Maharashtra Seamless Limited — Q3 FY26 earnings call

Call held 29 Jan 2026

Management summary

Maharashtra Seamless reported a quarter with improved margins in both seamless and ERW pipes, driven by inventory markdown reversal and product mix, leading to higher overall EBITDA. The company's treasury operations yielded over 24% return for the nine months ending December 2025. While facing challenges like Chinese dumping and reliance on government oil & gas expenditure, the company successfully replenished its order book of INR 1,302 crores and is progressing on capacity enhancements, including a new finishing line in Telangana and plans for premium connections production.

Highlights

  • Margins increased in seamless pipes, as expected, due to inventory markdown reversal.

  • ERW pipe margins improved due to better product mix.

  • Total EBITDA was higher.

  • Other Income was significantly boosted by market sentiment in gold and silver sectors.

  • Treasury portfolio return for 9 months ending Dec 2025 was in excess of 24%.

  • Order book of INR 1,302 crores maintained, with 33% from ONGC and Oil India.

  • United Seamless Tubulaar acquisition thesis played out, generating INR 100-200 crores EBITDA annually and INR 375 crores in tax savings.

Concerns

  • Unabated dumping from China continues, though margins and tonnage were maintained.

  • Company's growth is highly dependent on government expenditure in the oil and gas sector.

  • Existing production capacity of 2 lakh tons is currently unutilized due to finishing facility bottleneck, which is being addressed.

Key financials

3 periods

Q2 FY26

  • Pipe Dispatches
    1,03,000 tons

Q3 FY26

  • Pipe Dispatches
    1,01,000 tons

9M FY26

  • Treasury Portfolio Return
    24%

What they filed

Q1 FY27: revenue down 4.7%, net profit up 15.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,292 1,408 1,418 1,145 1,159 −10%1,090 −23%1,280 −10%1,091 −5%
EBITDA227 276 285 165 119 −48%149 −46%234 −18%179 +8%
Net profit220 186 242 230 125 −43%243 +31%103 −57%266 +16%
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.

Order book

high confidence

Total value

₹1,302 Cr

as of 2026-01-20 quantified

Execution

executable over three to four months

Composition

  • ONGC and Oil India (client type) ₹429.66 Cr 33%

Pipeline

other

Drill pipes annual market is around 8,000 to 9,000 tons for the entire country. Premium connections market is between 50,000 to 1 lakh tons per annum.

The order book is broadly similar to the previous quarter, with an increased proportion from the oil sector, and has been replenished despite a challenging economic environment.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹852 Cr
    • Cold drawn pipes project
    • Finishing line at Telangana (resolving bottleneck for 2 lakh tons production capacity by adding 1 lakh ton finishing capacity) ₹90 Cr
    Sir, I just wanted to know about your INR852 crores capital expenditure. By when you will plan to spend this amount? ... We have started two projects. Once the Telangana finishing line project is completed, then we'll take up other items mentioned over there. ... It will not increase the production capacity. It will increase the finishing capacity. So we already have production capacity of 2 lakh tons, which is currently unutilized because commensurate finishing facility is not in place. That bottleneck is being resolved by the finishing line which is currently being implemented.
  • M&A United Seamless Tubulaar Acquisition · Integrated · Consideration ₹[object Object] (undisclosed)

    Strategic acquisition to enhance capacity and leverage tax benefits.

    Invested additional INR 73 crores to reactivate the mill, total capital expenditure INR 550 crores. Generates INR 100-200 crores EBITDA annually. Saved INR 375 crores in tax due to accumulated losses and unabsorbed depreciation. Project paid back in about two years.

    We acquired it for INR477 crores, and we invested an additional INR73 crores to reactivate the mill. So against a total capital expenditure of INR550 crores, that mill generates between INR100 crores to INR200 crores of EBITDA every year depending on the margin profile. In addition to that, there were accumulated losses and unabsorbed depreciation in excess of INR1,500 crores in United Seamless Tubulaar Private Limited. Subsequent to merger of that company with Maharashtra Seamless, we were able to set off the profits of Maharashtra Seamless with the unabsorbed depreciation and accumulated losses of United Seamless Tubulaar, thereby saving tax of around INR375 crores. So the entire project was paid back in maybe two years. So yes, the thesis did play out, and that is the position today.
  • Liquidity Cash ₹3,500 Cr INR 2,957 crores of liquid investment is in mutual funds. Total portfolio return for the nine months ending December 2025 is in excess of 24%.
    My question is, you have about INR3,500 crores of liquid investment. Out of that, close to INR2,957 crores is into the mutual funds. ... The total portfolio return for the nine months ending December 2025 is in excess of 24%.

Guidance & targets

Margin

  • EBITDA per ton Margin · next quarter / next year · Medium confidence INR 10,000 to INR 15,000 per ton
    We do not give out guidance specifically, but the only thing that I can tell you from some experience is that we don't see margins to decline materially from here. I think it will remain in the range of INR10,000 to INR15,000 per ton.

    — Kaushal Bengani

Capacity

  • Premium connections production start Capacity · in about six months' time · Medium confidence start production
    I think in about six months' time, we should be able to start production of premium connections.

    — Kaushal Bengani

  • Telangana finishing line commissioning Capacity · in the current quarter · Medium confidence start some portion
    And the other one is the finishing line at Telangana, in which we have issued purchase orders of INR90 crores, and we'll be able to start some portion of it in the current quarter.

