Hariom Pipe — Q4 FY25 earnings call

Call held 10 May 2025

Management summary

Hariom Pipe Industries delivered a robust Q4 and FY25, marked by record sales volumes and significant EBITDA growth, driven by integrated manufacturing and strategic investments. Despite a decline in average selling prices and gross margin contraction due to external factors, the company improved its net debt-to-EBITDA ratio and is strategically expanding into renewable energy with a 60-megawatt solar project. Management outlined aggressive volume growth targets and a focus on higher-margin B2B segments.

Highlights

  • Achieved highest ever annual sales volume of 2.45 lakh metric tonnes in FY25, reflecting a 23% year-on-year growth.

  • EBITDA increased by 27% to ₹175.4 crore in FY25, and EBITDA margin expanded to 12.93%.

  • Operating cash flow increased 15 times to ₹78.6 crore, translating to a 45% EBITDA to cash conversion ratio.

  • Net debt-to-EBITDA improved to 1.99 from 2.45 last year, with net worth increasing to ₹573 crore.

  • Return on capital employed stands at a strong 19.2% and return on equity remains healthy at 10.8%.

Concerns

  • Average selling prices declined by 5% in FY25.

  • Profit after tax rose by only 9% to ₹61.7 crore despite strong operational performance, due to an increase in depreciation and finance costs.

  • Gross margin contracted to 22.8% in FY25 and 21.3% in Q4, attributed to safeguard duties on imported coils and volatility in steel prices.

Key financials

2 periods

Headline

  • Annual Sales Volume
    2,45,000 metric tonnes
    YoY +23%
  • Revenue from Operations Growth
    18%
    YoY +18%
  • Average Selling Price Decline
    -5%
    YoY -5%
  • EBITDA
    ₹175.4 Cr
    YoY +27%
  • EBITDA Margin
    12.9%
  • EBITDA per tonne
    ₹7,147
  • Profit After Tax
    ₹61.7 Cr
    YoY +9%
  • Operating Cash Flow
    ₹78.6 Cr
    YoY +1,500%
  • Net Worth
    ₹573 Cr
  • Net Debt-to-EBITDA
    1.99
  • Return on Capital Employed
    19.2%
  • Return on Equity
    10.8%
  • Gross Margin FY25
    22.8%
  • Gross Margin Q4 FY25
    21.3%

Q1 FY26

  • Volume (first 38 days)
    33,380 metric tonnes
  • Volume Growth (first 38 days)
    14%
  • Average Realization Price (first 38 days)
    ₹57,000
  • Realization Price Increase (first 38 days)
    5%

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

  • Value-Added Products
    97% Share of Total Revenue92% Share of Total Revenue Last Year
  • Galvanised Pipe and Coil
    ₹6,600 EBITDA per tonne

Order book

low confidence
The company operates on a dealership-based model and supplies to multiple OEMs and MNCs, focusing on volume-led growth rather than a traditional project-based order book.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹100 Cr Solar project equity funded by PM-KUSUM subsidy from Central Government, rest (72-75%) by debt.
    • Total CapEx for FY25 ₹100 Cr
    • Maintenance CapEx for FY25 ₹10 Cr
    • New product vertical (CTL) and solar panels (1.4MW) at Perundurai unit
    • 60-megawatt solar power plant project ₹180 Cr
    Total CapEx was done around 100 crore plus, 105 crores. Out of that, that maintenance CapEx is coming around 10 crores to 12 crores that mainly rolls and some of furniture, fixtures and all those things. Major CapEx is taken care (up) in Perundurai unit, where we have added the new product vertical, which is called CTL, cut to length... for generating one megawatt solar power, you have to require almost all 3 crores to 3.25 crores of CapEx. So, including the land. So, it's roughly 180 to 240... Hariom equity investment; it is totally backed under the PM-KUSUM scheme, where we are getting the entire equity amount as a subsidy during the construction period from the Central Government.
  • Debt 2.0× EBITDA Cost 8.5%
    Net worth increased to 573 crore and our net debt-to-EBITDA improved to 1.99 from 2.45 last year... our rate of interest is coming whatever as per the present Hariom rating, we are enjoying in our last financial year altogether, 8.85. So, it is in between 8.5 will be there... your borrowing is 400 crore, okay... Hariom is having A rated company. Therefore, Hariom is enjoying the lower rate of interest comparatively to any other in this sector... Yes. It is CRISIL, A- long-term rate. Fund-based limit is 340 crores.
  • M&A Ultra Pipes Acquisition · Abandoned

