Manaksia Coated Metals & Industries Limited — Q3 FY25 earnings call

Call held 13 Feb 2025

Management summary

Manaksia Coated Metals & Industries Limited reported a strong Q3 FY25, with consolidated revenue growing 17.68% QoQ to Rs. 207.83 crores and net profit surging 111.93% QoQ to Rs. 5.01 crores, driven by improved operational efficiency and margin expansion. The company saw significant export growth of 87% YoY, contributing 41% to total revenue, and secured a robust export order book of Rs. 350 crores. Strategic initiatives include an ongoing Alu-Zinc technology upgrade, a planned captive solar power plant, and capacity expansions, supported by a recent Rs. 134.55 crores equity fundraise.

Highlights

  • Q3 FY25 Consolidated Revenue grew by 17.68% QoQ to Rs. 207.83 crores, driven by strong demand and higher sales volume.

  • Q3 FY25 Consolidated PBT surged by 113.26% QoQ to Rs. 6.71 crores, reflecting improved operational efficiency and margin expansion.

  • Q3 FY25 Consolidated Net Profit increased by 111.93% QoQ to Rs. 5.01 crores, reinforcing commitment to profitable growth.

  • Q3 FY25 Consolidated EBITDA rose by 22.25% to Rs. 17.25 crores, with EBITDA Margin expanding 103 bps to 8.30%.

  • Export revenue increased by 87% YoY to Rs. 96.73 crores, with exports contributing 41% to total revenue in Q3 FY25.

  • Strong export order book of Rs. 350 crores, including a landmark Rs. 200 crores export order, underscoring growing global presence.

  • Successfully secured Rs. 134.55 crores in fresh equity capital for capacity expansion, technology upgradation, and debt reduction.

Concerns

  • Steel pricing is currently flattish to negative due to oversupply in China and reduced raw material costs, though management expects stability for the foreseeable couple of quarters.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹207.83 Cr
    QoQ +17.7%
  • Consolidated PBT
    ₹6.71 Cr
    QoQ +113.3%
  • Consolidated Net Profit
    ₹5.01 Cr
    QoQ +111.9%
  • Consolidated EBITDA
    ₹17.25 Cr
    QoQ +22.3%
  • Consolidated EBITDA Margin
    8.3%
  • Consolidated EPS
    ₹0.67
    YoY +13.6%
  • Standalone Net Profit
    ₹5.08 Cr
    QoQ +109.1%
  • Standalone Net Profit Margin
    2.4%

9M

  • FY25 PBT
    ₹13.88 Cr
    YoY +72.3%
  • FY25 Net Profit
    ₹10.35 Cr
    YoY +67.6%
  • FY25 EPS
    ₹1.39
    YoY +54.4%

What they filed

Q1 FY27: revenue up 4.8%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue175 205 208 250 220 +26%187 −9%227 +9%262 +5%
EBITDA11 14 15 25 26 +136%16 +14%14 −7%28 +12%
Net profit2 5 5 14 14 +600%7 +40%5 +0%14 +0%
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

₹350 Cr

as of 2024-12-31 quantified

Inflow this quarter

₹200 Cr

Execution

The Rs. 200 crores landmark export order is an arrangement that is going to last a period of 12 months, within which we have to complete the entire order.

Composition

Mix 2 products
  • Pre-painted steel (from Rs. 200cr order) 80%
  • Galvanized steel (from Rs. 200cr order) 20%

Share of order book by product

Pipeline

other

Aggressively looking at Americas (North and South) for Alu-Zinc exports.

The current export order book of Rs. 350 crores is higher than the typical Rs. 175-200 crores due to a landmark Rs. 200 crores order, with strong demand from European markets.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed Fresh equity capital of Rs. 134.55 crores, supplemented by debt for solar plant
    • Capacity expansion, technology upgradation (Alu-Zinc line to 180,000 TPA, Phase 2 pre-painted steel to 236,000 TPA)
    • Captive solar power plant
    To support our long-term growth, we have successfully secured Rs. 134.55 crores in fresh equity capital which will be strategically deployed for capacity expansion, technology upgradation and debt reduction. Our ongoing Alu-Zinc technology upgrade will further strengthen our product offerings... Additionally, in line with our commitment to sustainability and cost optimization, we are actively working on land acquisition for a captive solar power plant.
  • Debt Debt disclosed
    • Repayment Fresh equity capital of Rs. 134.55 crores will be strategically deployed for debt reduction.
    To support our long-term growth, we have successfully secured Rs. 134.55 crores in fresh equity capital which will be strategically deployed for capacity expansion, technology upgradation and debt reduction.
  • Liquidity Liquidity disclosed Fresh equity capital will help with additional working capital required to utilize enhanced capacity.
    And of course, it is going to help with additional working capital that is required to utilize the enhanced capacity that we have installed.

Guidance & targets

Capacity

  • Alu-Zinc coated steel capacity Capacity · Ongoing installation · High confidence 180,000 tons per annum
    Looking ahead, we are well positioned to capitalize on emerging opportunities in the coated steel segment. We are in advanced stages of installation and upgradation of our Alu-Zinc coated steel capacity line to 1 80,000 tons per annum.

