India: Maharashtra Seamless Ltd's production rises q-o-q in Q2FY'24

Maharashtra Seamless Ltd's production volumes rose q-o-q during July-September, 2023 (Q2FY'24), the company reported in it's investors' call held on 02 November 2023.

The company has a 55% market share in the seamless pipes segment, with manufacturing facilities in Nagothane and Mangaon, Maharashtra, and Narketpally, Telangana. It also has an 18% market share in the API certified, high frequency ERW pipes segment, with a manufacturing facility in Nagothane, Maharashtra.

Once the finishing facilities in Telangana are installed, the company's existing capacity of 100,000 metric tonnes per annum (mtpa) will be activated.

The company plans to expand and upgrade its United Seamless Tubular Pvt. Ltd. (USTPL) plant in Narketpally by adding heat treatment, finishing, and electromagnetic induction (EMI) facilities to increase capacity and installing a captive solar plant.

The company also plans to expand and upgrade its Mangaon plant in Maharashtra to include a complete line for cold drawn pipes, including a pilger and drawbench, an Oil Country Tubular Goods (OCTG) line, and billet pre-heating surfaces.

At the MSL Nagothane facilities, the plan is to upgrade the hot mill to a Premium Quality Finishing (PQF) mill, install an EMI machine, 3-roll sizing mill, flying saw, and ultrasonic testing machine, upgrade the mill with an annealer, hydro, and ultrasonic testing (ERW) machine, and electronically upgrade the EMI and ultrasonic testing machine (OCTG).

Other highlights:

Production rises q-o-q: The company's production rose by 17% q-o-q to 134 kMT in Q1FY'24 compared with 115 kmt in the last quarter. Y-o-y production increased 9% as against 123 kMT in Q2FY'23.

Sales up q-o-q: Saleable steel sales volume rose by 20% q-o-q to 133 kMT in Q2 from 111 kMT in the previous quarter. Sales registered a 6% increase y-o-y as against 126 kMT in Q2FY'23.

EBITDA shows growth q-o-q: The company's EBITDA registered a rise of 42% q-o-q to INR 306 crore in Q2 compared to INR 215 crore in the preceding quarter. Moreover, EBIDTA increased by 31% y-o-y against INR 233 crore in Q2FY'23.

Order book position: MSL order book position as on 25 October 2023 stands at INR 1,459 crore. Of this, INR 925 crore (nearly 63%) is for exports and others, while INR 523 crore is for ONGC and OIL orders.

Company expects order book position to remain steady based on current trend of seamless pipes prices and support of back-to-back booking of raw material leading to locking of margins and negating impact of fluctuating raw material prices.

The company has successfully shipped its entire order of subsea sour service seamless pipes, which is another value-added and import-substituting product. More orders are expected, as the domestic market size for these pipes is 35,000 metric tonnes. The company has also made inroads into the export market for these pipes and is actively working to expand into new regions.

Outlook:

The company expects the profit margins to remain stable, as the current trend of seamless pipe prices is favorable. Also, because they have secured a steady supply of raw materials, which has locked in their margins and protects them from the volatility of raw material prices.