    — Kaushal Bengani

Market Outlook

  • Government expenditure Market Outlook · in the budget · Low confidence expect some improvement
    I think in the budget we should expect some improvement in government expenditure, and then that will have a multiplier effect on the rest of the economy.

    — Kaushal Bengani

What to watch in Q4 FY26

Premium connections production start

within 6 months
Current Under process, royalty agreement signed
Target Start of production

Why it matters

Indicates progress on entering a high-margin value-added product segment.

I think in about six months' time, we should be able to start production of premium connections.

Risks & concerns

  • Unabated dumping from China

    medium

    Despite continued dumping from China, the company has managed to maintain and improve margins and tonnage dispatched.

    Management acknowledged

  • Dependence on government expenditure for growth

    medium

    The company's niche market is highly dependent on government expenditure in the oil and gas sector for market growth.

    Management acknowledged

  • Cyclical nature of the industry

    medium

    The seamless pipe industry is cyclical, influencing the company's strategy of conserving cash and seeking distressed assets for inorganic growth.

    Management acknowledged

  • Unutilized production capacity due to finishing bottleneck

    medium

    The company has 2 lakh tons of production capacity, but 1 lakh ton is currently unutilized due to a lack of commensurate finishing facilities, a bottleneck being addressed by the Telangana project.

    Management acknowledged

Q&A highlights

5 direct, 2 evasive
Product mix and margin differences between standard and value-added products Evasive
We've already informed in earlier calls that we'll not discuss product-wise margin. ... We are not giving that. I mentioned at the starting of the response that we will not give you product-wise, segment-wise bifurcation.

Analyst attempted to understand margin drivers and product mix, but management consistently declined to provide segment-wise or product-wise details, limiting transparency on core business profitability.

Asked by Radha

Bifurcation of liquid investments (equity, gold, liquid schemes) Evasive
We are not giving that bifurcation out, and it is not required.

Analyst sought clarity on the risk profile of the company's substantial liquid investments, but management refused to provide a breakdown, raising questions about transparency in treasury operations.

Asked by Niraj

Future growth prospects, utilization of cash reserves, and dividend policy Partial
We are conserving cash as of now and we are on the lookout for any inorganic opportunity that may arise, but that inorganic opportunity should be at a cost level at which we are comfortable. We will not buy assets at full value. We will buy only distressed assets... The interest of the equity shareholder does not necessarily have to align with the interest of the management in running an organization.

Analyst challenged management on the use of significant cash reserves and the lack of increased dividends, prompting a defensive response about long-term value creation, industry cyclicality, and a strategy focused on opportunistic distressed asset acquisitions.

Asked by Ankur Agrawal

Impact of Telangana plant commissioning on profitability if demand remains stagnant Direct
if government expenditure does not improve, then the market will not grow, which will directly impact us. So let us see what the budget puts out and accordingly you can decide.

Analyst questioned the profitability implications of new capacity in a flat demand environment, to which management directly linked market growth and profitability to future government expenditure, particularly in the oil and gas sector.

Asked by Tanmay Roy

Success and strategic rationale of the United Seamless Tubulaar acquisition Direct
We acquired it for INR477 crores, and we invested an additional INR73 crores to reactivate the mill. So against a total capital expenditure of INR550 crores, that mill generates between INR100 crores to INR200 crores of EBITDA every year... So the entire project was paid back in maybe two years. So yes, the thesis did play out, and that is the position today.

Management provided a clear financial justification and success story for a past acquisition, detailing investment, EBITDA generation, and tax savings, confirming the strategic thesis was realized.

Asked by Yogesh Mittal

Frequent changes in the Chief Financial Officer (CFO) role Direct
The changes in the CFO was on account of various factors which were unique to each CFO. So right now, Mr. Arup Mandal is the CFO, and he's been with us for about a year and half. But in addition to the CFO point, I would also like to mention that I have been with the organization for 14 years. So I think that should give you some comfort.

Analyst raised a governance-related concern about leadership stability, and management provided an explanation for past changes and reassured about current stability, highlighting the long tenure of other key personnel.

Asked by Yogesh Mittal

Market size and company's strategy for premium connections in India Direct
Premium connections would be between 50,000 to 1 lakh tons per annum depending on the amount of capital expenditure that takes place. Right now, this product is being supplied by Jindal Saw and through imports. So we will have to take some of their share in order to compete in this environment.

Management provided specific market size estimates for a new value-added product segment the company is entering, outlining the competitive landscape and the strategy to gain market share.

Asked by Vikash Singh

Progress on ONGC's stated demand for 500 wells (100 kt tonnage) Direct
There is regular requirement of seamless pipe. However, we would have preferred if there was maybe a 5% or 10% increase because then it gives us more assurance on pricing and on replenishment. Despite a challenging economic environment in which government expenditure was low, we have managed to replenish our order book without compromising on the tonnage that we have dispatched on quarter-on-quarter basis.

Analyst sought an update on a significant potential demand driver, and management confirmed ongoing requirements but highlighted the impact of muted government expenditure on overall market growth and pricing assurance.

Asked by Vikash Singh

3 min read 6 chapters

Detailed narrative

Q3 FY26 Performance and Margin Improvement

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.

Order Book and Market Conditions

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.

Capacity Expansion and Value-Added Products Strategy

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.

Capital Allocation and Treasury Performance

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.

Successful United Seamless Tubulaar Acquisition

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.

Industry Outlook and Government Dependence

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.

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