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.