Mah. Seamless

Maharashtra Seamless reported a quarter characterized by improved margins in both seamless and ERW pipes. The increase in seamless pipe margins was attributed to a reversal of inventory markdown from the previous quarter, as previously communicated. ERW pipe margins also saw improvement, driven by a favorable product mix. Overall, the company achieved higher EBITDA, and its other income was significantly boosted by positive market sentiment in the gold and silver sectors.

The company's order book stood at INR 1,302 crores as of January 20, 2026, with 33% comprising orders from ONGC and Oil India, reflecting an increased proportion from the oil sector compared to the previous quarter. Despite facing challenges such as unabated dumping from China and a generally muted government expenditure environment, the company successfully replenished its order book. Dispatches for Q3 FY26 were 1,01,000 tons, slightly lower than Q2 FY26's 1,03,000 tons, but the company maintained its margins and tonnage.

Maharashtra Seamless is executing a capital expenditure plan of INR 852 crores, with two projects underway. The cold drawn pipes project has been completed. The finishing line at Telangana, involving INR 90 crores in purchase orders, is expected to commence operations in part during the current quarter. This project is crucial as it will add 1 lakh ton of finishing capacity, resolving a bottleneck and making the company's existing 2 lakh tons of production capacity fully utilizable. Additionally, the company plans to start production of premium connections, a high-margin value-added product, within approximately six months.

The company maintains substantial liquid investments totaling INR 3,500 crores, with INR 2,957 crores allocated to mutual funds. These treasury operations delivered a robust return exceeding 24% for the nine months ending December 2025. Management emphasized a strategy of conserving cash for inorganic growth opportunities, specifically targeting distressed assets in the cyclical industry. The company has quadrupled its dividend payout from FY22 to FY24 and maintained this level in FY25, even with lower profits.

The acquisition of United Seamless Tubulaar for INR 477 crores, coupled with an additional INR 73 crores investment for reactivation (totaling INR 550 crores), has been highlighted as a success. The acquired mill generates an annual EBITDA of INR 100-200 crores. Furthermore, the merger allowed the company to utilize accumulated losses and unabsorbed depreciation, resulting in tax savings of approximately INR 375 crores. Management stated that the entire project was paid back within roughly two years, confirming the strategic thesis behind the acquisition.

The company's market is highly specialized and dependent on government expenditure within the oil and gas sector. Management expressed anticipation for an improvement in government spending following the upcoming Union Budget, expecting a positive multiplier effect on the broader economy and, consequently, on market growth. The company mitigates raw material price volatility through back-to-back booking, ensuring that any increases can be passed on to customers. EBITDA per ton is projected to remain stable within the INR 10,000-15,000 range.