Venus Pipes & Tubes Ltd (NSE: VENUSPIPES) Q2 2025 Earnings Call dated Nov. 13, 2024
Corporate Participants:
Arun Kothari — Managing Director
Kunal Bubna — Chief Financial Officer
Analysts:
Dhruv Jain — Analyst
Dhananjai Bagrodia — Analyst
Kunal Kothari — Analyst
Sneha Talreja — Analyst
Muskan Rastogi — Analyst
Sahil Rohit Sanghvi — Analyst
Mythili Balakrishnan — Analyst
Presentation:
Operator
Ladies and gentlemen, we welcome you all to Q2 and H1 FY ’25 Earnings Conference Call of Venus Pipes and Tubes Limited, hosted by Ambit Capital. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict.
I now hand the conference over to Mr. Dhruv Jain from Ambit Capital. Thank you and over to you, sir.
Dhruv Jain — Analyst
Thank you. Hello, everyone. Welcome to Venus Pipes and Tubes Limited 2Q FY ’25 earnings call. From the management side today we have with us Mr. Arun Kothari, Managing Director; Mr. Kunal Bubna, Chief Financial Officer.
Thank you and over to you, sir, for your opening remarks.
Arun Kothari — Managing Director
Good evening and warm welcome to everyone on the Q2 and H1 FY ’25 earnings call for Venus Pipes and Tubes Limited. I have been joined by Mr. Kunal Bubna, CFO and SGA, our Investor Relation Advisors. We have uploaded our Q2 FY’25 investor presentation on stock exchange and company’s website. First of all, sorry for the delay call — delay starting this call for 15 minutes and due to some technical reasons it was delayed. And I hope you had an opportunity to go through the same.
We are happy to share a strong performance for the second quarter. In the first half of FY ’25 in Q2, our revenues reached INR228.9 crores showing solid growth of 19.6%. For the first half of the year, our revenues stand at INR469.1 crores marking an impressive growth of 26.4%. This success reflects the high demand for our projects across various sectors and reinforces the trust that customers have in the quality of what we offer. The above growth is backed by robust volume growth of 30% for H1 FY ’25 on a year-on-year basis. We also achieved all-time high order book of INR340 crores. Our key performance monitoring the parameter remains market share gain and we are gaining market share from day one of operations and continue to gain as reflected in our presentation.
Before we discuss our operations, I am excited to share some important updates about our team. In our journey to become a global leader, we have appointed Mr. Neelanjan as our Chief Strategy Officer and Mr. Mark Light as our Business Development Officer, Energy. Mr. Neelanjan brings over 20 years of experience having worked with companies like Tubacex, Kelvion, BGR Energy System, Terex Corporation and Auro Mira Energy. He has a deep understanding of different industries, market trends and the challenges of running complex operations. As Chief Strategy Officer, Neelanjan will guide our plan for growth using his experience in business development, operations and market expansion. His industry knowledge and his strong focus on customers’ needs make him the idle person to help Venus Pipes and Tubes grow in a sustainable way.
We are also excited to have Mr. Mark Light who joins us with over 30 years of experience in international sales and business development, especially in the oil and gas and energy sectors. He has worked with well-known companies such as TW Metal, Rimor, UnitBirwelco and JNK. With his knowledge of global markets and business growth, Mark will play a key role in helping Venus become a leader in the stainless steel piping market and expand into new products and markets. We have been consistently investing in manpower, which has resulted in jump in our manpower cost in last five years. We believe that the substantial investment which we have done in last few months will give us substantial capability to gain market share and profitable growth for long-term.
With this strong team and a clear vision for the future, we are well-positioned to achieve our goals of becoming a global leader. We are excited about the road ahead and confident that our investment in these new leaders will drive Venus Pipes and Tubes to even greater success in the coming years. We have added new slides in our investor presentation elaborating on how we have increased our market share over the years. The domestic market size has expanded from 2.2 lakh metric ton per annum to 3.2 lakh metric ton per annum from FY ’22, ’24 and we have increased our market share from 3.7% in FY ’20 to 6.2% in FY ’24. Our success is largely driven by our capacity expansion and backward integration, which position Venus as one of the few players in the country with end-to-end production capabilities. We are confident of increasing our market share to low double-digits in coming years given our foray into fittings and value-added pipe and tubes.
