Surya Roshni Limited (NSE: SURYAROSNI) Q3 2025 Earnings Call dated Feb. 06, 2025
Corporate Participants:
Raju Bista — Managing Director
Bharat Bhushan Singal — Senior Vice President, Chief Financial Officer & Company Secretary
Analysts:
Adityapal Singh Jaggi — Analyst
Saransh Gupta — Analyst
Rohan Vora — Analyst
Farokh Pandole — Analyst
Dev Vora — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Surya Rochni Limited Q3 FY ’25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on-date of this call. These statements are not the guarantees of the future performance and involves risks or uncertainties that are difficult to predict. 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 then zero on your phone. Please note that this conference is being recorded. I now hand the conference over to Mr Raju Vista, Managing Director of Surya Roshne Limited. Thank you, and over to you, sir.
Raju Bista — Managing Director
Hi, welcome everybody, and thank you very much for joining us. Good evening. On this call, we are joined by Mr B.B. Singal, our company CFO; and Company Secretary as well; Mr Naresh Singal, Executive Director Steel Business; Mr Jitendra Agrawal, CEO of Lighting and Consumer Durable; Mr Gaurav Jain, ED and COO of Steel operations; Mr Vasumitrapande, CEO of Lighting and Consumer Durable Business; and SJ, our Investor Relations Advisors. And I hope everyone had an opportunity to go through the financial results. And moving on to the overall financial performance highlight, we are pleased to have had delivered a resilient performance in Q3 FY ’25 despite challenging macroeconomic conditions. During the quarter, our revenue saw a marginal decline of 4% and primarily due to an average 18% year-on-year decrease in HR coal prices, but we achieved a revenue growth of 22% and EBITDA in PET grew by 87% and 163% respectively as compared to Q2. Our lighting and consumer Durable segment delivered healthy performance with robust growth across professional lighting, decorative and home appliances. This reinforces our strategic focus on innovation quality and customer-centric offering. On a sequential basis, we recorded double-digit growth as well. Optimizing our capacity utilization, efficient working capital management and strategic cost rationalization have enabled us to achieve zero-debt while maintaining a cash surplus fund of INR223 crores as of Nine-Month FY ’25. Now coming to lighting and Consumer Durable, despite industry-wide challenges, including price erosion in LED segment, our proactive approach to product innovation, strong distribution network and early market initiatives has enabled us to achieve double-digit growth year-on-year revenue growth of 12% in this quarter. Focusing on the premiumization, cost rationalization, innovation and technology and backward integration under the PLI scheme also contributed to improved margins and overall profitability. Professional lighting delivered almost 15% year-on-year growth, benefiting from increased demand across the key product categories, including LED straightlight, where volume nearly doubled, a healthy order book of about INR150 crores in the professional lighting segment further strengthens our growth momentum. Looking-forward, we remain optimistic about the business roadmap and are — we are confident in delivering double-digit revenue growth for the full-fiscal year in lighting. Our focus will also be on achieving double-digit EBITDA margin through a balanced approach of product mix optimization, operational excellence and innovation. We are well-positioned to drive consistent growth and reinforce our leadership in lighting and consumer durable segment. And also we are investing INR25 crore at our facility in lighting division to set-up a state-of-art domestic wire business unit of specified size and categories. Now moving on to the steel pipe and strip segment, the Steel Pipe and steel segment witnessed 8% year-on-year volume growth, reflecting healthy demand. However, revenue declined by 8% year-on-year to INR1,417 crore, primarily due to drop-in average HR coal price by 18%, that is about INR10,500 per ton compared to same correspondence year last year. On a sequential basis, revenue grew significantly by 25% in steel pipe business from INR10,000 crore in FY ’25, recording a strong recovery. On quarter-on-quarter basis, EBITDA per ton improved by 78% from 2,900 in Q2 FY ’25. EBITDA for Q3 FY ’25 stood at INR11 crores, declining 9% year-on-year from INR121 crore. This EBITDA per ton declined to 5,163 from INR6,156, primarily due to absence of inventory gain, which contributed INR200 per ton in Q3 FY ’24. Value-added product, API spiral and galvanized pipes contributed almost 45% of total revenue for both the Q3 FY ’25 and Nine-Month FY ’25. Export sale remain unchanged year-on-year, but globally, trade uncertainties and reservations around the US tariff policies have prevented a potential double-digit growth despite this headwind, we are expanding our presence in Middle-East, Saudi Arabia, Europe and Canada market. We currently have order book of about INR600 crores in-hand for oil and gas sector, water sector and export business with rising demand for a structural pipe in infrastructure, construction and industrial sectors, we are expanding our section pipe capacity using direct form technology DFT to enhance efficiency. The spiral — the new spiral plant in Gwaliar and cold-rolling expansion at plant are set to commence our operations in February and March this year ’25 respectively. And at our Hindupur facility, we are increasing capex from INR75 crore to INR125 crores to expand production by almost 200,000 tonnes per annum, focusing on large-diameter 8 to 20 inch DFT mill and coated pipes for waterline project and infrastructure project as well. At our facility also, we have made an investment of about INR75 crore for manufacturing of large-dia pipe and DFT pipes, which will add another 60,000 tonnes of annual capacity and support our export business. Steel pipes are at five years steel prices are at almost five years level low and further declines are unlikely, providing a stable cost environment. We remain committed to expanding our product portfolio, strengthening our export business and investing in technology, driving capacity enhancement to drive long-term growth and profitability as well. And that’s it. Now I will request our CFO, Mr B. Singalji, to share his thoughts.