    Cost-effectiveness of stamp duty and legal issues led to a shift from acquisition to long-term lease.

    Leasing for 99 years provides more financial benefit than upfront purchase.

    We had recently announced the acquisition. But later on, we cancelled it. And now we are taking the same on lease for 99 years instead of 40 years... The reason behind that to cost-effective of the stamp duty, as well as some legal issues with the stamp department, we have shifted instead of acquisition on a long-term lease, where the company will get a much more financial benefit rather than it is going to upfront purchase in the long-term basis.

Guidance & targets

Volume

  • Volume CAGR Volume · next two years · High confidence 30%
    the foundation led this year has prepared us well to deliver 30% volume CAGR over the next two years

    — Rupesh Kumar Gupta

  • Q1 FY26 Volume Growth Volume · Q1 FY26 (first 38 days) · High confidence 14%
    as of today, we are on track to achieve around 14% volume growth in Q1 compared to the last quarter.

    — Amitabha Bhattacharya

Realization

  • Q1 FY26 Price Realization Increase Realization · Q1 FY26 (first 38 days) · High confidence 5-7%
    Realisation side, we have received as average realisation price is almost of 57,000 plus, which is compared to the 5% to 7% high.

    — Amitabha Bhattacharya

Profitability

  • EBITDA per tonne Profitability · FY26 · Medium confidence similar, may vary with INR 200 to INR 500 plus side only
    Yeah. So, the EBITDA per ton remains almost similar. This may vary with INR 200 to INR 500 plus side only, because as we are entering into the new aspects of power and other things, which will also add on some cost effectiveness and the values in the process.

    — Rupesh Kumar Gupta

  • PAT Growth (absolute value) Profitability · FY26 · Medium confidence 9-12%
    PAT growth last year, it was 9%. So, similar line of activity in between 9% to 12% in terms of value we are expecting.

    — Amitabha Bhattacharya

  • MS Tubes EBITDA per tonne Profitability · High confidence 8,000-8,500

    From 8,000 today

    Presently, we are getting 8,000 per tonne. We can get between 8000 to 8,500 per-tonne EBITDA.

    — Amitabha Bhattacharya

Working Capital

  • Net Working Capital Days Working Capital · FY26 · Medium confidence 100 days
    FY '26, it will be almost all net working capital days if you have taken. So, it is coming around 100 days we are expecting.

    — Amitabha Bhattacharya

Capacity

  • MS Tubes Capacity Capacity · High confidence 180,000 metric tonnes

    From 132,000 metric tonnes today

    So, basically, presently, we are having 132,000 capacity. Whatever you say, the minimum CapEx part, we are up to reach up, up to 1,80,000 of metric tonne.

    — Amitabha Bhattacharya

Project Completion

  • 60-megawatt solar power plant completion Project Completion · next 18 months · High confidence completion
    The project is expected to generate approximately 9.6 million kilowatt annually and will be completed over the next 18 months.

    — Rupesh Kumar Gupta

Debt

  • Debt-free status Debt · FY27 or FY28 maximum · High confidence debt-free
    Yes. So, yes, our internal accrual, by FY '27 or by FY '28 maximum, our internal accrual will be that much of positive, where we can be able to repay the entire debt amount by our internal accrual.

    — Amitabha Bhattacharya

What to watch in Q1 FY26

Q1 FY26 Volume Growth

next quarter
Current 14% achieved in first 38 days
Target Full Q1 FY26 volume growth

Why it matters

To confirm the sustained momentum of volume growth for the entire quarter, aligning with the 30% CAGR target.