    — Karan Agrawal

  • Pre-painted steel capacity (Phase 2) Capacity · Within FY26 · High confidence 236,000 tons per annum
    Groundwork for our Phase 2 expansion for enhancing the pre painted steel capacity to 2,36,000 tons per annum has also started and we are confident of achieving this milestone within FY26.

    — Karan Agrawal

Revenue

  • Alu-Zinc product revenue generation Revenue · Q1 of coming fiscal (within 75-90 days) · High confidence Start generating revenue
    And currently the project is in advanced stages of completion and we are quite confident that this line will start generating revenue in the first quarter of the coming fiscal. So, by this I mean anytime in the next let's say 75 to 90 days is we are quite positive of achieving well within this timeline.

    — Karan Agrawal

Product Mix

  • Share of pre-painted product Product Mix · Immediate future · High confidence 75%-80%
    So, for the immediate future let's say our share of pre-painted product versus the unpainted product would be anywhere in the range of between 75% to 80% of the total production.

    — Karan Agrawal

  • All production and sales from pre-painted steel Product Mix · Later part of FY26 · Medium confidence 100% pre-painted steel
    When that situation comes sometime during the later part of FY26, at that point of time definitely one can expect a situation where all of our production and sales is happening only from the pre painted steel product.

    — Karan Agrawal

Project Completion

  • Captive solar power plant completion Project Completion · Q2 of FY26 · High confidence Completion
    In terms of completion, like I have mentioned in my opening remarks, FY26 will definitely see this project being commissioned. But I can say sometime during Q2 of FY26 is a reasonable expectation.

    — Karan Agrawal

Pricing

  • Steel prices Pricing · Foreseeable couple of quarters · Medium confidence Stable
    I feel that given this current situation of volatility and wars going on in the Middle-east and Russia-Ukraine, also due to some protectionist measures being envisaged by the Trump administration, the prices of steel and other similar commodities should be stable and we do not expect any major jump or hike in the price of steel for the foreseeable couple of quarters.

    — Karan Agrawal

What to watch in Q4 FY25

Alu-Zinc Revenue Generation

Q1 FY26 (within 75-90 days)
Current Advanced stages of installation
Target Start generating revenue

Why it matters

Successful commissioning and revenue generation from the new Alu-Zinc line is crucial for higher profitability and product portfolio expansion.

And currently the project is in advanced stages of completion and we are quite confident that this line will start generating revenue in the first quarter of the coming fiscal. So, by this I mean anytime in the next let's say 75 to 90 days is we are quite positive of achieving well within this timeline.

Risks & concerns

  • Raw material price volatility (steel)

    medium

    Steel pricing is flattish to negative due to oversupply in China and reduced raw material costs. Geopolitical volatility and potential protectionist measures could impact prices. However, management expects stability for the next couple of quarters and mitigates risk via a back-to-back model.

    Management acknowledged

Q&A highlights

6 direct
Export Order Book and Demand Drivers Direct
Well, the export order book currently which is Rs. 350 crores is on a higher side currently on account of the recent landmark export order that we bagged which was a single order of Rs. 200 crores... European market is the main market that we are catering to in terms of our finished goods which we are exporting. And we are seeing a revival in many pockets in Europe where in Eastern Europe we are seeing big surge in demand due to the rebuilding activities in Ukraine.

Clarified the composition and drivers of the significantly higher export order book, indicating strong international demand.

Asked by Jayraj Jain

Alu-Zinc Technology Upgrade Project Update Direct
So, the Alu-Zinc technology upgrade and the capacity expansion that we are doing will lead to about 35%-36% of capacity enhancement for us where upon completion we will be able to produce about 1,80,000 tons per annum on of Alu-Zinc product... the project is in advanced stages of completion and we are quite confident that this line will start generating revenue in the first quarter of the coming fiscal.

Provided specific details on capacity enhancement, timeline for revenue generation, and the superior product characteristics of Alu-Zinc.

Asked by Jayraj Jain

Benefits of Captive Solar Power Plant Direct
On the benefits of the captive solar power plant sir, it is obviously very clear that today the cost of solar power plant solar power is way lower than conventional grid power... the cost of the solar power, depending on the investment being done can range anywhere between Rs. 2 to 3 a unit. So, the saving is drastic and leads to a direct and immediate impact on the bottom line of the company.

Quantified the significant cost savings and highlighted the direct positive impact on the company's bottom line and sustainability efforts.

Asked by Jayraj Jain

Product Mix Strategy and Pre-painted Steel Share Direct
So, for the immediate future let's say our share of pre-painted product versus the unpainted product would be anywhere in the range of between 75% to 80% of the total production. This is obviously because the higher value addition we do which is by doing color coating or by producing pre painted, the margins or the value addition is higher as compared to the interim product which is galvanized or bare Alu-Zinc in the near future.

Outlined the strategic shift towards higher-margin pre-painted steel and its expected contribution to profitability, with clear targets for product mix.

