Hariom Pipe — Q3 FY25 earnings call

Call held 11 Feb 2025

Management summary

Hariom Pipe reported robust Q3 and 9M FY25 results, with strong YoY growth in income, EBITDA, and PAT, driven by volume expansion and improved margins. Despite sequential revenue decline due to weaker steel prices and demand slowdown, the company leveraged cost efficiencies and a focus on value-added products. Management remains optimistic about future growth, targeting 20% volume growth for FY25 and double-digit revenue growth for FY26, while actively managing debt and working capital.

Highlights

  • Total income for 9M FY25 reached ₹959.79 crores, an impressive 16% YoY growth.

  • EBITDA for 9M FY25 grew 31% YoY to ₹126.57 crores, with Q3 EBITDA margin improving to 13.21% from 11.64% in Q3 FY24.

  • Operating profit for 9M FY25 grew 21% YoY to ₹92.32 crores.

  • PAT for Q3 FY25 grew 11% YoY to ₹11.22 crores.

  • Volume increased by 17% YoY in Q3 FY25, and 24% YoY for 9M FY25 to 171,254 metric tonnes.

  • Galvanized product segment sales increased 38% YoY in 9M FY25 to 86,934 metric tonnes.

  • Electricity cost reduced by more than 30% YoY, showcasing operational strength and efficiency.

  • Long-term debt reduced from ₹133.57 crores in September to ₹120-123 crores in December.

Concerns

  • Sequential revenue decline in Q3 due to weaker steel prices and temporary slowdown in demand from construction and automotive sectors.

  • Q3 FY25 volume (57,200 MT) was the lowest among the last eight quarters.

  • Net margin observed to be continuously declining by an analyst.

  • EBITDA per tonne declined sequentially from ₹7,600 in Q1 to ₹6,900 in Q3 FY25.

  • Target of 4 lakh MT volume and ₹2,500 crores revenue for FY26 might be delayed by 3-4 months.

Key financials

  1. Total Income ₹300.366 Cr
  2. EBITDA ₹39.625 Cr
  3. EBITDA Margin 13.2% +1.6%YoY
  4. Operating Profit ₹27.567 Cr
  5. PAT ₹11.23 Cr +11%YoY
  6. Volume 57,200 metric tonnes +17%YoY
  7. Average Price Realization ₹52,431 -6%QoQ
  8. EBITDA per tonne ₹6,900

What they filed

Q1 FY27: revenue down 6.9%, net profit down 29.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue314 300 400 461 336 +7%363 +21%507 +27%429 −7%
EBITDA42 40 49 58 43 +2%45 +13%64 +31%50 −14%
Net profit16 11 17 24 10 −37%12 +9%30 +76%17 −29%
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.

Segment breakdown

  • Galvanized Product Segment
    86,934 metric tonnes Sales Volume (9M FY25)62,876 metric tonnes Sales Volume (9M FY24)38% Sales Growth (9M FY25 YoY)
  • MS Tubes and Scaffolding
    77,000 metric tonnes Sales Volume (9M FY25)
  • Direct B2B Sales (GP coils and others)
    17,260 metric tonnes Sales Volume (9M FY25)10% Share of Total Volume (9M FY25)
  • Overall B2B Sales
    15% Share of Total Volume

Order book

low confidence
Management noted receiving good volumes of orders from government, private, and corporate sectors, indicating a healthy demand environment.

Source: Q&A

Capital allocation

high confidence
  • Debt Gross ₹409 Cr
    • Repayment Long-term debt reduced from ₹133.57 crores in September to ₹120-123 crores in December. ₹13.57 Cr
    As on December, our current debt is, just a minute. Our total debt is around Rs. 409 crores, roughly.

Guidance & targets

Volume

  • Total Volume Growth Volume · FY25 · High confidence 20%
    So, basically, we are targeting total volume growth is almost 20% growth we are expecting.

    — Amitabha Bhattacharya

  • Total Volume Volume · FY25 · High confidence 238,000 metric tonnes
    And we expect steady growth in FY '25, almost 20%, which is reaching to somewhere around 2,38,000 metric tonnes, with an increase in PAT volume terms also.

    — Amitabha Bhattacharya

  • Total Volume Volume · FY26 · Medium confidence 300,000 metric tonnes (+/- 10%)
    For FY '26 we can take this target for 3 lakh metric tonnes. So here and there, 10% plus or minus will be there because in the last financial year we can only see the volume only we can work on that and definitely we will be targeting and we will be achieving.

    — Amitabha Bhattacharya

Working Capital

  • Working Capital Days Working Capital · FY27 · High confidence 120 days

    From 153 days today

    from almost FY '23 if you see that, we have 153 days in FY '24 to 120 days in FY '27 we foresee further reduction in reliance on external borrowings and the debt will be coming down by our internal financial stability.

    — Amitabha Bhattacharya

Capacity

  • SKUs Capacity · FY26 · High confidence 4-digits (add ~200 SKUs)

    From 800+ SKUs today

    So, day by day our SKUs are increasing. And that might be by the end of FY '26 we can reach in the four digits also. So that means another minimum 200 SKUs also we are expecting to add it. It is not only pipe, it's pipe, coil and other products also.