Now turning to our operations. Venus has delivered impressive export performance this quarter with export revenue growing by 2.7 times despite high freight rates, export now makes up one-third of our total revenue, which is a strong milestone for us. Let’s look the export outlook in our key region. Europe. Europe is showing encouraging sign of recovery, though the economy is still facing high inflation and reduced consumer spending. However, with the European Central Bank lowering interest rates, we expect a renewed focus on capital spending, which will open more doors for companies like ours to grow and capture a larger market share.
In Europe, demand for our product is strong and our quality is on par with the European manufacturers. We are steadily expanding in this market, thanks to solid relationship with dealers, active participation in the industry events and our reputation for high-quality products. Regarding United States, with the election uncertainty behind us, we anticipated China Plus One player to pick-up, which could benefit us in the long-term. Additionally, the Federal Reserve’s rate cuts were expected to boost spending and restart capital investments. We see a huge opportunity for our welded products in the U.S. market. To strengthen our presence, we have appointed representatives on the ground who are actively building connections with the local dealers and distributors.
Regarding Middle East, while parts of the region face ongoing conflict, we are largely supplying to countries not affected by the unrest. The demand in the oil and gas sector is substantial and we are proud to have secured approval from several major oil and gas players in the Middle East and we expect more approvals in the coming quarters. Overall, we are positive about our operation in this region and we expect a strong flow of orders in the coming quarters. With the Red Sea crisis improving and freight rates returning to normal levels, we are optimistic that the growth momentum in our export business will continue.
On the domestic front in India, the growth story remains strong after the recent election and we have seen a renewed focus on public spending. Some orders were delayed due to heavy rainfall across part of the country, but demand remains solid and we expect continued growth in our domestic business. We see a major opportunity in sectors such as oil and gas, engineering, chemical and power with the healthy inflow of the orders.
Coming to our segment wise performance, sales from seamless pipes showed the strong growth increasing by 21% year-on-year for both the quarter and the first half of FY ’25. Welded pipe however saw a slight dip of the 2% in Q2, though for H1 FY ’25, sales grew by 13%. In terms of volume, growth remained robust and with both seamless and welded pipe achieving over 30% growth in the first half. Revenues for the quarter were expected to be impacted by fluctuations in raw material prices. Looking ahead, we remain focused on expanding our value-added product portfolio. This includes offering specialized tubes such as titanium grade tubes and fitting. We aim to cater more to critical industries where quality is paramount. We’ve also seen a promising opportunity in the emerging sector like green hydrogen and nuclear, which align with our commitment to high quality specialized products.
Our capital investment in the expansion business is progressing with the first phase set to launch in March 2025. We are confident that this expansion will support our growth in high demand segments and reinforce our position in the market. We anticipate a strong second half of the year driven by sustained export growth and our expansion into new geographies. Our focus remains on delivering top quality stainless steel pipes and tubes tailored to meet the diverse need of various industries and customers. We are committed to upholding the highest standard and ensuring that our product meets global benchmark for reliability and performance. This commitment to excellence positions us well for continued growth and success in the global market.
With this, I hand over to Mr. Kunal Bubna, our CFO.
Kunal Bubna — Chief Financial Officer
Good afternoon, everyone, and a very warm welcome to our earnings conference call. We take absolute pride in announcing that your company has reported a strong quarterly and half yearly revenue, EBITDA and PAT for Q2 and H1 FY ’25. Just to brief you on the revenue front, revenue from operation for Q2 FY ’25 stood at INR228.9 crores as compared to INR191.4 crores during Q2 FY ’24 achieving a growth of 19.6% on year-on-year basis. Revenue for H1 FY ’25 stood at INR469.1 crores witnessing a strong growth of 26.4% and we have witnessed a strong volume growth of 30% across welded and seamless. Revenue bifurcation for the quarter was 33% from welded pipe and 57% from seamless and balance from others. Growth in seamless segment was 21% on year-on-year basis and welded segment registered degrowth of 2% on Q2 FY ’25 on year-on-year basis in terms of revenue.
Our export sales stood robust at INR75.6 crores for the quarter compared to INR28.5 crores during the same period last year, a growth of 165% year-on-year basis. Gross profit for Q2 FY ’25 grew by 42.6% on year-on-year basis and stood at INR77.6 crores. On the front of EBITDA, our EBITDA for the quarter stood at INR40.9 crores as compared to INR34.8 crores in Q2 FY ’24, a growth of 17.5%. EBITDA margin for the quarter stood at 17.9%. Our H1 FY ’25 basis EBITDA showed a growth of 42.5% standing at INR88.9 crores with margin at 19%. On the PAT front, PAT for Q2 FY ’25 is INR23.7 crores compared to INR20.3 crores in Q2 FY ’24, a growth of 16.7% on year-on-year basis. Margin stood at 10.4% compared to 10.6% in Q2 FY ’24. Our order book remained robust at INR340 crores.
In closing, we are optimistic about the journey ahead and fully committed to driving sustained growth. We are excited to push forward and elevate the Venus brand setting new benchmark in the industry.
With this, I would like to open the floor for Q&A round.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions]. We have our first question from the line of Dhananjai Bagrodia from Ask Investments. Please go ahead.
Dhananjai Bagrodia
Sir, congratulations on a good set of numbers again. I wanted to ask you now are we taking significant market share from other countries or are we taking it from other players in our industry? How are we gaining these numbers now?
Kunal Bubna
Sir, you see, in our business that we operate, there are a lot of smaller and unstructured player operating in that. So over a period, those small player also forms a good percentage of the total industry supply. So we have been taking their percentage. And apart from that see our export has been also been increasing over the period. It used to be significantly low 2%, 4% over the past many years and last year it was 12%. It is now gone up to 33%. That is also a contribution coming from.
Dhananjai Bagrodia
Okay. Sure. And sir, secondly, any thoughts on our inventory days, what would that end the year at?
Kunal Bubna
I didn’t get your question. Can you repeat?
Dhananjai Bagrodia
Inventory days, what would be in the year end for working capital inventory days?
Kunal Bubna
Yeah, it is around — inventory days are around 120 days sort of.
Dhananjai Bagrodia
Okay. And will be ending the year around similar?
Kunal Bubna
Yeah. We intend to maintain that only.
Dhananjai Bagrodia
Okay. And sir, lastly, another question like one of our suppliers had bought a company, a stainless-steel company in NCLT for 50,000 tons for INR200 crores. Is that something we had also looked at? Because that would have been way cheaper to acquire that.
Kunal Bubna
See, not specific that. But as we said always, we as a company always there is a team who keep on working on any acquisition and any sort of that which are available which plan to our strategies which are at a cheaper cost, but not this one.
Dhananjai Bagrodia
Okay. Fine. Sure. Thank you, sir. Congratulations again.
Kunal Bubna
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Kunal Kothari from Centrum Broking. Please go ahead.
Kunal Kothari
Yeah. Thank you for the opportunity and congratulations for great set of numbers in challenging quarter. Sir, my first question is what would be our current capacity utilization that we are operating on 38,400 ton overall capacity. Can you also provide how much would be the utilization rate in seamless and as well as in welded?
Kunal Bubna
Yeah. It’s more than 85% on the upfront of seamless and around 60% on the side of welded.
Kunal Kothari
Okay, sir. And by year end, at what level we are expecting to reach?
Kunal Bubna
Yeah. In case of seamless similar level like 85%, 90%, more than that sort of number for seamless and for welded, we should be targeting sort of 70%.
Kunal Kothari
Okay. Secondly, we were expecting the approval from companies like Aramco in the oil and gas sector. Can you state us what is the current status over there?
Arun Kothari
Yes, Kunal, with approval process, we are already on for the number of companies. So for the big companies, we had already received some of the approval from the oil and gas companies from the Middle East. Some of the oil and gas companies just like Aramco and others approval is under process.
Kunal Kothari
Okay. And what timeline that you can suggest that approval can come from Aramco as well?
Arun Kothari
Hopefully, we are getting — every month or every quarter, we are getting some of the approval from some of the new company. So I believe that most of the oil and gas companies or particular what segment we are operating, what sizes we are manufacturing right now will able to get in the period of six to nine months with most of the oil and gas company. Not only in Middle East, we are — number of oil and gas companies globally we are in-process of the approval.
Kunal Kothari
Okay, sir. Sir, also we have started selling our products largely in the oil and gas sector from last couple of quarters. So compared to the quarter one, we have started maybe from quarter four onwards, how much growth that we have seen selling in this particular area in the overall mix and how we can see in next six months to 12 months?
Kunal Bubna
See, we don’t give any specific sector wise data, but again, it’s not currently double-digit for oil and gas, but we believe going forward with many of the approvals coming in and again supplying to the larger player in the country also, we should be touching double-digit in coming year to come.
Kunal Kothari
Okay, sir. Sir, one more question. There are some demand pockets where I believe the extrusion process is required. Are we also targeting in future to set up a extrusion process to cater that part of the demand as well?
Arun Kothari
Kunal, right now, we can’t do any comments on this matter. Definitely, we look forward for the opportunity. Whenever right time will come for Venus, definitely, we wish to go, but right now, we are not able to give any comments in this matter, Kunal ji.
Kunal Kothari
Okay. Okay. No issue. Thank you so much, sir, and all the best.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Sneha Talreja
Sir, congratulations on great set of numbers. Just a couple of questions from my end. Firstly, if I look at your export share, I think you were aiming at about 25% odd. It’s actually grown much significantly, I think beyond everyone’s expectation. How do you see the run rate going-forward? Can it become like a 40%, 50% share for our business or is there any revised growth rate that you’re looking at from the exports angle?
Kunal Bubna
See, definitely, yes, it has been significantly high 33% and see, the order book is quite healthy on the side of export, but it will be always more than 25% what we believe for the coming quarter to come.
Sneha Talreja
Understood. Just secondly on your domestic market, of course, you’ve written that certain orders got pushed. Is there any quantum to it that once the order book which would have got pushed from, let’s say, Q1 to — or Q2 — from Q2 to basically Q3 that would have led to some domestic dip here?
Kunal Bubna
So definitely, it’s not specific of the quantum — on a specific quantum basis, but see, many of the end customer had delayed taking their material, keeping the effect of rainfall in the entire country. And again, few of the push we have not — the export might have been slightly higher as compared to what we have achieved because of the elevated freight. So these were the two reasons which has slightly made the top line on a bit lower side.
Sneha Talreja
Understood. Lastly, you have actually given your market shares this time in your presentation, which is pretty helpful. If I look at the market size from FY ’23 to FY ’24, especially on the seamless side is actually not increased at all. And you have definitely increased volumes there and gained market share. Any reason for market itself not growing on the seamless side and one this particular year FY ’24?
Kunal Bubna
Not as such there is any such specific reason. But we believe going forward, there should be 6% to 8% growth in the market on an overall basis.
Sneha Talreja
Both welded and seamless included?
Kunal Bubna
Both on a total basis, yes.
Sneha Talreja
Understood. Understood. Thanks. Thanks a lot and all the very best.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Muskan Rastogi from B&K Securities. Please go ahead.
Muskan Rastogi
Hello, sir. Congratulations on good set of numbers. Sir, recently we’ve got a notification where India has implemented anti-dumping duty on welded stainless steel pipes imported from Vietnam and Thailand. With regards to that I have a couple of questions, In India, the current stainless-steel industry is 3 lakh and 70% is welded out of that. So can you please tell how much is imports — catered by imports for welded? And second part is [Indecipherable] ADD will be implemented for five years then how much of volumes are we targeting?
Kunal Bubna
Unable to get you actually, the voice is getting distorted.
Operator
Ma’am, can you please use your handset?
Muskan Rastogi
Yeah. Yeah. Am I clear now?
Operator
Yes. Yes.
Muskan Rastogi
Sir, recently we have got a notification where India has implemented anti-dumping duty on welded stainless steel pipes imported from Vietnam and Thailand. So with regards to that, I have questions. So in India, the total stainless steel industry is 3 lakh and 70% is welded out of that. So how much imports currently is catered — how much of it is catered by imports currently? And second part is that since ADD will be implemented for five years, then how much of volumes are we targeting?
Kunal Bubna
See, for import for welded, we believe we should be in the range of more than 15% to 20%. But again, there are few of the companies which are exempted who are overseas companies and who are exempted from these circulars. So those companies keep on exporting welded pipe to India.
Muskan Rastogi
Okay. Sir, in future, how much volumes are we targeting after this anti-dumping duty comes in?
Kunal Bubna
You see, we are not as such importing any welded pipe. We are importing coil on which more anti-dumping duty is there. So we are not as such affected by the circular. Definitely it helps in a way from the way the welded pipe which we used to come in the country will be coming significantly less. But again few of the company are exempted which generally supply to India. So they will keep on supplying it.
Muskan Rastogi
All right. Okay. Sir, we are also seeing a huge demand in Middle East for stainless steel welded and stainless steel seamless. So what would be the opportunity size there and how much percentage we are exporting?
Arun Kothari
Regarding the Middle East, size we cannot define. But there is a huge investment is ongoing in the Middle East or in oil and gas sector. Mostly only main supply of Middle East is the catering from India or China only. In India also depends on the approval of the mill. Whichever mill is approved, they procure from because in the Middle East sector, in oil and gas sector very limited mills are approved from India. So in Middle East, there is a right now in demand in the water sector. In other sector also there is a good demand which is open for even for the unapproved player also. But it depends on the quality it plays an important part in the Middle East.
So, we see good opportunity in the Middle East or we have started to penetrate our Venus Pipes presence in the last two to three quarters only. For the coming quarters at least for next four to five years, we are looking very good demand from the Middle East. Whatever inquiry and orders we are in hand, we are in processing all the orders or almost number of enquiries ongoing for the Middle East. So in the coming quarter, we are expecting good volume from Middle East, but quantum we cannot define right now.
Muskan Rastogi
Okay, okay. And sir, on volume front, can you please tell how much is the year-on-year growth for welded and seamless?
Kunal Bubna
See, on a blended basis, if you see, the growth level was around 30% year-on-year and half yearly basis.
Muskan Rastogi
30% for both of them?
Kunal Bubna
Yeah, both of them, it was around 30%.
Muskan Rastogi
All right. Okay. Thank you so much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sahil Rohit Sanghi from Monarch Networth Capital. Please go ahead.
Sahil Rohit Sanghvi
Yeah. Thank you for the opportunity and first of all, congratulations on delivering such results in difficult times especially on exports. You’ve done a wonderful job. My first question is some bit on the financials. The other income has risen substantially this quarter. So is it purely interest income or something else?
Kunal Bubna
That includes a few part towards interest income, few towards export incentive and few towards exchange fluctuation.
Sahil Rohit Sanghvi
Okay. So roughly half or would be…
Arun Kothari
Majorly it was towards exchange fluctuation because we export that was the income on there.
Sahil Rohit Sanghvi
Okay. And on the other expenses also, the number looks very high. So I mean, any one-off over here or what’s the reason for the increase?
Kunal Bubna
No, it’s not a one-off, now the entire operation like PFC and entire mill is backward — backward integration, so the entire mill is running. So there is increase in store and power and labor costs. And apart from that, see, as the export proportionate increase, the ocean freights are high currently and it has also increased in this quarter as compared to earlier quarters. So that is also the reason for increase in other expenses.
Sahil Rohit Sanghvi
Okay. Okay. And so thirdly, I just want to understand, on the on the welded side, I mean, on the revenue basis, we are not seeing growth. So is this largely because the pricing has corrected or is it because volumes also? Like because you said there is a Y-o-Y growth in volumes.
Kunal Bubna
Yeah. There is a — there had been Y-o-Y growth in volume. The prices have deflated on the side of welded are fairly on a Y-o-Y basis. But again, the quantity was also on a low side for this quarter. But see, as we said, a few of the orders had been forwarded to the coming quarters to come. So we believe there is a healthy order book, which will help us to take the revenue on the side of welded also up going forward.
Sahil Rohit Sanghvi
And the pricing correction on the whole seems to be roughly 10%. Is this just because of the whole steel price correction or is there any other element to it?
Kunal Bubna
That is the reason basically if you see on a blended basis, it is more than 5% on a blended basis connection. And in fact, if you see our internal estimate, the correction is around 8% to 10%, but we have forecasted in March ’24.
Sahil Rohit Sanghvi
Okay. Okay. Okay. Thank you. Thank you. That’s all. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Dhruv Jain from Ambit Capital. Please go ahead.
Dhruv Jain
Thank you for the opportunity. If you could just spell out what’s your order book currently and what is the execution cycle that you expect that it will take for you to fulfill this order book?
Kunal Bubna
It is around something sort of INR340 crores and we believe typically should take roughly more than 120 days to execute the same.
Dhruv Jain
Okay. And we’ve seen a fairly strong execution from your end from an exports perspective almost contributing more than 30% of your revenue. But despite that, typically what we’ve seen in the past is that as your export mix goes up, your margins also pick up. But in this quarter, we’ve seen some softness. So just wanted some thoughts from your end on that perspective because you’ve seen a very strong export growth?
Kunal Bubna
Yeah. But what has happened is right, there had been good export growth, but in the last quarter, there was a hefty increase on the side of ocean freights being paid on while you export the goods to various part of the world. That has rose by quite significant number. So that has slightly softened the margins. But I think we believe it should be maintainable going forward. Those trades should also subsidize going forward and it will help us to increase those margins.
Dhruv Jain
Fair enough. And sir, one question on the market of welded and seamless. So in your presentation, you’ve mentioned 110,000 tons for FY ’23 and ’24 for seamless and for welded at about 210,000 tons. So while the last four, five years seamless has done well, we see that has not really picked up even if we look at it from a four year CAGR. So just wanted your thoughts as to why is this happening, as to why is welded not growing as fast? Is there some issue with the market because we’ve obviously seen anti-dumping, etc, that’s helped the industry. But from an absolute market growth perspective, it’s been kind of on the softer side.
Kunal Bubna
Yeah. Basically, as you said rightly in case of seamless, few of the government policies and other and also our export team in Europe and others has really helped us to penetrate faster than what we in fact internally have thought. But on the side of welded, see, the approvals of larger diameters and all take a significant time. So that has taken us and see, as U.S. market and all, we have started penetrating there and also along with that the Middle East many of the approvals had been received and a few of the approvals are underway of receiving. So those things happen in case of welded. It was entirely new set of sizes what we were going to manufacture in case of seamless we were there with earlier many of the sizes, only few inches we have added in case of seamless. So we penetrated faster out there and because of this requisite approval and all we have taken a bit time.
Dhruv Jain
Sir, I was talking more from an industry perspective. So I mean, if I look at welded pipes market, FY ’20 it was 160,000 tons and FY ’24, it is about 210,000 tons, which basically implies a sort of lower growth versus what seamless market has done. So I just wanted your thoughts there as to why is this market not growing as fast?
Arun Kothari
Main factor is that the people are shifting the seamless as you know, it is used in the critical operations or it’s highly valued product compared to the welded pipe. So people might be migrating from the demand from welded pipe to seamless pipe or seriously the seamless pipe industry was not much present in India. So right now, there is a player like Venus. There’s other player also who is in market to supply the seamless pipe. So if the previously the demand of the seamless pipe, the availability of the seamless pipe was also limited. It will depend on the import of very few players.
So people are not able to get the seamless pipe. That’s why they were using welded pipes. So people if sometimes if any industry requires anything or they are not getting in the seamless category, then if they require to use the SS pipe, then they select the welded pipe instead of a seamless pipe. So sometimes demand shifts from seamless pipe to welded pipe or welded pipe to seamless pipe. Right now, there is a good availability in the Indian market for the seamless pipe. That’s why seamless pipe market is growing well. That’s our thought.
Dhruv Jain
And sir, on the capacity front, we’ve seen a couple of players add capacity. Have you seen any sort of pricing issue that you’ve had to face or in general with respect to industry because we’ve seen a couple of players add substantial capacity? Thank you so much.
Arun Kothari
Yes, definitely it’s slightly acceptable, but still there is a good demand in the seamless pipe or very good demand is coming seamless pipe segment from the power sector in India. So in future, we don’t foresee much pricing competition in seamless pipe segment because there the demand is also growing up, just water industry is growing up in India. But still there is a — for any new players, it requires the approval process to enter in the market. So they can’t simply enter into the market on the basis of the mill. They require the long process to get the approval. So if any new industry starts the seamless pipe production, it requires minimum gestation period of the two years to three years to get the requisite approval to supply the pipe. So there’s a slightly price pressure, but there’s not much price pressure we are foreseeing in future.
Dhruv Jain
Great. Great. Great. Thank you so much, sir and all the best.
Operator
Thank you. [Operator Instructions] The next question is from the line of Mythili Balakrishnan from Alchemy Capital. Please go ahead.
Mythili Balakrishnan
Thank you for the opportunity. Just a question on the domestic demand. You mentioned that it was a [Foreign Speech] takeoff was a little pushed out into the quarter. Has it come back to normal in October or do you see it [Foreign Speech] there have been drains and other factors which have also happened. So just wanted to get a sense of that.
Kunal Bubna
Not as such — see, our intent is more towards a — for the first half, the intent was to focus to an export geography just to penetrate out there so that indigenous and export both sides are there. We are seeing demand in the domestic market from chemical industry, which was for the last few months, we are seeing those demands. Those shifts are there. Good demand is there on the side of power. We don’t believe any much major challenges in the domestic industry on the demand-side currently.
Mythili Balakrishnan
But has it picked up from what you saw in the first half or [Foreign Speech] is it…
Kunal Bubna
Similar to that.
Mythili Balakrishnan
Yeah. Got it. And also in terms of the capex, could you just give us an update on what is happening on the fittings as well as the better material welded tube capacities?
Kunal Bubna
The sale is underway. So we are working on that. Few of the machines order, a few of the civil works had all been started. So the project is underway. So we believe the full target of 31 March, 2025, we would be able to meet. We believe that.
Mythili Balakrishnan
Got it. Thank you. That’s all from my side.
Operator
Thank you. We have our next question from the line of Kunal Kothari from Centrum Broking. Please go ahead.
Kunal Kothari
Thank you for the opportunity again. Sir, we did a capex around INR50 crores in first half. What will be the capex in second half? And also about the capacity expansion we are doing, can you also state the current status like how much is being done and are we expecting to be complete on time or we can do before the timeline that we have provided?
Kunal Bubna
See, it should be roughly for second half in the range bound of further INR100 crores of capex investment and see, the project for both the — both the projects are working. The civil work had been started, few of the machines have been ordered. A few of the machines had also been received. So we believe the target of 31 March by — before 31 March, 2025 seeing the current scenario we believe we should be able to make. But definitely, there was a rainfall in the last quarter which affected a bit of civil work. But again, we believe there are six months to go and we should be able to make that.
Kunal Kothari
Sir, out of INR170 crores, we are doing around INR150 crores in FY ’25?
Kunal Bubna
No. It would be INR115 crores sort of number.
Kunal Kothari
Because we did around INR48 crores in H1 the overall capex.
Kunal Bubna
Yeah. So total will be — the total capex for the year should be in the range of INR150 crores, out of that INR115 crores would be towards this project and balance left over INR35 crores include few of the routine capex and few of the pilgers of small dia and the land cost which we have also acquired in the last quarter.
Kunal Kothari
Okay. Okay. Secondly, looking at the overall demand scenario, what volume growth that we can expect for FY ’26, ’27 with a two year view also like revenue, EBITDA and margin target that we are looking forward?
Kunal Bubna
See, we believe on quantity and other parameter, we believe there should be always a growth of more than 20% to 25% volume CAGR growth.
Kunal Kothari
And sir, on revenue, EBITDA and margin profile, do we see improvement because of the improvement in…
Kunal Bubna
There should be growth in EBITDA and PAT and all this stuff. But again, revenue will slightly dependent on the prices which cumulate into it. But that is how — so commenting on that is slightly tough, but what we believe 20% to 25% should be CAGR growth in coming three years.
Kunal Kothari
And in margin as well, sir, we are doing in the range of 18% to 20% currently with new capacities coming in and we ramping up in next couple of years, can we expect margin expansion with the ramp-up as well?
Arun Kothari
Kunal, definitely we look for the margin expansion. But right now, we can expect the present margin level because since we are already penetrating the market or we are increasing our market share or we are creating a new market also or we had invested — on the manpower front also, we had invested a good amount. So for at least one — at least three to four quarters, we can expect the same level of margin which we have right now or we look for the better margin, so it will definitely come in the coming year.
Kunal Kothari
Sir, what’s…
Kunal Bubna
For the FY ’25, if you see on the revenue front, we are declined by 8% to 10% than the internal budget, which is primarily due to realization dip of 5% versus March 2024 and also 8% to 10% versus our internal budgets.
Kunal Kothari
Yes, sir. Currently, we are at around 28,000 to 30,000 tons run rate for FY ’25. But as we are expanding from current 38,400 tons to around 45,000 tons by FY ’26 end. So at that peak level, like what could be at the maximum potential of revenue, EBITDA and margin?
Kunal Bubna
See, I mean I can — I’ve already given you the indicatives. We were speaking this expansion and all, so you can get a fair idea on that.
Kunal Kothari
Okay. Fair enough, sir. Thank you so much, sir.
Kunal Bubna
Yeah.
Operator
Thank you. Ladies and gentlemen, due to time constraint, that would be the last question for today. And I now hand the conference over to the management for closing comments. Over to you, sir.
Arun Kothari
I take this opportunity to thank everyone for joining the call. We will keep updating the investor community on regular basis for incremental updates on your company. I hope we have been able to address all of your queries. For any further information, kindly contact SGA, the Investor Relations Advisor for your company. Good evening and thank you once again.
Operator
[Operator Closing Remarks]