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.