India: Usha Martin's sales volumes drop marginally y-o-y in FY'24

Usha Martin has reported marginal drop of 1.7% y-o-y in sales volumes in the financial year of 2024 (FY24). The company witnessed notable advancements in strategic initiatives, including enhancements in value-added offerings, deepening engagement with OEMs and expansion of presence globally. The emphasis on product diversification has driven the performance in FY24.

Capex

Ranchi facility's phase-I capex programme progressed during FY24, which focused majorly increasing capacities of high value-added products. The commercial operations for these facilities will began in first quarter of financial year 2025 (Q1FY25) and anticipated to be ramped up over the next 9-12 months. Following this, next phase will have investment of INR 167 crores at Ranchi facility, which is expected to be completed by next 18-24 months.

The capex got completed in Q4 and the company aims to achieve 15,000-20,000 t of quantity increase with almost 12-15% rise in volumes.

FY24, Q4FY24 highlights:

Sales volumes down marginally: Company's sales volumes edged down by 1.7% y-o-y to 157,000 tonnes (t) in FY24 as against 159,000 t in the previous year. Meanwhile, the same was up marginally by 0.8% on the year to 40,000 t in Q4FY24.

In FY24, segment wise contribution in sales was as follows: wire rope- 47%, wire & strand- 18% and low relaxation prestressed concrete (LRPC) steel strand - 35%.

Sales realisations were impacted by lower realisations in LRPC and wire strand segment, while realisation from wire rope continue to increase through sustained emphasis on value-added offerings.

Net revenue from operations: Net Revenue from operations was largely stable y-o-y at INR 2,046 crores in FY24 while, during Q4FY24 the same edged up by 0.8% y-o-y to INR 515 crores.

Operating EBITDA rises y-o-y: The company's operating Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) registers 34.3% growth to INR 400 crores in FY24. During Q4, EBITDA increased by 16.1% on the year to INR 97 crores. This was attributed to consistent focus on value-added products.

Steel prices fall in FY24: Steel prices have witnessed pressure last year. The average steel prices fell by around INR 6,000/t ($72/t) on the year to INR 55,400/t ($663/t) in FY24. Similarly, on q-o-q basis also, prices were down by INR 1,000/t ($12/t) to INR 53,100/t ($636/t) in Q4FY24. This directly impacted LRPC prices, which came down to INR 63,000/t ($754/t) from INR 71,000/t ($850/t) previous year. Furthermore, the company will focus more on plasticated and galvanized LRPC.

Integration with Thailand plant: Integration of India and Thailand plants supplying to Brunton Shaw has boosted competitiveness through cost advantages and profit generation across wire supply and finished products. This strategic approach has enabled to secure large contracts, ensuring order bookings for the next seven to eight months.