So as of today, we are on track to achieve around 14% volume growth in Q1 compared to the last quarter.

Risks & concerns

  • Challenging external environment (weaker steel demand, pricing volatility)

    medium

    Despite weaker steel demand and pricing volatility, the company demonstrated growth through its integrated manufacturing model and strategic investments.

    Management acknowledged

  • Gross margin contraction due to external factors

    medium

    Gross margin contracted due to safeguard duties on imported coils and volatility in steel prices, though EBITDA was managed through internal controls.

    Management acknowledged

  • Potential glut and margin pressure from aggressive volume growth in an expanding industry

    medium

    Analyst concern that aggressive volume growth targets in an industry with expanding capacity could lead to margin pressure; management cited backward integration and cost control as mitigants.

    Analyst downplayed

  • Capital allocation efficiency for new solar project given existing debt levels

    medium

    Analyst questioned the prudence of investing ₹180-240 crore in a new solar vertical with existing debt, suggesting alternative investments in core business; management emphasized long-term strategic vision.

    Analyst deflected

Q&A highlights

5 direct, 2 evasive
EBITDA per tonne decline despite operational improvements Evasive
So, thank you, Keshav to raising all the concerns of yours. That's really good to understand all your points. I would like to invite you to our plant to visit and check what exactly are the performance is doing and to understand the complete process and other things.

Analyst questioned the company's profitability metrics given improvements in power cost and value-added product mix, suggesting a potential disconnect that management did not fully address on the call.

Asked by Keshav Gaur

Sustainability of margins with aggressive volume growth in an expanding industry Direct
No, no, it won't happen. The reason is that basically, we have strong backward integration and a clear assumption about the pricing for the upcoming month. We have very good control over that aspect.

Addresses concerns about potential margin pressure from increased industry capacity and Hariom's aggressive growth targets, with management highlighting internal controls and backward integration.

Asked by Keshav Gaur

Gross margin contraction in FY25 and Q4 Direct
So that gross margin is actually material margin. So, due to that imported coil was stopped by the government due to that safeguard duty. The domestic HRC price is going up after that. And during the year also if you check that, the volatility in the steel price was happened.

Provides specific reasons for the observed gross margin pressure, linking it to external factors like government policy and raw material price volatility.

Asked by Aadesh Gosalia

Capital allocation efficiency for the new 60MW solar project given existing debt Partial
One particular point as I mentioned before, this model, it is not only for the solar generation and supply. It is a model for a new vertical. In this, the company will leverage a large part of its pipe segment and the scaffolding division that we are already operating in a similar manner.

Analyst questioned the strategic and financial prudence of investing in a new, capital-intensive solar vertical while the company has existing debt and could potentially invest in related core businesses.

Asked by Hrishit Jhaveri

Reconciliation of 30% volume growth target with 9-12% PAT growth target Direct
So, 9% means last year, FY '24, if we check, our total PAT amount was 56.80 crores. In March 25, 61.73 crores. So, for the absolute value, if you've taken on the growth trajectory, 9% growth were there versus '24 versus '25 in absolute value figure, not in terms of percentage of the against the revenue.

Clarifies a potential misunderstanding regarding the nature of PAT growth guidance, ensuring investors correctly interpret the targets as absolute value growth rather than percentage of revenue.

Asked by Bhagwat N

Rationale for 60MW solar project, debt levels, and alternative investments Evasive
Keshav, thank you for the insights, basically. So, the business model, we cannot give you a very clear picture on this platform. I would request you to just meet us in-person, so that undoubtedly your insights on the SS Pipe and other things are really welcoming, and we are already planning on that lines also.

Analyst reiterated concerns about the solar project's rationale and capital allocation, suggesting other, more related investments. Management's evasive response indicates sensitivity or complexity not suitable for a public call.

