Electrosteel Castings Limited — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

Electrosteel Castings reported a mixed Q4 FY25, with consolidated total income of Rs. 1,739 crores and an EBITDA margin of 11.4%, primarily impacted by two blast furnace shutdowns and a temporary slowdown in market demand. Despite this, the company achieved a consolidated total income of Rs. 7,443 crores and an EBITDA margin of 15.6% for FY25. Management highlighted positive demand outlook from increased government allocation for the Jal Jeevan Mission and other water infrastructure projects, alongside capacity expansion to 9 lakh tons and strategic entry into new export markets.

Highlights

  • FY25 Consolidated Total Income reached INR 7,443 crores, reflecting robust annual performance.

  • FY25 Consolidated EBITDA Margin stood strong at 15.6%, aligning with mid-to-long term targets.

  • Installed capacity increased to 9 lakh tons by year-end FY25, with plans to reach 1 million tons by 2026-27, positioning for future growth.

  • Government's renewed commitment to the Jal Jeevan Mission (JJM) with a Rs. 67,000 crore allocation for FY25-26 and extension till 2028, promises significant demand.

  • Strategic entry into the Vietnam market and expansion of product offerings through the Singardo acquisition are opening new growth avenues.

Concerns

  • Q4 FY25 Consolidated Total Income was Rs. 1,739 crores, impacted by two blast furnace shutdowns.

  • Q4 FY25 Consolidated EBITDA Margin was lower at 11.4%, attributed to maintenance activities and a temporary market slowdown.

  • Working capital days increased marginally due to a slowdown in customer payment cycles, though management expects improvement.

Key financials

2 periods

Headline

  • Consolidated Total Income
    ₹7,443 Cr
  • Consolidated EBITDA Margin
    15.6%
  • Consolidated PAT
    ₹710 Cr
  • Dividend Per Share
    ₹1.4

Q4

  • Consolidated Total Income
    ₹1,739 Cr
  • Consolidated EBITDA Margin
    11.4%

What they filed

Q1 FY27: revenue down 22.2%, net profit down 93.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,692 1,659 1,563 1,402 1,192 −30%1,242 −25%1,197 −23%1,091 −22%
EBITDA249 264 175 162 83 −67%34 −87%25 −86%43 −73%
Net profit152 157 191 86 76 −50%-20 −113%-11 −106%6 −93%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

medium confidence
The company's order book is currently around seven and a half months, with expectations for it to improve.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹200 Cr
    • Capacity expansion (balance from planned Rs. 700 crores) ₹200 Cr
    • Maintenance CAPEX for FY26 ₹35 Cr
    • Regular CAPEX for FY26 ₹165 Cr
    • New project (funded by coal compensation)
    The CAPEX for FY26 will be somewhere around Rs. 200 crores. Maintenance CAPEX altogether will be Rs. 35 crores and Rs.165 crore would be regular CAPEX.
  • Debt Net ₹1,400 Cr
    Debt is reduced, it was Rs. 1,800 crores earlier working capital debt now it is Rs. 1,400 crores. ...maintaining million ton plus production capacity in pipe by keeping up say Rs. 1,500 crores to Rs. 2,000 crores total net debt level, it's something that we are targeting to achieve, and is very much in our grasp.
  • Dividend ₹1.4/share (final)
    The Board recommended Rs. 1.40 dividend per equity share, it means 140% dividend. We are maintaining the dividend from last year.

Guidance & targets

Capacity

  • DI Pipe Capacity Capacity · 2026-27 · High confidence 1 million tons
    The DI pipe capacity will be around 1 million tons in 2026-27.

    — Ashutosh Agarwal

Production Volume

  • Production Volume Production Volume · FY26 · High confidence 8.3-8.5 lakh tons
    we are expecting to hit something between 8.3 lakh to 8.5 lakh this financial year.

    — Madhav Kejriwal

  • Production Volume Production Volume · FY27 · High confidence >9 lakh tons
    in the subsequent year, we should be crossing 9 lakh tons.

    — Madhav Kejriwal

Margin

  • EBITDA Margin Margin · mid to long term · High confidence 15-18%
    15% to 18% is the range that we are looking at in the mid to long term.

    — Madhav Kejriwal

Profitability

  • Return on Capital (ROC) Profitability · Medium confidence 12-13%
    around 12% to 13% at a very, I would say realistic, slightly conservative level.

    — Madhav Kejriwal

Demand

  • JJM Ground Impact Demand · Q2 FY26 · High confidence Start coming in
    Impact on the ground will start coming in from Quarter 2.

