Manaksia Coated

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.

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.

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.

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.

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.

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.

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.