India: Maharashtra Seamless Ltd's output falls q-o-q in Q4FY'24

Maharashtra Seamless Ltd.'s reported q-o-q decline in production volumes during January-March, 2024 (Q4FY'24), the company reported in its investors' call held recently.

This leading company is a major player in the seamless pipes market, holding a significant 55% share. They have production facilities in Nagothane and Mangaon (Maharashtra) and Narketpally (Telangana).

The company also has a strong presence in the high-frequency ERW pipes (API certified) market, capturing 18% share with a plant in Nagothane. Currently, they have the capacity to produce 100,000 metric tonnes per annum (mtpa), but it will be fully operational once they set up the finishing facilities in Telangana.

Production decreases q-o-q: The company's production in Q4FY'24 fell by 6% q-o-q to 119 KMT against 126 KMT in Q3FY'24. Moreover, on y-o-y basis the same fell by 21% y-o-y as compared to 151 KMT in Q4FY'23.

Sales declines : Saleable steel sales volume went down by 9% q-o-q to 123 kMT in Q4 from 135 kMT in the previous quarter. Sales registered a 15% decline y-o-y as against 145 kMT in Q4FY'23.

EBITDA shows fall q-o-q: The company's EBITDA registered a fall of 30% q-o-q to INR 241 crore in Q4 compared to INR 343 crore in the preceding quarter. Furthermore, EBIDTA declined by 15% y-o-y against INR 283 crore in Q3FY'24.

Order book position: MSL order book position as on 15 May 2024 stands at INR 1,754 crore. Of this, INR 701 crore (nearly 40%) is for exports and others, while INR 1,053 crore is for ONGC and OIL orders.

The company expects a stable order book due to consistent seamless pipe prices. Additionally, their strategy of securing raw materials through back-to-back bookings protects their profit margins by minimising the impact of price fluctuations.

Indian oil and gas companies, ONGC and Oil India, are meeting strong domestic demand by quickly processing and delivering orders. Additionally, tenders for large quantities of ERW pipes have been announced by BPCL, GAIL, Indraprastha Gas and Assam Gas, indicating major investments in the country's oil and gas infrastructure.

This follows exciting new discoveries: significant natural gas reserves in the Mahanadi basin and new oil fields named "Amrit" and "Moonga" found off the coast of Mumbai.

Outlook: The oil and gas sector in India is seeing increased activity. There is a high demand for seamless pipes for new wells being drilled onshore and offshore. Additionally, a major Indian oil company, ONGC, is planning a significant expansion to double its petrochemical production capacity by 2030.