Bharat Bhushan Singal — Senior Vice President, Chief Financial Officer & Company Secretary
Thank you, respected MD sir, and a very good afternoon to all the participants on the call. For the quarter, the revenue was INR1,868 crores as compared to INR1,938 crores. EBITDA and PAT stood at INR156 crores and INR90 crore as compared to INR158 crore and INR90 crores respectively. For nine months of financial year ’25, the revenue was INR5,290 crore as compared to INR5,729 crore. EBITDA and PAT stood at INR397 crore and INR217 crore as compared to INR414 crore and INR225 crores, respectively. In lighting and consumer durables for the quarter, the revenue stood at INR451 crore as against INR403 crore, a growth of 12% year-on-year basis. EBITDA and PBT stood at INR45 crore and INR35 crore, a growth of 20% and 18% respectively. For nine months of financial year ’25, the revenue stood — stood at INR1,232 crores as against INR1,154 crores, a growth of 7% Y-on-Y basis. EBITDA and PBT stood at INR115 crore and INR87 crores, a growth of 9% and 5% respectively. In the steel pipes and steps, during Q3 FY ’25, the revenue was INR1,417 crores as compared to INR1,536 crores. Similarly, EBITDA per metric ton stood at 563 compared to INR6156. EBITDA and PBT stood at INR11 crore and INR86 crores as against INR121 crores and INR91 crores, respectively. For nine months of FY ’25, the revenue was INR4,061 crore as compared to INR4,577 crores. Similarly, EBITDA per metric tons stood at INR4840 crore to INR5,224. EBITDA and PBT stood at INR282 crore and INR203 crores as against INR308 crores and INR22 crores, respectively. As on, 31, 2024, our net working capital was 57 days with a return on capital employed ROCE of 21.4% and return-on-equity of 15.63%. With this, I conclude the presentation and we can now open the floor for further questions-and-answers you.
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 their telephone. If you wish to remove yourself from the question queue, you may press star N2 2. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles first question is from the line of Gupta from Swan Investments. Please go-ahead the line of the participant was on-hold. We move to the next participant. That is Pal Singh Jagi from MSC Capital Partner. Please go-ahead with your question.
Adityapal Singh Jaggi
Hi, am I audible?
Operator
Yes, sir.
Adityapal Singh Jaggi
Thank you so much for the opportunity. Sir, wanted to quickly understand from you that the previous con-call, that is Q2 con-call, we had said that we can achieve 9 lakh tonnes volume this year, 9 lakh ton a few thousand tons this year. But for us to achieve that, we would really need to grow our volumes by 40%, 45% Y-o-Y. So that would be my first question that do you think that this 9 lakh is achievable or do you want to revise the guidance for this FY ’25
Raju Bista
Next?
Adityapal Singh Jaggi
Sir, next would be that, again, in the last couple of con you said that in FY ’26, we can grow our volume to 12 lakh tonnes, 1.2 million tonnes, but revenue would grow by 10% to 12%. From INR9 lakh to 12 lakh, we are going up — we are growing 33% tonne, but there is a sharp, the revenue and volume are not matching. So just wanted — wanted to understand — wanted your clarification that are these numbers — is my understanding correct?.
