Hi-Tech Pipes

Hi-Tech Pipes reported a strong Q3 FY25, with revenue from operations growing 21% year-on-year to ₹761 crores. Profit Before Tax (PBT) saw a 35% increase to ₹25.6 crores, and Profit After Tax (PAT) rose 34% to ₹19.1 crores. EBITDA per ton, however, experienced a slight sequential decline of 5.56% to ₹3,238 from ₹3,429 in Q2 FY25. The company invested ₹3 crores in branding activities, equating to ₹242 per ton.

The company has significantly ramped up its branding efforts, including onboarding Hrithik Roshan as its brand ambassador, to enhance market leadership and visibility. This initiative aims to strengthen emotional and aspirational connections with stakeholders. Concurrently, the distribution network is targeted to expand by over 10%, from the current 450 to 500 distributors and dealers by the end of the current financial year, with an additional 50 dealers expected to be added in Q4 FY25.

Hi-Tech Pipes is focused on driving energy cost reduction through new renewable energy schemes, contributing to sustainability and cost efficiency. Continuous efforts in debottlenecking processes and micro-incentive schemes have led to effective improvements in operational efficiencies. The company has also set an ambitious target to become net carbon free by 2030, aiming for complete carbon neutrality within the next 5-6 years.

The company is committed to strengthening its manufacturing capabilities with two major expansion projects. The brownfield expansion of Sanand Unit 2 Phase-II and a new greenfield manufacturing facility at Sikandrabad, UP, are both progressing as per schedule and are expected to be commissioned in April 2025. The total capex for FY25 is projected to be ₹100 crores. These strategic investments are anticipated to significantly enhance production capacity, operational efficiency, and market reach, with a target of at least 50% utilization for the new 2.5 lakh tons capacity in its first year of operation.

The product portfolio has expanded with new SKUs, including a focus on large hollow sections and solar torque tubes, which are high-value-added products. The company aims to increase its share of value-added products, which yield higher EBITDA per ton. Management noted that ERW tubes and pipes constitute 80% of total capacity, with flat products and engineering products making up 20%. For hollow sections, the company currently covers 90% of the market up to 250x250 mm and plans to introduce larger 300mm and 500mm series to capitalize on emerging demand.

The company maintains strong financial discipline, with a focus on working capital management and optimal liquidity. Its credit rating has been upgraded to A+ for long-term exposure and A1+ for short-term exposure. Long-term debt has been significantly reduced, with short-term debt currently in the range of ₹100-225 crores. The company aims to fund its ongoing capacity expansion and growth initiatives through a combination of internal accruals and judicious debt management.