    — Madhav Kejriwal

  • Ken-Betwa Project Demand Demand · H2 FY26 · High confidence Start seeing demand
    Sir, I think second half of this financial year we should start seeing some demand from Ken-Betwa come into DI pipes.

    — Madhav Kejriwal

  • Demand vs Supply Demand · next two years · High confidence 10-12% ahead of supply
    demand will which was earlier beyond supply by 25% will remain to be ahead of supply by approximately 10%, 12% for the next two years.

    — Madhav Kejriwal

Capacity Utilization

  • Capacity Utilization Capacity Utilization · next one year or so · High confidence 90-95%
    we will soon be hitting those numbers in the next one year or so right? Yes, please. (referring to 90-95% utilization)

    — Madhav Kejriwal

What to watch in Q1 FY26

JJM Project Execution Velocity

From Q2 FY26
Current Slowdown in H2 FY25, central funds disbursement in process.
Target Visible increase in project activity and pipe demand.

Why it matters

JJM is a major demand driver; its revival and execution pace are crucial for the company's volume growth.

Impact on the ground will start coming in from Quarter 2.

Risks & concerns

  • Jal Jeevan Mission (JJM) Funding and Execution Delays

    medium

    Reduced central government spending on JJM in FY24-25 (budget revised down from Rs. 70,000 crores to Rs. 22,000 crores) impacted H2 FY25 performance. Some states with financial troubles might delay projects.

    Management acknowledged

  • Impact of Blast Furnace Shutdowns

    medium

    Two blast furnace shutdowns in Q2 and Q3/early Q4 FY25 temporarily impacted production volumes and Q4 financial results, leading to a production loss of 60,000-65,000 tons.

    Management acknowledged

  • Working Capital Deterioration

    low

    A marginal increase in the debtor cycle was observed due to a slowdown in customer payment cycles, though management maintains strict credit policies and expects improvement.

    Management acknowledged

  • Competition from OPVC Pipes

    low

    The emergence of OPVC pipes as an alternative is not seen as a significant threat to DI pipes, especially for larger diameters, due to different use cases and limited overlap.

    Analyst downplayed

Q&A highlights

7 direct
Jal Jeevan Mission (JJM) Penetration and Ground Reality Direct
I have been saying since 1.5 years to 2 years that we have a coverage of 40% to 50%. So, what I was saying, I find that that has now come out in public, but this is a reality that I am noticing on the ground because of our network...

Management provides a more realistic assessment of JJM's on-ground penetration (40-50%) compared to official claims (80%), offering a nuanced view of market potential.

Asked by Aashav Patel

Impact of OPVC Pipes on DI Pipe Demand Direct
I don't find OPVC to be a real threat this sort of mindset or rather concern had also come up when HDPE was introduced in the domestic market, but we find that smaller diameter pipes still run the demand for Ductile Iron Pipes.

Management clarifies that OPVC pipes are not seen as a significant threat to DI pipes, especially for larger diameters, due to differing use cases and historical precedents with HDPE.

Asked by Rajat Sethia

Coal Mine Compensation Claim Status Partial
I am hopeful that this financial year we should see this matter settled towards to a very large degree.

Management expresses optimism for the settlement of the Rs. 1200 crore coal compensation claim within the current financial year, indicating a potential significant cash inflow, though specific timelines are not provided.

Asked by Aashav Patel

Increase in Working Capital Days Direct
So, that is in two parts. As mentioned earlier, we have seen a slight slowdown in the customer payment cycle, we had pushed some of our material to our subsidiaries across the globe because we were expecting sales pickup, which we will see in due course, reflecting in our in figures. So there is some extension in the overall.

Management attributes the marginal increase in working capital days to customer payment slowdown and strategic inventory placement, expecting an improvement going forward.

Asked by Rajesh Agarwal

FY26 CAPEX Breakdown Direct
The CAPEX for FY26 will be somewhere around Rs. 200 crores. Maintenance CAPEX altogether will be Rs. 35 crores and Rs.165 crore would be regular CAPEX.

Provides a clear breakdown of the planned Rs. 200 crore CAPEX for FY26, distinguishing between maintenance and regular capital expenditure.

Asked by Rajesh Agarwal

Realization and Margin Outlook Direct
Well, ma'am as I was mentioning previously in this call, the absolute realization numbers is a result of both demand and the movement of the iron ore and coal pricing, part of the reason for the softening on the realization is also that the input material costs have come down. Going forward the movement of the realization is going to be a consequence of the demand moving up...

Management explains the drivers behind softening realizations (lower input costs) and reiterates confidence in achieving 15-18% EBITDA margins in the mid-to-long term, viewing Q4 as a temporary 'rock bottom'.