Raju Bista
Regarding Holum, Karib Chelak net or Q4 me expected 2.65 lakhs ton. So almost INR9 lakh crores to the Karenge, so 8.8, 8.9 KRs per ton Pure or my volume both in regions say, Pura Sal election year, One Ki, General Election Ki. Toda API segment Kendar May, May — growth expected to have Dika, area is joke overall global job crisis, Chandra I can’t be time. We thought I export growth expected, but otherwise some looks like Agar Johara target Joha Mari budget the slightly. Or Sarpassi slightly. So now Jahta FY ’26, May, Hamara already, Doso Johay capex almost put a ahead in the cold-rolling mill or Kendar me and spiral plant Suru Hora,, 60,000 ton or similarly already Anjar maybe Chaltra, Indupur, maybe. So yes, or total Hamara, those Salka Jopanshu plant, Hay Uske Hamara Volum, your existing Karib Bharala, Kari ton Hoga. Bharala Tan, Jada, but still may. HR coal prices K Uper overall macro-economy K or Abhi Kush Harta for time-being but it may Kharab or way or Mujalak Tanki gradually advantage bulky India. So to my Malak EA
Adityapal Singh Jaggi
Mankey that now we have to dial your capex from say FY ’27, ’28 because capacity Kafi. So be 70% of. Yes, much at least I need to bar us a 100% volume growth as year-on-year?.
Raju Bista
Minimum. In fact 100% plus. Deke, is investment may a greenfield project be current.
Adityapal Singh Jaggi
Correct.
Raju Bista
Okay. Steel price can be my freight, logistic operament depend. My all-India may state have 65% he is stayed because of freight and logistic issues. So Naya project Laker, existing name, Vaha of those project KRA, this project substantial volume growth in our investments at Milena. For existing facility under maybe Joe DFT over the Joe and Square Pipe investment or cold-rolling facility maybe investment Advantage Milega.
Adityapal Singh Jaggi
Okay. Sir, what are the strategic say. Say Joe Hamlo benchmarking here with your competitors. So APA spread that is realization minus cost of production is five — is by far the best-in the industry. So started spread realization minus cost of production. But Jabham gross margin, say, EBITDA per ton overheads per tonne the. So internally, Socha that how to reduce it — buy up 100% volume growth ike.
Raju Bista
Ushme again. CDC Di, our overall baking a job oil and gas pipe Banaga, higher value-added product to naturally other lagging it. Our section pipe Bananiki those per ton. When you, value-added product Bananiki. So Iski hey, like in,, this, there are per ton EBITDA they can get. Those may — our PSA compared say this person, Hamara margins have better.
Adityapal Singh Jaggi
So. Sir, Sawal before I come back-in the queue. So Joe per tonne and Jab Panch,, Dosoke Beach Mahara and Jabb capex because most of value-added products affair so in the next say FY ’28, FY ’27 gross margin improvement or Kitna operating leverage
Raju Bista
May substantially gross margin say IGA or just say each quarter maybe is per ton per.
Adityapal Singh Jaggi
What’s the EBITDA, EBITDA okay?
Raju Bista
Like gross margin say hey improvement diagrams
Adityapal Singh Jaggi
To operating leverage other, where they sa part of
Raju Bista
You unlock investments of further, what is our evaluated product, high-margin products.
Adityapal Singh Jaggi
Take care. Okay.
Raju Bista
So gross margin may improvement this year, yes.
Adityapal Singh Jaggi
Take care. But employee benefit expenses and your other expenses. There was a birthday,
Raju Bista
I guess. As change. I just say volume maybe coming to a substantial improvement or gross margin will up.
Adityapal Singh Jaggi
Take it to melab? A, a gross margin.
Raju Bista
Okay., yes, sir, own, LAVAK, Amara,, target here or is my volume maybe growth higher Kaki, Hatta,, Joha, Square and sections of projects are related to may be Kaki investment to and volume may be growth dicator.
Adityapal Singh Jaggi
Okay, sir. May you may have thank you so much, sir.
Raju Bista
Okay.
Operator
Thank you. A reminder to all participants to ask a question you can press R&1. You. The next question is from the line of Saranj Gupta from Swan Investment. Please go-ahead.
Saransh Gupta
Hello, am I audible?
Operator
Yes, sir.
Saransh Gupta
Yeah. Thank you, sir for the opportunity and I guess I got disconnected earlier. So sir, so obviously mentioned current energy volume maybe we can see ago. So can you give us a ballpark number for that? And I have a couple of more questions. So should I like put it ahead?
Raju Bista
6.2 lakh ton or 2.6, 2.7 k aspar, no the
Saransh Gupta
Answer upcoming two years, as you mentioned that we can go to a gross margin of 23% to 25% with an EBITDA burden of 7,000. So by then what can we see the volume at?
Raju Bista
Hey, volume, see, Matla Hamara, turnkey Aspaska,, Mara volume increased Hoga. So Uska get gradually investment Jo spread almost in Salka. So almost Johay Usikke is, 50%, 60% 50 so the next three years Hamara ton on the basis volume at sir.
Saransh Gupta
Sir, next question is, sir a GP facility, when will it — when is it expected to come on-stream?
