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    Ratnamani Metals

    RATNAMANIGood
    Capital Goods·17 May 2024
    Management Summary

    Ratnamani Metals delivered its third consecutive year of record-breaking performance, crossing the ₹5,100 crore revenue milestone. While domestic oil and gas demand remains muted due to election cycles and structural shifts, the company is seeing robust traction in water line pipes and international exports to the MENA region. Management is aggressively targeting ₹6,000 crores in revenue for FY25, supported by capacity expansions and a shift toward higher-value specialized products.

    Highlights

    8

    • Achieved record consolidated revenue of over ₹5,100 crores in FY24.

    • Reported historic high profitability with PAT of approximately ₹600 crores.

    • Order book stood at approximately ₹2,400 crores as of May 1, 2024.

    • Management guided for FY25 consolidated revenue of approximately ₹6,000 crores.

    • Volume growth for FY25 is projected between 10% and 15%.

    • EBITDA margin guidance maintained at 16% to 18% for the long term.

    • Stainless Steel (SS) segment saw a sharp increase in export demand, particularly from the Middle East.

    • Subsidiary Ravi Technoforge reported revenue of ₹258 crores with 11% EBITDA margin.

    What Changed1

    vs Q2 FY25

    Guidance items5 → 6 (+1)

    Key financials

    Single quarter

    04 metrics
    1. 01Consolidated Revenue₹5,100 Cr
    2. 02PAT₹600 Cr
    3. 03Order Book₹2,400 Cr+4.3%YoY
    4. 04EBITDA Margin Guidance17%

    Segment breakdown

    Order Book ShareUtilization
    Carbon Steel70%50%
    Stainless Steel30%65%
    Ravi Technoforge (Subsidiary)——
    Heatmap· 2 shared metrics

    Guidance & targets

    6
    CategoryTargetPriority
    Revenue
    Consolidated Revenue
    ₹6,000 crores
    		High
    Revenue
    Ravi Technoforge Sales Target
    ₹310-330 crores
    		High
    Volume
    Volume Growth
    10-15%
    		Medium
    Margin
    EBITDA Margin Band
    16-18%
    		Medium
    Capex
    Maintenance & Debottlenecking Capex
    ₹100-125 crores
    		High
    Capex
    Orissa Plant Capex
    ₹170 crores
    		High

    Risks & concerns

    5
    RiskSeverity

    Muted Domestic Oil & Gas Demand

    Domestic oil and gas transmission and city gas distribution business is currently muted and yet to show signs of pick up. — Management acknowledged

    medium

    Election Cycle Impact

    Elections cited as a reason for slower order booking in the carbon steel segment, though expected to recover in 6-8 months. — Both acknowledged

    low

    Geopolitical Disturbances in Europe

    Disturbances in Europe impacted export shares for subsidiary Ravi Technoforge, though domestic share increased to compensate. — Management acknowledged

    medium

    Areas of Evasion(2)

    • Geographical revenue breakup (explicitly stated they don't share it).
    • Specific margin differences between hot finish and cold finish products.

    Q&A highlights

    3

    “Dhananjai, basically our product portfolio is such where volumes only in terms of tonnage may not be the right thing to monitor... so usually we prefer giving guidance in terms of amount in crores instead of volume only.”

    Highlights the shift towards value-added, specialized products where tonnage is a secondary metric to revenue and value addition.

    asked by Dhananjai Bagrodia

    2 min read5 chapters

    Detailed Narrative

    01

    Record Financial Performance and Growth Trajectory

    Ratnamani Metals achieved its best-ever performance in FY24, with consolidated revenues crossing ₹5,100 crores and profits reaching approximately ₹600 crores. This marks the third consecutive year of historic highs for the company. Management has set an ambitious target of ₹6,000 crores for FY25, representing a nearly 18% growth target, supported by a volume growth guidance of 10-15%.

    02

    Robust Order Book and Sectoral Dynamics

    The order book remains healthy at ₹2,400 crores as of May 2024, with a 70:30 split between Carbon Steel (CS) and Stainless Steel (SS). Within the CS segment, the water segment accounts for 20-25% of orders. While domestic oil and gas demand is currently cyclic and muted, the company expects a resurgence in 6-8 months as new projects move from planning to execution.

    03

    Middle East Expansion Driving SS Exports

    The Stainless Steel segment is benefiting significantly from a resurgence in CAPEX in the MENA region. Major players like Saudi Aramco, SABIC, and ADNOC are in expansion mode, driving demand for oil and gas applications. SS order bookings have increased to over ₹150 crores per month, with direct physical exports now accounting for more than 50% of SS turnover.

    04

    Subsidiary Turnaround and Value-Added Strategy

    Subsidiary Ravi Technoforge is undergoing reorganization and automation to improve margins, with a target of 13-14% EBITDA in FY25 up from 11%. Additionally, the company is expanding its 'spooling' and cooling business, targeting ₹100 crores in revenue with high margins of 18-20%. These initiatives reflect a broader strategy to move away from commodity products toward specialized, high-margin applications.

    05

    Strategic Capex and Capacity Enhancements

    Ratnamani is at the final stages of commissioning a new expansion for higher diameter pipes (up to 150mm thickness and 18m length). A new plant in Orissa with a ₹170 crore investment is expected to come online by the end of FY25. Maintenance and debottlenecking capex will continue at a steady rate of ₹100-125 crores annually to maintain the company's competitive edge.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.