    — Amitabha Bhattacharya

Market context

  • Revenue Growth Revenue · FY26 · Medium confidence double digit
    And in FY '26, we anticipate continued double digit revenue growth also.

    — Amitabha Bhattacharya

What to watch in Q4 FY25

FY25 Total Volume Achievement

Next quarter (Q4 FY25 results)
Current 171,254 MT for 9M FY25
Target ~238,000 MT for FY25

Why it matters

Meeting the full-year volume target is crucial for demonstrating sustained growth despite Q3 challenges.

And we expect steady growth in FY '25, almost 20%, which is reaching to somewhere around 2,38,000 metric tonnes, with an increase in PAT volume terms also.

Risks & concerns

  • Weaker steel prices and pricing pressure

    medium

    Weaker steel prices and pricing pressure in the domestic market impacted overall realization in Q3.

    Management acknowledged

  • Temporary slowdown in demand

    medium

    Slowdown in demand from key sectors like construction and automotive in Q3.

    Management acknowledged

  • Imported coil dumping in India

    medium

    The Indian steel industry faced challenges from imported coil dumping.

    Management acknowledged

  • Delays in government spending

    medium

    Government spending, as allocated in the budget for FY25, did not happen properly initially, though it has now started.

    Management acknowledged

  • Raw material price volatility

    medium

    Continuous fluctuation and volatility in steel prices in the past nine months.

    Management acknowledged

Q&A highlights

7 direct
Sequential degrowth and Q3 being the lowest quarter Direct
The sequential revenue decline was preliminary due to weaker steel price and temporarily slowdown in the demand from key sector such as construction and automotive, especially in Q3. Additionally, the pricing pressure in the domestic market and an industry-wide correction in selling price impacted overall realization. Despite these challenges, our volume increased by 17% year-on-year in Q3 FY '25, and we successfully offset some revenue pressure through higher value added products.

Addresses the core concern of sequential decline and explains the seasonal nature of Q4, which is typically stronger for the industry.

Asked by Chirag Vachhani

FY25 volume target and FY26 double-digit revenue growth Direct
So, basically, we are targeting total volume growth is almost 20% growth we are expecting. And we expect steady growth in FY '25, almost 20%, which is reaching to somewhere around 2,38,000 metric tonnes, with an increase in PAT volume terms also. And in FY '26, we anticipate continued double digit revenue growth also.

Provides clear volume and revenue growth targets for the current and next fiscal years.

Asked by Chirag Vachhani

Net margin target and continuous decline Direct
So, basically if you see cost efficiency wise, we are doing extremely good. Our electricity cost price is cutting down from the last year to this year, almost more than 30%. And our impact in raw material margin is also constrained, despite the fluctuation in raw material rate and disturbing the volatility in the steel price continuously in the past nine months, which we are facing in this segment from almost all of the three years period. Even though you can say, after COVID period this is the first time in this segment we are facing this kind of challenge. Despite that, our operating cost are constrained and we are continuously minimum our operating cost. And due to that only we are able to manage the margin and we are very much confident the margin will be truthfully growing in the coming future, because this is the lowest price which we are seeing in the steel market.

Addresses analyst's concern about declining net margins, highlighting cost efficiencies and confidence in future margin recovery with steel price stabilization.

Asked by Chirag Vachhani

Update on ₹700 crores fundraising Direct
Regarding this, basically in the earlier con call also and so many times we had clarified that the present scenario the fundraising is preferred for the time being. And the company is, whatever the growth, they are always focused for growth capital. And company is planning to grow managed by their own. And it is segmental wise and it is process wise. First we have to focus on our whatever the existing capacity we are having, that resource at optimized level we have to use. At the same time, the company very much focused to add various other sector's value added products, and our product basket is also we are expanding. And we are also penetrating new geographical regions. By that we are already getting some government and private sector, corporate sector also very good volume of orders. And then in the coming future also we are expanding like that. At the present moment we are not going for any sort of fundraising. This is for the time being, it is deferred.

Clarifies that the previously discussed fundraising is deferred, with the company focusing on organic growth and internal capital generation.

Asked by Bhagat

Achievement of 4 lakh MT volume and ₹2,500 crores revenue target Partial
So, 4 lakh metric tonnes of volume and Rs. 2,500 crores of revenue which we had disclosed, I think in the mid of 2022. At that time the steel demand and steel prices in the top notch and the market and the demand, domestic growth, GDP growth is also looking very positive and we are still in very much optimistic and our entire team is focused and our channel are very much professionally handled. And we are very much keen to reach our goal first, as I said just a few minutes before. And it will be, we ensure that that figure definitely will be reached. Instead of maybe by the end of '26 it can be some around three to four months extra it will take. But definitely Hariom reach this target, definitely. Because whatever the present capacity we are having, that optimum level is this much, 4 lakh metric tonnes.

