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    Kamdhenu

    KAMDHENU
    Capital Goods·20 May 2025
    Management Summary

    Kamdhenu reported a mixed Q4 and FY25, with its steel business demonstrating robust growth in revenue, volumes, and profitability, driven by strong brand recognition and franchisee network expansion. The company remains debt-free. However, the paint business faced significant headwinds, experiencing revenue and profit declines due to intense competition and a challenging market, though it managed to remain profitable. Management expressed confidence in future growth for both segments, with specific targets for capacity expansion and market penetration.

    Highlights

    5

    • Steel business revenue grew 12% YoY to ₹198 crores in Q4 FY25, and 3% YoY to ₹748 crores for FY25.

    • Full-year FY25 steel business PAT increased 21% YoY to ₹61 crores, with PBT up 20% YoY to ₹80 crores.

    • Royalty income from franchisee steel business grew 9% YoY to ₹38 crores in Q4 FY25 and 8% YoY to ₹139 crores for FY25.

    • Own manufacturing steel volume grew 12% YoY in Q4 FY25 and 5% YoY in FY25.

    • Paint business achieved a PAT of ₹7 crores for FY25, maintaining profitability despite headwinds.

    Concerns

    4

    • Paint business revenue declined to ₹83 crores in Q4 FY25 from ₹85 crores in Q4 FY24, and to ₹266 crores in FY25 from ₹292 crores in FY24.

    • Paint business PAT significantly reduced to ₹1.9 crores in Q4 FY25 from ₹4.2 crores in Q4 FY24, and to ₹7 crores in FY25 from ₹14 crores in FY24.

    • Challenging operating environment for paint business due to softer demand, slower construction activity, and high-end competition.

    • Share price of Kamdhenu Paints has tanked by more than 80% in the past few months, raising concerns from investors.

    Key financials

    Metrics

    6

    Periods

    2

    Headline

    4
    • Total Revenue (Steel)
      ₹198 Cr
      YoY+12%
    • PAT (Steel)
      ₹17 Cr
      YoY+2%
    • Total Revenue (Paint)
      ₹83 Cr
      YoY-2.3%
    • PAT (Paint)
      ₹1.9 Cr
      YoY-54.7%

    FY25

    2
    • ROCE
      25.5%
    • ROE
      19.2%

    Segment breakdown

    • Steel Business (FY25)₹61 Cr89.7%
    • Paint Business (Kamdhenu Ventures Limited) (FY25)₹7 Cr10.3%
    Donut· Share of PAT

    Order Book

    low confidence

    "The company's business model for steel and paint is based on franchisee-led volumes and dealer networks, rather than a traditional project-based order book. Management discussed capacity and volume targets instead of an order book."

    Source:
    Inferred

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹10 crores

    Debt

    Gross ₹0 crores · Net ₹0 crores · 0.0x EBITDA

    Guidance & targets

    5
    CategoryTargetPriority
    Volume
    Steel Business Volume Growth
    14%
    		High
    Capacity
    Steel Capacity Increase
    20%
    		High
    Capex
    Paint Business Capex
    ₹10-15 crores
    		Medium
    Brand Expenditure
    Brand Expenditure Increase
    20%
    		High
    Profitability
    Bottom Line Growth
    20-25%
    		Medium

    Paint business market stabilization

    next 6 months / 2 quarters of FY26
    CurrentCompetitive and challenging environment
    TargetMarket settling and competition subsiding

    Why it matters

    Market stabilization is crucial for the paint business to recover from current headwinds and improve profitability.

    So I think that in the next 6 months, in the 2 quarters of FY26, the competition will almost begin subsiding as the players choose to position themselves by the end of FY26.

    How to verify

    key_financials.segment_breakdown[name='Paint Business (Kamdhenu Ventures Limited) (FY25)'].metrics[label='Revenue']

    Risks & concerns

    4
    RiskSeverity

    Intense competition and market saturation in paint business

    Three new entrants and competitive trade environment led to no extraordinary demand or new retail network generation, impacting paint business performance. — Management acknowledged

    high

    Slowdown in construction activity

    FY25 was a challenging year for both steel and paint businesses due to a slowdown in construction activity. — Management acknowledged

    medium

    KAMOPAINTS share price erosion and investor confidence

    Individual investor highlighted over 80% decline in Kamdhenu Paints share price, questioning management's capability and alleging foul play, which management attributed to external factors and actions taken. — Analyst acknowledged

    high

    Freight disadvantage for paint business in South India

    The paint unit's location in North India creates a freight disadvantage for supplying to Southern India, limiting market reach. — Management acknowledged

    low

    Q&A highlights

    7

    “See what happens your question is correct and your grievance is also right. In paint the way price escalation was there in between in this financial year in that. It might be in your knowledge that some people have foul play and social media messages is also there because of that some people have misused it and extraordinary price movement you and I have also seen. ... And the question which was there the capital which has been eroded for that management is also worried and we think that the people who are doing foul play for them we have done an FIR and given efforts and we have identify some people.”

    An individual investor directly challenged management on the significant decline in Kamdhenu Paints' share price, alleging foul play and incompetency, which management partially acknowledged by referencing external factors and actions taken.

    asked by Mahnovar (Individual Investor)

    2 min read5 chapters

    Detailed Narrative

    01

    Steel Business Sustains Growth Amidst Challenges

    Kamdhenu's steel business demonstrated resilience in FY25, with total revenue growing 3% year-on-year to ₹748 crores. Profit Before Tax (PBT) increased by 20% to ₹80 crores, and Profit After Tax (PAT) saw a 21% rise to ₹61 crores. The franchisee-led volumes grew by 6% to 34.4 lakh metric tons, while own manufacturing volumes increased by 5% to 119,841 metric tons. Royalty income, a capital-efficient revenue stream, grew 8% to a record high of ₹139 crores, reflecting strong brand recognition and market share of 20% in the organized retail branded TMT segment.

    02

    Paint Business Navigates Headwinds with Profitability

    The paint business, Kamdhenu Ventures Limited, faced a challenging operating environment in FY25, marked by softer demand, slower construction activity, and intense competition from new entrants. Revenue for FY25 declined to ₹266 crores from ₹292 crores in FY24, and PAT reduced to ₹7 crores from ₹14 crores. Despite these headwinds, the business remained profitable, focusing on product innovation, customer value, and expanding its dealer network. Management highlighted a strategy to increase the share of high-value, premium finishes to improve profitability.

    03

    Strategic Focus on Capacity Expansion and Brand Strengthening

    Looking ahead, Kamdhenu plans to increase its steel manufacturing capacity by 20% by the end of FY26, with 10-12% becoming operational within the financial year, targeting a 14% volume growth. For the paint business, a modest capex of ₹10-15 crores is planned for FY26, primarily for tinting machines and balancing equipment. The company also intends to increase brand expenditure by 20% in FY26 to further strengthen its market position and expects a 20-25% increase in the bottom line for FY26-27.

    04

    Debt-Free Status Maintained

    Kamdhenu Limited maintained a debt-free status as of March 31, 2025. This strong financial position provides flexibility for future growth initiatives and capital allocation decisions, supporting the company's focus on capital-efficient revenue streams like royalty income from its franchisee model.

    05

    Investor Concerns on Paint Business Share Performance Addressed

    An individual investor raised significant concerns regarding the more than 80% decline in Kamdhenu Paints' share price, questioning management's capability. Management acknowledged the grievance, attributing the price escalation and subsequent decline to 'foul play' and 'social media messages' by some individuals. They stated that actions, including filing an FIR, have been taken to address these issues, while emphasizing the company's efforts to maintain its bottom line despite market challenges🌐.

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