Asked by Muskan Rastogi

Greenfield Expansion and New Product Strategy Direct
Most definitely sir, there are new products that are being envisaged. We mentioned before that as a Company we wish to move towards a manufacturer and supplier of the entire water infrastructure space. So, slowly we are covering all products, very recently we set up a small production line for gaskets also which goes into the pipeline.

Management outlines a strategic shift towards becoming a comprehensive water infrastructure supplier, indicating diversification into new products like gaskets and other fittings beyond core DI pipes.

Asked by Aashav Patel

JJM Outlay Revision and State Funding Direct
Your apprehension is well placed when it comes to certain states where they are running into financial troubles, but there are specific states where there will continue to remain central support such as Bihar and Andhra Pradesh and Madhya Pradesh.

Management addresses concerns about potential cuts in JJM outlay, clarifying that while some states might face challenges, others with central support or strong cash flows will continue project execution.

Asked by Aashav Patel

3 min read 7 chapters

Detailed narrative

Q4 and FY25 Financial Performance Overview

Electrosteel Castings reported a consolidated total income of INR 7,443 crores for FY25, with an EBITDA of INR 1,159 crores and an EBITDA margin of 15.6%. Consolidated PAT for FY25 stood at INR 710 crores, including a one-time deferred tax adjustment of INR 81 crores. For Q4 FY25, consolidated total income was INR 1,739 crores, impacted by plant shutdowns, resulting in an EBITDA of INR 198 crores and an EBITDA margin of 11.4%. The company recommended a dividend of Rs. 1.40 per equity share, maintaining the previous year's payout.

Jal Jeevan Mission (JJM) Outlook

The Jal Jeevan Mission (JJM) experienced a slowdown in H2 FY25 due to a budget revision from Rs. 70,000 crores to Rs. 22,000 crores for FY24-25. However, the government has allocated a significantly higher budget of Rs. 67,000 crores for FY25-26 and extended the mission until December 2028. Management believes that while official penetration claims are 80%, the ground reality is closer to 40-50%, indicating substantial remaining work for over 4 crore households. The impact on ground-level activity is expected to pick up from Q2 FY26.

Capacity Expansion and Production Volumes

The company's phase-wise expansion to increase capacity from 6.8 lakh tons to 1 million tons is on schedule, with installed capacity reaching 9 lakh tons by year-end FY25. A total CAPEX of Rs. 500 crores has been incurred up to FY25 out of a planned Rs. 700 crores, with the balance Rs. 200 crores to be spent later. DI sales volume for FY25 was 7.17 lakh tons, with Q4 volume at 1.71 lakh tons. Production for FY26 is targeted at 8.3-8.5 lakh tons, aiming to cross 9 lakh tons in FY27, with capacity utilization expected to reach 90-95% within the next year.

Raw Material and Margin Dynamics

Coking coal prices remained relatively steady in the last three months, varying by about $20, while iron ore saw a small upward trend of Rs. 200-300 per ton. The softening in realizations, currently Rs. 58-60 per kg for new orders, is partly attributed to lower input material costs. Despite Q4's 11.4% EBITDA margin being a 'rock bottom' due to shutdowns, management maintains a mid-to-long term EBITDA margin target of 15-18% and aims for a Return on Capital of 12-13%.

Strategic Diversification and New Markets

Electrosteel Castings is strategically moving towards becoming a comprehensive manufacturer and supplier for the entire water infrastructure space. This includes expanding product offerings beyond DI pipes and fittings, with a new production line for gaskets already set up. Through the Singardo acquisition, the company has successfully entered the Vietnam market, initially with small orders, and is now pursuing larger contracts. This diversification aims to reduce reliance on core products and tap into broader market opportunities.

Capital Expenditure and Debt Management

The company has incurred approximately Rs. 500 crores in CAPEX up to FY25 for capacity expansion, with a balance of Rs. 200 crores planned. For FY26, the total CAPEX is projected at Rs. 200 crores, comprising Rs. 35 crores for maintenance and Rs. 165 crores for regular CAPEX. Working capital debt has been reduced from Rs. 1,800 crores to Rs. 1,400 crores. Management aims to maintain and slightly reduce total net debt, targeting a comfortable level of Rs. 1,500-2,000 crores for a 1 million ton plus production capacity.

Competitive Landscape and Product Innovation

Management addressed concerns regarding OPVC pipes, stating they do not pose a significant threat to DI pipes due to distinct use cases and limited overlap, particularly for larger diameters (above 200 dia). The company is focusing on innovation by adding new products for the water infrastructure space, beyond just fittings and pipes, to maintain competitiveness. The demand for DI pipes is expected to remain 10-12% ahead of supply for the next two years, with the demand-supply cycle projected to meet in FY28-29.

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