. So what makes you say that the assets are getting old and plus we are generating a lot of cash every year, then what is the reason for conserving cash for something that will be required in and
Kaushal Bengani
Our assets were purchased when they were 20 years-old and then we’ve been operating those assets for 30 years. So already our assets are 50 years-old. So there will come a point in time when the replacement of parts which are not functioning will not be the way forward because of obsolescence and since we’ll have to embrace new technology and even better efficiency, we will have to buy new assets.
Unidentified Participant
Okay. So within sites, you have multiple products. So subsea price, OCTG, API, etc., many kinds of sites. So what is the usual mix of these pipes for the company, which one contributes to the highest in terms of volumes and margins?
Kaushal Bengani
Oil and gas sector is our main area. Almost 70% Of total dispatches are in the oil and gas sector, with the balance 30% coming from boiler power general engineering segment please,
Unidentified Participant
I’m not talking about the user industry. I’m talking about the pipes, the kind of pipes, API pipes, power pipes, those kind of pipes, which one contributes the highest in the seamless EBITDA?
Kaushal Bengani
We cannot give that information.
Unidentified Participant
Okay, sir. Thanks, and all the best you.
Kaushal Bengani
Thank you.
Operator
Thank you. The next question is from the line of Harsh Shah from Verifus Advisors. Please proceed.
Unidentified Participant
Yeah. Hi, sir. Thank you for the opportunity. Can you only? Yeah. Yeah. The conversation from the previous participant, you said that in long-term, the EBITDA per ton expected should be around INR15,000. So then do you expect it — so we expect it to go to anytime soon FY ’24 level of around, say, 20,000 2022,000 in the coming years, say three, five years on the line.
Kaushal Bengani
It is difficult for us to give long-term guidance when the earlier participant had asked the question I had said that based on our current order book, the margin would be around INR15,000 per ton. The current order book is for a period of three to four months. That is what I have commenced in that
Unidentified Participant
Understood, sir. Thank you so much.
Kaushal Bengani
Thank you.
Operator
Thank you. The next question is from the line of Vikash from PhillipCapital. Please proceed.
Unidentified Participant
Hi, I just wanted to understand the current market dynamics or the growth rate if you could have. Also the Eastern Coast what we talked about, there’s a lot of discoveries. Any progress which you have seen so-far there.
Kaushal Bengani
Market is growing at a rate of 3% to 4%, I believe, but the orders from the oil and gas sector are not growing at that rate. So although new discoveries have taken place, I don’t think they have commenced exploration aggressively. The reason why I believe that is because in the offshore drilling rig sector, the day rate for rigs have temporarily crashed which means that there is availability of rigs but they are not being properly utilized. Hence exploration activities are not taking place and that is the reality for the moment.
Unidentified Participant
Understood my second question is we at one point of time before tariff in 2018 used to supply a good chunk in the US market. Given present condition, those still fluid, if India gets a zero for zero tax regime, how should we look at the Maharashtra benefiting from it?
Kaushal Bengani
We will definitely benefit from it because there is currently a 25% duty on all steel products if that duty goes away, we automatically become more competitive in the 4th quarter we noticed an increase in export and that increase was there for a period of four month so three months of the 4th-quarter and the April month. But since then, there has been a steady decline in export inquiries, which led to the dip in our order book. We have not reached the levels of exports that we had seen in financial year 2023 when 30% of our total dispatches were exports and that is ideally what we would like the position to be, but for now export market is soft.
Unidentified Participant
Understood. That’s all from my side.
Kaushal Bengani
Thank you.
Operator
Thank you. Due to time constraints, that was the last question. I now hand the conference over to Mr Vikash for his closing comments. Thank you, and over to you, sir.
Vikash Singh
Thank you. On behalf of Capital, I would like to thank Maharashtra Management to allow us to host the call. For any closing remarks, over to you,
Kaushal Bengani
. Thank you, Vikash, for organizing the call. We are grateful to interact with shareholders. The dip in the order book should not be seen as an indicator to write-off the company. It is more of a function of what the position of the market is right now. We expect it to improve going-forward. Thank you.
Operator
Thank you. On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines