India: Surya Roshni reports y-o-y decline in revenue in Q3 FY'24
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Surya Roshni Limited, announced its financial results for the quarter ended 31 December 2023 (Q3 FY'24) recently. Despite a revenue decline, the company's operating profit margin remained stable due to a substantial improvement in the lighting and consumer durables segments.
Key takeaways:
1. Revenue down y-o-y in Q3: The company's consolidated revenue for Q3 FY'24 went down by 4% on y-o-y basis to INR 1,938 crore compared to INR 2,021 crore reported in Q2 FY'23. The company reported decline in revenue on account of slow down of demand for high value-added products in steel pipes business.
2. EBITDA margins drop y-o-y: The company dropped by 3% on y-o-y basis in EBITDA margins to INR 158 crore in Q3 FY'24 as compared to INR 164 crore in the same quarter of the previous financial year.
3. PAT stable y-o-y: Profit After Tax (PAT) remained stable on a y-o-y basis to INR 90 crore in Q3 FY'24. In addition, growth in lighting and consumer durables segment remained flat y-o-y for this quarter.
4. Steel pipe and strips segments' performance highlights: The company is currently having 12.76 lakh tonnes per annum (ltpa) capacity for steel pipes and strips. Out of which 9.61 ltpa are for ERW pipes and 2 ltpa for spiral pipes.
- Revenue declines y-o-y: Revenue for Q3 FY'24 declined by 6% on a y-o-y basis to INR 1,536 crore compared to INR 1,626 crore reported in Q3 FY'23.
- EBITDA margins decreases y-o-y: EBITDA margins for this segment decreased by 11% on y-o-y basis to INR 121 crore in Q3 FY'24 as compared to INR 136 crore in the same quarter of the previous financial year.
The company experienced a slight decline in revenue, primarily due to a slowdown in demand for high-value pipes. However, this was partially mitigated by increased sales in other pipe segments. On a positive note, steel prices saw a slight improvement sequentially. Exports also performed well, growing by 23% in Q3 FY'24 and 16% in the first nine months of FY'24.
5. Healthy orders in hand: The company boasts a strong order book of INR 600 crore for the Oil & Gas and Exports sectors. In addition, company has got two valuable orders during the month of January 2024:
- Domestic orders worth INR 52.96 crore (including GST) for supply of 3 LPE coated carbon steel pipes from Hindustan Petroleum Corporation Limited (HPCL) for city gas distribution projects across West Bengal, Rajasthan, Bihar, and Jharkhand.
- Domestic orders worth INR 60.51 crore (including GST) for supply of MS pipe - coated pipe as per specified specifications under Multi-Village Drinking Water Supply Scheme.
The company has a strong order book, driven by strong demand from both the private and government sectors, as well as oil and gas. The company expects robust order inflow in the coming years, with a resurgence in export demand for API pipes and continued positive momentum for GI pipes.
7. Expansion project at Hindupur, AP: The company is currently spending INR 75 crore to build an expansion project in Hindupur, Andhra Pradesh, to manufacture galvanized and cold-rolled coils and pipes. Currently, the company buys GP and CR coils from external suppliers. However, they want to make sure they always have enough stock to meet South Indian market demand, while also getting the coils cheaper than market price.
Outlook:
To optimize resource utilization, the company plans to curate a strategic product blend, capitalizing on robust domestic and export market growth.