Raju Bista
So as you how many GP project you project would or Uske last day of Pipe May investment carve-in Du Purme, uki, GP Pike under Majo, Majo investment ROY Tha. Oh, to already Hamara tie-up Hoge ahead long come understand
Saransh Gupta
As we have seen a decent pickup in the monoblock residential pump. So it’s may EBITDA per ton differ Jamara existing product if you compare it with the API grade EBITDA per ton.,,
Raju Bista
Just from the Kia Charmena OH, VA to margin QK product introduced ahead. So publicity or branding key cost involved here, so with a percent margin be here. But your product category I see it as percent margin, its particular product segment say up to the. So overall lighting gender Pandra Solo Sok around K turnover comparing it or what shortage.
Saransh Gupta
And sorry, the by when can we expect this?
Raju Bista
Yeah, third year. Third year may Jakar K Ki Us Yara Bhara Hogra or announced PK, approved Kia. Purchased Peka investment on domestic wire business. Jokeri purchases are Johay business, say or whose segment can under maybe or Chi, 200,000 outlets saying this almost 75% to 80% electrical outlet. So your distribution dealer through say demand already oil lighting product deal, but somehow wire or or those company, we introduced. So MSA demand to RJ K Joy Board meeting may Board may approve KIA. So purchase capex almoso business, Dusra Doso, third year with Tinso or Gwaliar is existing lighting facility, Amari hey Joe JLS or TL or CFL. So investment or is my technically could be Amlo Filaman, already me so what easily joy is is under my turnover we are replacement. So Naish Amlok, is made on.
Saransh Gupta
Sorry, last question. I say government JJM pay focus, they have increased the focus on JJM. So Usmet, how do you see the tendering happening in the coming months like in last one year, the pipe that we have supplied for JJM like delay or Mila, Game working capital cycle segment.
Raju Bista
So already large those pass unlock a large wire pipe supply like. So JJM year 2028 extend Kia government name. Yeah,, average Old India Medica to both are estate 40%, so the Kinsal or here like in Italy,, I have the can they make many facilities plant in Lagai, particularly for this JJM project only. In Central India, we are located here or Ruska Advantage so eight clock ton.
Saransh Gupta
That’s the capacity, like I use Germany facility, like I used capacity here again
Raju Bista
60,000 tons per annum. But depend Qatar is 50,000 to 80,000 high scale open or thickness may depend Qatar, but the average look calculation is after 60,000 ton per annum as a man said are ton
Saransh Gupta
Okay, sir, that’s it for now. I’ll get back-in the queue.
Raju Bista
30,000 plus order. In fact, Iska Commercial production anime I’m going to manage delay are technical issues are at the imported machine. But what we or is it am no commercial production start.
Saransh Gupta
Okay, sir, that’s great. I’ll get back-in the queue.
Operator
Thank you. The next question is from the line of Rohan Vora from Envision Capital. Please go-ahead you. MR. Vora, can you proceed with the question, please?
Rohan Vora
Hello, am I audible?
Operator
Yes, sir, you are.
Raju Bista
Yes, sir.
Rohan Vora
Thank you for the opportunity. So sir, earlier comments this quarter API pipes key volume 3 slow. So as I give up his volumes, of Alta and Busra broadly API pipe ski demand comes high because EBITDA per ton major driver ahead. So Uski over the next three years,, 35% EBITDA per ton. So API pipes demand KC degree or book. Thank you.
Raju Bista
See, may, API can maybe doke category pipe, let’s say ERW pipe, welding pipe or Gusra spiral pipe. So Abhi, a beach General Election kick is tendering over a knee way or or RW segment may already go tender pipeline. So generally oil and gas segment is Bara Madlav,,, Har Gas Hamlog through pipeline. So cross-country line, pipkey demand here or gradually feel, so go-ahead both Limited chart log he category segment high skill or coffee but investment which is okay.
Rohan Vora
So your demand about
Raju Bista
But PSU Dubara said Madla Hoge already tender process Ogara start Jupe.
Rohan Vora
Okay. Sir, is K Alaba EBITDA per ton or KR drivers over the next three years.
Raju Bista
See Hamaraju volume growth Bhara driver or Dusrajo API pipe, Export segment to be Canada Market Officer Hamaril or your investment Hamco mean Jobi segmentia or sort of premium category. So go or Middle-East, maybe Saudi market co-manate have go a substantial volume or in fact to scan margin be. So overall, Johan could premium segment value-added product or Hamara Jonaya capex or, Johamari Coast in versus a advantage over Ilco plant can unlock DFT plant be installed. Just give us a but the manufacturing cost can then maybe improve in the.
