Jai Balaji Industries Limited — Q4 FY25 earnings call

Call held 14 May 2025

Management summary

Jai Balaji Industries Limited reported a resilient performance for Q4 and FY25 despite industry-wide challenges and a slowdown in government orders. The company successfully commissioned 2.04 lakh tons of DI Pipe capacity, bringing total capacity to 5.04 lakh tons, and significantly reduced net term debt to INR 221 crores, achieving a net debt-to-EBITDA ratio of 0.25. While realizations saw a slight decreasing trend and annual revenue/EBITDA dropped, the company is optimistic about FY26, targeting 25-30% revenue growth and 16-17% EBITDA margins, driven by anticipated rebound in government ordering and ongoing capacity expansions.

Highlights

  • Successfully commissioned additional 2.04 lakh tons of Ductile Iron Pipe capacity, increasing total to 5.04 lakh tons.

  • Net term debt reduced from INR 871 crores in FY23 to INR 221 crores in FY25.

  • Net debt-to-EBITDA ratio for FY25 stands at 0.25, outperforming earlier guidance of 0.6.

  • Board approved diversification into other pipes and tube segments (OPVC).

  • Targeting revenue growth of 25-30% and EBITDA margins of 16-17% for FY26.

Concerns

  • Industry-wide challenges and slowdown in government orders in FY25.

  • Realization for almost all products showed a slight decreasing trend in FY25.

  • Annual revenue and EBITDA showed a drop in FY25 due to market sluggishness.

  • Ferro Alloys capacity expansion delayed to Q1 FY27 due to critical equipment issues from China.

  • Working capital increased in Q4 FY25 due to delayed payments from infrastructure players.

Key financials

  1. Net Term Debt ₹221 Cr
  2. Net Debt to EBITDA Ratio 0.25
  3. EBITDA Margin 14%
  4. Return on Equity 26%
  5. DI Pipe Production Growth 17% +17%YoY
  6. Ferro Alloys Production Growth 8% +8%YoY

What they filed

Q1 FY27: revenue up 24.0%, net profit up 19.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,557 1,486 1,590 1,357 1,353 −13%1,329 −11%1,745 +10%1,683 +24%
EBITDA228 190 133 127 72 −68%54 −72%92 −31%151 +19%
Net profit153 120 75 71 26 −83%12 −90%21 −72%85 +20%
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

Share of EBITDA per ton
₹49,000 Total
  • Ferro Alloy (blended) ₹20,000 40.8%
  • Ductile Iron Pipe ₹19,000 38.8%
  • Pig Iron ₹4,000 8.2%
  • TMT Bar ₹4,000 8.2%
  • Billets/MS ingot ₹2,000 4.1%

Capital allocation

high confidence
  • Capex ₹175 Cr internal accruals
    • Capacity expansion (remaining from INR 1,000 crores plan)
    • OPVC pipe diversification ₹100 Cr
    • DI Pipe capacity expansion (additional 96,000 tons)
    • Ferro Alloys capacity expansion (to 1.9 lakh tons)
    • Blast furnace revamp
    • Sinter capacity increase
    The entire capex will be funded through internal accruals, reflecting our strong financial discipline. For FY '26, we have provided a capex guidance of around INR175 crores.
  • Debt Net ₹221 Cr · 0.3× EBITDA
    • Repayment Net term debt reduced from INR 871 crores in FY23 to INR 221 crores in FY25. ₹650 Cr
    • Repayment Approximately INR 175 crores of debt will be paid in the current financial year (FY26). ₹175 Cr
    We have successfully brought down our net term debt from INR871 crores in FY '23 to INR221 crores in FY '25. We are very pleased to share that our net debt-to-EBITDA ratio for FY '25 stands at 0.25 substantially outperforming our earlier guidance of maintaining it around 0.6 as of March 31, 2025.
  • Liquidity Liquidity disclosed Working capital increased in Q4 FY25 due to delayed payments from government to infrastructure players, expected to normalize by end of Q1 FY26.
    To be very frank, what has happened is infrastructure players who are some of our buyers, their payment from the government is also delayed. So that has some of the government payments are also delayed and it always happens before the budget and gets resolved once the new budget is in place and the disbursement starts to happen. So this should come down by the end of this quarter.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence 25-30%
    With this encouraging outlook, we are targeting revenue growth of around 25% to 30%, EBITDA margins in the range of 16% to 17% and DI Pipe production surpassing 4 lakh tons.

    — Aditya Jajodia

Margin

  • EBITDA Margins Margin · FY26 · High confidence 16-17%
    With this encouraging outlook, we are targeting revenue growth of around 25% to 30%, EBITDA margins in the range of 16% to 17% and DI Pipe production surpassing 4 lakh tons.

    — Aditya Jajodia

  • DI Pipe EBITDA per ton (Upside) Margin · post market recovery · Medium confidence INR 23,000-24,000

    From INR 19,000 (FY25) today

    Upside, if the market is good and say the demand comes back and whatever committed expenditure that the government has announced. If that is spent, it should be somewhere in the region back up to INR23,000, INR24,000, which we had already achieved in FY first 2 quarters of this current financial -- previous financial year.

    — Aditya Jajodia

Volume

  • DI Pipe Production Volume · FY26 · High confidence surpassing 4 lakh tons

    From 2,82,000 tons (FY25) today

    With this encouraging outlook, we are targeting revenue growth of around 25% to 30%, EBITDA margins in the range of 16% to 17% and DI Pipe production surpassing 4 lakh tons.

    — Aditya Jajodia

Capacity

  • DI Pipe Capacity Commissioning Capacity · FY26 · High confidence additional 96,000 tons
    A further 96,000 tons is set to be commissioned by FY '26.

    — Aditya Jajodia

  • Ferro Alloys Capacity Expansion Capacity · Q1 '27 · High confidence from 1.66 lakh tons to 1.9 lakh tons
    Also in Ferro Alloys, the capacity is set to rise from the current 1.66 lakh tons to 1.9 lakh tons within the expansion scheduled for completion in Q1 '27.

    — Aditya Jajodia

  • Blast Furnace Revamp Completion Capacity · Q4 '26 · High confidence second blast furnace completed
    one of the blast furnaces has already been revamped and commissioned with the second expected to be completed by Q4 of '26

    — Aditya Jajodia

  • Sinter Capacity Increase Capacity · Q4 '26 · High confidence from 9 lakh tons to 12 lakh tons
    Also, the sinter capacity of approximately 9 lakh tons is expected to increase to 12 lakh tons by Q4 '26.

    — Aditya Jajodia

  • DI Pipe Capacity Utilization Capacity · current year (FY26) · High confidence approximately 80%

    From 90% (Q4 FY25) today

    And current year, we are projecting approximately 80%.

    — Aditya Jajodia

Capex

  • Capex Guidance Capex · FY26 · High confidence around INR 175 crores
    For FY '26, we have provided a capex guidance of around INR175 crores.

    — Aditya Jajodia

What to watch in Q1 FY26

Government order flow and spending for DI Pipes

Next quarter (Q1 FY26)
Current Slowdown in FY25, expected to pick up
Target Robust order books and increased spending

Why it matters

Direct impact on DI Pipe volumes and realizations, crucial for FY26 guidance.

now what we are expecting is that with the financial year over and with the new budget being announced, so now accordingly the government will be able to take our course of path correction to rectify these things. And the order books should be robust from here onwards.

Risks & concerns

  • Slowdown in government orders and spending

    medium

    Government spending slowed down in FY25 due to elections and diversion of funds to social schemes, impacting order flow for DI Pipes.

    Management acknowledged

  • Decreasing realization for products

    medium

    Realizations for almost all products showed a slight decreasing trend, contributing to lower EBITDA.

    Management acknowledged

  • Increase in working capital due to delayed payments

    medium

    Working capital increased in Q4 FY25 due to delayed payments from government bodies to infrastructure contractors.

    Analyst acknowledged

  • Delay in Ferro Alloys capacity expansion

    low

    Project delayed due to issues with critical equipment from Chinese supplier, pushing completion from early FY26 to Q1 FY27.

    Analyst acknowledged

Q&A highlights

8 direct
DI Pipe production volume miss in FY25 and target for FY26 Direct
We achieved 2,82,000 in FY '25. And as per the internal assessment, we should be able to produce 4 lakh tons of pipe in the next financial year, the current financial year.

Clarifies past performance and sets a clear future volume target for a key product.

Asked by Shlok Bhartiya

Delay in Ferro Alloys capacity expansion Direct
Actually, this project was a little bit delayed because of some very critical equipment, which was to be coming from China. So there were some issues at the Chinese supplier's end... So this has been delayed a little bit.

Explains the reason for the delay in a significant capacity expansion project.

Asked by Manav Gogia

Sustainable capacity utilization for Ferro Alloy segment Direct
Since we are making specialized Ferro Alloys, the capacity utilization we expect to be within the same range. It might also go down by a few percentage points as we increase the specialty grades of Ferro Alloys.

Provides insight into the company's strategy for Ferro Alloys, balancing volume with value-added products.

Asked by Manav Gogia

Slowdown in government orders for DI Pipes and outlook for FY26 Direct
what had happened in the last year, prior to the elections the government was in a very, I will say, easy spending mode. Post elections, though the same government was in place, but a lot of spending actually on the ground got a little bit constrained... now what we are expecting is that with the financial year over and with the new budget being announced, so now accordingly the government will be able to take our course of path correction to rectify these things. And the order books should be robust from here onwards.