Asked by Keshav Gaur

Debt reduction target and interest cost trajectory Direct
Yes. So, yes, our internal accrual, by FY '27 or by FY '28 maximum, our internal accrual will be that much of positive, where we can be able to repay the entire debt amount by our internal accrual.

Provides clarity on the company's debt management strategy and long-term goal of becoming debt-free, which is crucial for capital-intensive businesses.

Asked by Devendra Warankar

How economics change with increased B2B sales Direct
So, basically, B2B sales, when we are increasing the B2B sales, the margin is always is good. Moreover, it's a very much predictable top line is coming and the margin, you can easily understand which is not connected with the recent market pricing or volatility.

Highlights the strategic advantage and financial benefits of shifting towards a higher B2B contribution, which is a key growth area for the company, offering better margins and predictability.

Asked by Gurvinder Juneja

3 min read 6 chapters

Detailed narrative

Overall Performance and Volume Growth in FY25

Hariom Pipe Industries achieved its highest ever annual sales volume of 2.45 lakh metric tonnes in FY25, marking a 23% year-on-year growth. This was primarily driven by higher output of MS Tubes and Galvanised Products and better utilization at Mahbubnagar and Perundurai units. Despite a 5% decline in average selling prices, revenue from operations grew by 18%, showcasing a volume-led growth strategy. The company is targeting a 30% volume CAGR over the next two years, with Q1 FY26 already tracking a 14% volume growth in the first 38 days.

Profitability and Margin Management

In FY25, EBITDA increased by 27% to ₹175.4 crore, expanding the EBITDA margin to 12.93%. EBITDA per tonne stood at ₹7,147, up from ₹6,964 in FY24, reflecting operating leverage and tighter cost controls. However, gross margin contracted to 22.8% for FY25 and 21.3% in Q4, primarily due to safeguard duties on imported coils and volatility in domestic HRC prices. Profit after tax grew 9% to ₹61.7 crore, impacted by increased depreciation and finance costs from capacity expansions and new asset commissioning.

Strategic Expansion into Renewable Energy

The company has incorporated a wholly-owned subsidiary, Hariom Power and Energy Private Limited, to execute a 60-megawatt solar power plant project under a 25-year power purchase agreement with MSEDCL. This project, expected to generate 9.6 million kilowatt annually and be completed within 18 months, is a strategic move to align with India's renewable energy goals, strengthen ESG profile, and open a new revenue stream through the sale of solar steel structures. The estimated CapEx for this project is ₹180-240 crores, with equity funded by PM-KUSUM subsidies from the Central Government.

Capital Allocation and Debt Management

Hariom Pipe's balance sheet remains healthy, with net worth increasing to ₹573 crore and net debt-to-EBITDA improving to 1.99 from 2.45 last year. Return on capital employed is strong at 19.2%, and return on equity at 10.8%. Total CapEx in FY25 was approximately ₹100-105 crores, including ₹10-12 crores for maintenance and investments in Perundurai for CTL and 1.4 MW solar panels. The company aims to be debt-free by FY27 or FY28 through internal accruals, with current borrowing at around ₹400 crore and a cost of debt around 8.5%.

Focus on Value-Added Products and B2B Segment

Value-added products contributed 97% of total revenue in FY25, up from 92% last year, reaffirming the company's focus on customer-centric, margin-eccentric segments. The company is actively enhancing its reach in Western and Northern India and exploring franchisee and rural market models. Management highlighted that increasing B2B sales, currently targeted to grow from 15%, offer higher margins and more predictable top-line compared to the general market volatility, providing a good opportunity to enhance revenue and EBITDA rates.

Operational Efficiency and Future Outlook

Operational efficiencies, including the implementation of hot charging facility and continuous 24x7 crucible operation, have significantly reduced power costs. The company targets a 30% volume CAGR over the next two years and expects PAT growth of 9-12% (in absolute value) for FY26. Net working capital days are projected to be around 100 days for FY26. The MS Tubes capacity is planned to expand from 132,000 to 180,000 metric tonnes with minimal CapEx, targeting an EBITDA per tonne of ₹8,000-₹8,500.

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