Detailed Narrative
Q4 FY25 Performance Overview
Maharashtra Seamless reported a robust sequential performance in Q4 FY25. Revenue increased by 3% to INR 1,456 crores, while EBITDA saw a 2% rise to INR 285 crores. Net profit (PAT) significantly improved by 28% to INR 243 crores from INR 190 crores in Q3 FY25, leading to an EPS of INR 18 per share, up from INR 14. This indicates strong operational execution in the quarter.
Annual Performance and Realization Challenges
Despite the strong Q4, the full fiscal year 2025 saw annual earnings decline by 19% compared to FY24. This was primarily attributed to a fall in sales realization on a year-on-year basis, even though dispatches increased by over 10%. The company noted that the market has normalized after a period of high prices driven by the Russia-Ukraine war, impacting overall revenue despite higher volumes.
Order Book and Market Dynamics
As of March 31, 2025, the company's order book stood at INR 1,584 crores, comprising INR 54 crores for ERW and INR 1,530 crores for Seamless pipes. This is within the management's expected range of INR 1,500-2,000 crores. However, a slowdown in order booking was observed in the previous quarter, and the export market remains soft, impacting new inquiries.
Capital Expenditure and Treasury Management
The company is actively pursuing capex projects, including a cold drawn line and a finishing line at Telangana. Equipment for the cold drawn line has been ordered and is expected later this calendar year. Total capex mentioned in the PPT is INR 852 crores, with INR 100 crores allocated for the cold drawn pipeline. Current capex spend for FY25 was INR 23 crores, with payments being back-ended. The company maintains a strong treasury of INR 2,630 crores, which is being judiciously managed for future plant overhaul and potential acquisitions at favorable valuations.
Rig Business Update
The rig business, previously considered for divestment, has received a subsequent contract with Jindal Drilling and is under refurbishment. The new contract with ONGC is for 3 years at a rate of $35,000 per day. Maharashtra Seamless will not see an increase in rental from Jindal Drilling and may experience a decline. The Board has not yet provided an update on the divestment of this segment, and management stated the company will focus solely on the steel pipe segment going forward⏳.
Regulatory Support and Export Outlook
The Domestically Manufactured Iron & Steel Products (DMI&SP) policy is expected to benefit the company by reducing seamless pipe imports, as it mandates domestic sourcing of the entire value chain. This will make the company more competitive. While exports saw an increase for four months in Q4 FY25 and April, the export market has since softened, leading to a decline in inquiries. The removal of the 25% duty on steel products could significantly boost export competitiveness.