Updates on a significant long-term target, indicating a potential delay of 3-4 months beyond FY26 but reaffirming commitment to the target.

Asked by Bhagat

Debt level as of December and long-term debt Direct
As on December, our current debt is, just a minute. Our total debt is around Rs. 409 crores, roughly. ... Long term debt is almost Rs. 120 crores, Rs. 123 crores. ... For September, sorry? From September Rs. 133 crores it was. In September long time debt was Rs. 133.57 crores, to be precise, okay. So it has come down from Rs. 133.57 crores to almost Rs. 124 crores.

Provides key debt metrics, showing a reduction in long-term debt and a comfortable debt-to-equity ratio.

Asked by Hrishit Jhaveri

EBITDA per tonne for different product segments Direct
For MS tubes you can take it up around Rs. 8,600 to Rs. 8,650. All the figures I am telling you, exact figures I cannot say because it is not audited. It's a limited report, but the figure is almost similar range, Rs. 8,600 you can take from MS tubes, scaffolding you can take Rs. 11,500. And GP pipe is again Rs. 6,500 to Rs. 6,800, for this quarter.

Provides granular profitability metrics for different product segments, indicating higher margins for scaffolding and MS tubes compared to GP pipes.

Asked by Nitesh Dutt

Sequential decline in EBITDA per tonne Direct
So basically, if you check with the realization price, that is when the realization price is quarter-on-quarter basis it is coming down on an average 5% to 6%, in terms of EBITDA decline mode is not in terms of that much of percentage, okay. So due to that our efficient operational capacity and efficient management skills we are able to manage the EBITDA. It is quite common thing that when the steel price is coming down, the realization price coming down, some absolute figure value, something is lower. But not at that much as the realization price is coming down from the market.

Explains the sequential decline in overall EBITDA per tonne due to lower realization prices, while highlighting management's ability to mitigate the impact through operational efficiency.

Asked by Pankaj Motvani

3 min read 7 chapters

Detailed narrative

Q3 and 9M FY25 Financial Performance

Hariom Pipe reported a total income of ₹300.36 crores for Q3 FY25 and ₹959.79 crores for the first nine months of FY25, marking a 16% YoY growth. EBITDA for Q3 stood at ₹39.62 crores, with a margin of 13.21%, an improvement from 11.64% in Q3 FY24. For 9M FY25, EBITDA grew 31% YoY to ₹126.57 crores. PAT for Q3 FY25 increased 11% YoY to ₹11.22 crores.

Market Conditions and Strategic Response

The Indian steel industry faced challenges in Q3 FY25, including weaker steel prices, temporary slowdown in demand from construction and automotive sectors, and imported coil dumping. Despite these headwinds, Hariom Pipe maintained a strong market foothold by leveraging its resilience and strategic vision. The company focused on higher value-added products and cost efficiencies to offset revenue pressure.

Volume Growth and Product Mix

The company achieved a 17% YoY volume increase in Q3 FY25. For the first nine months of FY25, total volume sold was 171,254 metric tonnes, representing a 24% YoY growth compared to 138,567 metric tonnes in 9M FY24. The galvanized product segment was a significant contributor, witnessing a 38% YoY increase in sales to 86,934 metric tonnes during 9M FY25. Hariom Pipe is expanding its product basket beyond pipes to include other value-added products.

Profitability and Cost Management

Hariom Pipe's profitability metrics highlight strong operational efficiency. The EBITDA margin improved to 13.21% in Q3 FY25. Management noted a significant reduction in electricity costs, down by over 30% YoY, which helped maintain margins despite raw material price volatility and pricing pressure. The overall EBITDA per tonne for Q3 was ₹6,900, with specific segments like scaffolding achieving ₹11,500 per tonne.

Debt and Working Capital Management

As of December 2024, the company's total debt stood at approximately ₹409 crores, with long-term debt at ₹120-123 crores, a reduction from ₹133.57 crores in September. The total outside liability to tangible net worth (TOL/TNW) ratio was around 0.9, indicating a comfortable debt level. Hariom Pipe aims to reduce working capital days from 153 days in FY24 to 120 days by FY27, improving cash conversion and reducing reliance on external borrowings.

Long-Term Outlook and Capacity Expansion

Hariom Pipe is optimistic about the opportunities in India's expanding steel market, driven by government initiatives. The company targets a 20% volume growth for FY25, aiming for approximately 238,000 metric tonnes, and anticipates continued double-digit revenue growth in FY26. For FY26, the volume target is 300,000 metric tonnes, with a 10% +/- variation. The company is also working to expand its SKUs to four digits by FY26, adding around 200 new SKUs.

Sponge Iron Plant Expansion Update

The company provided an update on its sponge iron plant expansion, stating that CFO renewal approval from the Andhra Pradesh Pollution Control Board was recently received. Applications for Environmental Clearance (EC) and Consent for Operation (CAP) for an additional 100 TPD capacity are in the pipeline. Management expects to receive these approvals within one to two months, after which construction for the additional capacity will commence.

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