Asked by Abhishek Sharma

Solar Power Plant Ownership Model Direct
Right. So, for this the company will be acquiring land and we'll be doing the CAPEX using a mix of debt and equity and will be owning the entire asset and that will be the model that we will be having. Only your O&M part will be outsourced to professional contractors who take care of the O&M part.

Clarified the company's full ownership model for the solar power plant, indicating long-term asset control and benefits.

Asked by Priya Jain

ROE/ROCE from Fresh Equity Fundraise Partial
The current fundraise that we have done is basically going to help us in three ways. One is obviously completion of our projects that are under commissioning, which is the Alu-Zinc project. The second is the solar power plant project. Another way that the fundraise is going to help us is to reduce our debts and reduce our finance cost in the company. And of course, it is going to help with additional working capital that is required to utilize the enhanced capacity that we have installed... Definitely we will be seeing much better ROCE and ROE numbers to give you exact projections, I would seek some more time and probably we can get back to you through our IR arm.

Management explained the multiple uses of the fundraise and its expected positive impact on profitability and returns, though specific ROE/ROCE numbers were not provided yet.

Asked by Ankur Parekh

Raw Material Price Volatility Mitigation Direct
Well, thank you for your question. Our raw material is basically procured largely on a back-to-back model where we are booking our orders from export customers and OEM customers and then proceeding with booking the raw materials required against the order bookings that we have made. So, in essence by the nature of our business model which is largely back-to-back, we are always protecting our margins by following this model.

Explained the company's strategy to mitigate raw material price volatility through a back-to-back model, ensuring margin protection for a significant portion of its business.

Asked by Swaraj Singhania

3 min read 7 chapters

Detailed narrative

Strong Q3 FY25 Financial Performance

Manaksia Coated Metals & Industries Limited reported a robust Q3 FY25, with consolidated revenue growing 17.68% QoQ to Rs. 207.83 crores. Profit Before Tax (PBT) surged 113.26% QoQ to Rs. 6.71 crores, and consolidated net profit increased 111.93% QoQ to Rs. 5.01 crores. The company's EBITDA rose 22.25% to Rs. 17.25 crores, leading to an EBITDA margin expansion of 103 basis points, reaching 8.30%, reflecting improved operational efficiency and margin expansion.

Strategic Shift to High-Value Pre-painted Steel

The company is executing a strategic shift towards high-value pre-painted steel products, which now account for 75.10% of revenue in Q3 FY25, a significant increase from 61.40% in Q3 FY24. This shift is driven by the higher value addition and better margins offered by pre-painted steel. Management aims for pre-painted products to constitute 75-80% of total production in the immediate future, with an aspiration for all production and sales to be from pre-painted steel by the later part of FY26.

Robust Export Growth and Order Book

Exports emerged as a key growth pillar, with export revenue increasing by 87% YoY to Rs. 96.73 crores in Q3 FY25. This boosted the contribution of exports to total revenue to 41%, up from 25% in Q3 FY24. The company secured a landmark Rs. 200 crores export order during the quarter, contributing to a strong overall export order book of Rs. 350 crores. Demand is primarily driven by European markets, including rebuilding activities in Eastern Europe and robust industrial growth in Southern Europe.

Alu-Zinc Technology Upgrade and Capacity Expansion

Manaksia Coated Metals is in advanced stages of installing and upgrading its Alu-Zinc coated steel capacity line, which will increase capacity to 180,000 tons per annum. This project is expected to start generating revenue in Q1 FY26 (within 75-90 days) and will enhance product durability, corrosion resistance, and competitiveness. Additionally, groundwork for Phase 2 expansion to enhance pre-painted steel capacity to 236,000 tons per annum has commenced, with the milestone targeted for achievement within FY26.

Captive Solar Power Plant Initiative

The company is actively pursuing a captive solar power plant project, with due diligence on identified land parcels and negotiations with EPC partners underway. This initiative is projected to be completed by Q2 FY26 and is expected to drastically reduce energy costs, with solar power costing Rs. 2-3 per unit compared to Rs. 9-10 per unit for conventional grid power. The project also aligns with sustainability goals, aiming to reduce the carbon footprint and support the transition to green steel.

Equity Fundraise for Growth and Debt Reduction

Manaksia Coated Metals successfully raised Rs. 134.55 crores through fresh equity capital. This capital is earmarked for strategic deployment across key growth initiatives, including capacity expansion, technology upgradation, and debt reduction. Furthermore, a portion of the funds will be utilized to bolster working capital, which is essential for leveraging the enhanced production capacities. Management anticipates this fundraise will be critical in elevating overall profitability and improving return on capital.

Raw Material Price Stability and Mitigation Strategy

Management noted that steel pricing has been flattish to negative, influenced by oversupply in China and reduced raw material costs such as iron ore and coking coal. Despite global volatility from geopolitical events and potential protectionist measures, prices are expected to remain stable for the foreseeable couple of quarters. The company mitigates raw material price volatility through a largely back-to-back business model, where 75-80% of its business involves booking orders from customers before procuring raw materials, thereby protecting margins.

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