Rohan Vora
Thank you, sir. I’ll get back-in the queue.
Operator
Thank you. A reminder to all participants to ask a question, you may press one. The next question is from the line of Farak Pandole from Avista Fund Management LLP. Please go-ahead.
Farokh Pandole
Yeah. Hi, Rajuji. Amku, Mira Sawal Yithake, Amara net cash position at this point or capex in the next two, I — this INR300 crores we are going to spend over next three years and our capacity — total capacity steel pipe cars capacity will go to 18 lakh ton
Raju Bista
18 to 19 yeah
Farokh Pandole
For crore team Sal may.
Raju Bista
Those next two years
Farokh Pandole
Next two years. Our net cash position yeah.
Raju Bista
As on today, INR225 crores.
Farokh Pandole
Okay. So, we should maintain a net cash position going-forward despite
Raju Bista
Augment or up Kushna or Pasa also of Investor Kai Yoga. Who ask mega.
Farokh Pandole
Thank you. Or the
Raju Bista
Price quarter Q2 really difficult Thapura Sal General Election steel price came under Pansal lowest level,,. So yes,,, Panswood, Bita, Kiata or Isbar, Joe, commentary EBITDA as a per ton EBITDA,, lighting division with double-digit EBITDA margin of this percent plus or on this like HSO EBITDA, Hamlo and Quarter 4K under Mara those who currently ask us EBITDA outlook company has a whole current in-spite of all these difficulties, Uske is the up the margins or profitability.
Farokh Pandole
So Hamaraju revenue or profit charsal or green Sal
Raju Bista
Say range-bound so clearly I think next range-bound there, Halkar Group maintain, your number. 80%, 85% capex utilization — sorry, Amar of utilization or plant utilization. So Joabi investment substantial jump volume in the KGA. To volume demand too high. Is Charpha be both selective for a high-value added product or high-margin volume look for the collective. Like in. In-spite of all these difficulties, they think under maybe Amari balance sheet improve profitability, 30 is high, like in maintain Khankey Ratkai.
Farokh Pandole
Thank you. Thank you, Rajiv. Thanks, G.
Operator
Thank you. The next question is from the line of Dave from NMR Capital Advisors LLP. Please go-ahead.
Dev Vora
Hello. Am I audible?
Operator
Yes, sir.
Dev Vora
Yeah. Good evening, sir. I just wanted to ask that the 25 capex that you are doing.,
Operator
Sir, you are not sounding very much clear. There’s a lot of takeo there.
Dev Vora
Just a second. Hello.
Operator
Yeah, that’s much better. Please proceed.
Dev Vora
Yeah. I just wanted to ask that 25 capex we are doing in the wire business, is that included in the 500 CR capex plan or is it apart from that.
Raju Bista
Additional Aji, Marevo plant or, which is capex.
Dev Vora
Okay. And my second question was Malaba structural pipe Banata here. So pre-existing buildings may be used Kavo pipes.
Raju Bista
Hi,. Thank you.
Dev Vora
Okay. Thank you. Rest of the questions are covered. Thank you.
Operator
Thank you. The next question is from the line of Adityapal from MSA Capital’s Partners. Please go-ahead.
Adityapal Singh Jaggi
Hi, thank you so much again for the follow-up. Sir, Aglais I’m FY 30 man. So I’m confidently at the average quarterly run-rate volume unit B H2 heavy hotel, but on an average 1,167 crores up team because a capex API may be alright upke is because up there opportunity in Middle-East and Canada China Y is Kela, say by FY ’27
Raju Bista
27 or Pandra person overall steel segment exports say values in that way.
Adityapal Singh Jaggi
Okay. All, sir, okay, steel pipes and stuff such a major segment there. So Akara that Mota Moti, each other FY ’27. So my sector EBITDA on an absolute level considerably improves the time.., Manna, sir, all the very best. All questions just email it to you all. Thank you so much wishing you all the very best.
Operator
Thank you very much. A reminder to all participants to ask a question, you may press star and one ladies and gentlemen, to ask a question, you may press star and one as a reminder to all participants to ask a question, you may press R&1. As there are no further questions from the participants, I now hand the conference over to Mr B.B. Singhal for closing comments.
Bharat Bhushan Singal
Thank you, everyone, for joining us today on this earnings call. We appreciate your interest in Roshne Limited. I sincerely once again thank to our MD sir and the CEOs for sparing their time and addressing queries raised by participants who attended the call. For any further queries, if any, contact SGA, our Investor Relation Advisors. Thanks. Good evening to all.
Raju Bista
Thank you very much.
Operator
Thank you. On behalf of Surya Rochini Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.