Addresses a key market challenge and provides an optimistic outlook for demand recovery.

Asked by Manav Gogia

Entry into OPVC pipes and its impact on DI Pipes Direct
this OPVC pipe, this is a new alternate material which has been developed... this is not going to eat into the demand of ductile pipes... If at all, it is going to have some market share, it will take something from the steel pipes, mostly from the plastic pipes or the HDPE pipes...

Clarifies the strategic rationale for entering OPVC, positioning it as complementary rather than competitive to DI Pipes.

Asked by Pujan Shah

DI Pipe EBITDA per ton and upside potential Direct
For the last year FY '25, the ductile iron pipe, we had an EBITDA per ton of INR19,000. It has come down slightly. But what we we assume over here, and we budget also that this is probably the lowest level, and things should improve from here... Upside, if the market is good and say the demand comes back... it should be somewhere in the region back up to INR23,000, INR24,000

Provides a key profitability metric and outlines the potential for margin improvement.

Asked by Rudraksh Raheja

Working capital increase in Q4 Direct
No, once the demand is slightly low and we have continued the production probably at 90% of the same level, the inventory pile up is there... what has happened is infrastructure players who are some of our buyers, their payment from the government is also delayed... this should come down by the end of this quarter.

Explains the reason for the working capital build-up and provides a timeline for its resolution.

Asked by Koustubh Shaha

Tax situation and carry-forward tax losses Direct
we started the last financial year with INR1,000 crores carry-forward tax losses. Out of that, INR750 crores, INR800 crores has been consumed. And still we have started this current financial year with a carry forward tax loss of INR250 crores. After the profitability of INR250 crores, we will be in normal taxation.

Provides clarity on the company's tax shield and when it expects to return to normal taxation.

Asked by Saket Kapoor

3 min read 7 chapters

Detailed narrative

Q4 & FY25 Performance Overview

Despite industry-wide challenges and a slowdown in government orders during FY25, Jai Balaji Industries delivered a resilient performance. The company reported a 14% EBITDA margin and 26% return on equity for FY25. On a quarterly basis, Q4 FY25 saw revenues increase sequentially, though EBITDA and PAT decreased. Realizations across most products experienced a slight decline, and the company noted Q4 margins were impacted by inventory losses, coming in at 8-9%.

Capacity Expansion & Modernization

Jai Balaji is actively executing its capacity expansion plans. In Q4 FY25, an additional 2.04 lakh tons of Ductile Iron Pipe capacity was commissioned, increasing the total to 5.04 lakh tons, with a further 96,000 tons expected by FY26. Ferro Alloys capacity is set to rise from 1.66 lakh tons to 1.9 lakh tons by Q1 FY27, despite a delay due to critical equipment from China. TMT Bar capacity also increased from 2.6 lakh tons to 3 lakh tons through debottlenecking.

Debt Reduction & Financial Discipline

The company has made significant progress in its debt reduction strategy, bringing down net term debt from INR 871 crores in FY23 to INR 221 crores in FY25. This resulted in a net debt-to-EBITDA ratio of 0.25 for FY25, significantly outperforming the earlier guidance of 0.6. The remaining capital expenditure of INR 175 crores for FY26 will be funded through internal accruals, reflecting strong financial discipline.

Strategic Diversification into OPVC Pipes

The Board has approved diversification into other pipes and tube segments, including OPVC pipes. Management clarified that OPVC is a new alternate material, primarily targeting replacement of HDPE and plastic pipes, and is not expected to significantly impact DI Pipe demand. The initial investment for OPVC is small, less than $2 million, with a total capex not exceeding INR 100 crores over several years, positioning it as a trial product to explore new growth avenues.

Outlook for FY26 and Market Recovery

Management expressed optimism for FY26, anticipating a rebound in government ordering activity. The company is targeting revenue growth of 25-30% and EBITDA margins in the range of 16-17%. DI Pipe production is projected to surpass 4 lakh tons in FY26, up from 2.82 lakh tons in FY25. The company believes product realizations, which saw a slight decrease in FY25, are at their lowest point and are expected to improve with market demand recovery.

Government Orders and Working Capital

A slowdown in government orders and spending was observed in FY25, particularly in the second half, attributed to pre-election dynamics and diversion of funds. This also led to an increase in working capital in Q4 FY25 due to delayed payments from government bodies to infrastructure contractors. However, with the new budget, management expects funds to be released, leading to a normalization of working capital by the end of Q1 FY26 and a robust order book going forward.

Taxation and Carry-Forward Losses

The company started FY25 with INR 1,000 crores in carry-forward tax losses. Approximately INR 750-800 crores of these losses have been consumed, leaving INR 250 crores for the current financial year. Management expects to return to normal taxation after the profitability of INR 250 crores is utilized.

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