Hariom Pipe Industries Limited (HARIOMPIPE) Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptifi Consulting Investor Relations team, I welcome you all to the Q1 FY '26 Post Earnings Conference Call of Hariom Pipe Industries Limited. Today on the call from the management team, we have with us, Mr. Rupesh Kumar Gupta, Managing Director. Today, we are also happy to welcome Mr. Soumen Bose, Non-Executive Director, who was the former Managing Director of Tata Thailand, and he joined the Board of Hariom Pipe Industries on June 10, 2022, as an Independent Director and was redesignated as Non-Executive Director on 4th of Jan 2024. He currently serves as a representative of HPIL's Thailand Foreign Office. We also have Mr. Amitabha Bhattacharya, Chief Financial Officer, and Ms. Rekha Singh, Company Secretary. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to brief us about the business and performance highlights for the quarter ended June 2025, the growth plan and vision for the coming year, post which we will open the floor for Q&A. Over to the management team.

Good afternoon, everyone. I'm Rupesh Kumar Gupta, Managing Director of Hariom Pipe Industries Limited. I thank you all for joining this Q1 FY '26 earnings call of Hariom Pipe Industries. I am pleased to present to you the financial and operational performance for the first quarter of the financial year '25 - '26. It is my pleasure to share that we have started the year on a very strong note both in terms of operational performance and strategic progress. That reflects both the strength of our business model and the disciplined execution of our strategy. At the start of FY '26, we had set a clear growth outlook aiming for around 30% year on year volume expansion and I am happy to share that we have met and even exceeded that target in Q1. Our sales volumes stood at 78,221 metric ton reflecting a 35% growth as compared to Q1 FY25 and a 5% sequential increase. This performance demonstrates the resilience of our demand based across multiple sectors and efficiency of our operations across our integrated manufacturing units. Our average selling price improved to INR 58, 931 per metric ton, a 9% sequential increase, which helped cushion the impact of input cost fluctuation. This improvement is a result of a healthy product mix, strong value-added product sales, and our ability to command better pricing through quality and customer trust. Revenue from operations came in at INR 416.96 crores registering a 34% growth over Q1 FY25 and a 15% increase over the previous quarter. Our strategic focus on value-added products, continued to yield results. With this product competitive, 98% of our revenues, in line with our consistent product mix. On the profitability front, EBITDA excluding other income was INR 57.58 crore, showing 39% YOY growth and 18% sequential growth. With EBITDA margins yielding a healthy 12.49%, this reflects our continued emphasis on operational efficiency, prudent cost management, and the benefits of our backward integration operations. PAT stood at INR 23.61 crore up 35% YOY and 27% sequentially with PAT margins improving to 5.11. EPS for the quarter was INR 7.63 reinforcing our commitment to value creations for shareholders. Strategically we have made strong progress on innovation and market development. We have developed new products and strengthened relationships with original equipment manufacturers, especially in the fast-growing renewable energy sector. A notable highlight has been our transition in solar structure manufacturing. Moving away from conventional [H.R. steel] channels, with cost intensive Hot Dipped Galvanising to high strength pre-galvanized (GP) steel pipes sections. This shift not only registers a steel way but also enhances durability and efficiency, making traditional design imitation and enabling our customers to achieve better cost effectiveness in their projects. As we look ahead, we anticipate a significant boom in solar renewable energy infrastructure, both in India and globally. Our innovation products position us to play a pivotal role in supporting this growth, contributing to reduced carbon footprint and improving sustainability and viability of solar projects. In summary, Q1 strong performance reaffirms our confidence in meeting our FY '26 targets and sustaining our momentum. We will continue to focus on volume growth, margin stability, operational efficiency and innovation, ensuring that Hariom Pipe remains well positioned to deliver sustained value to all stakeholders. With that, I look forward to addressing your questions and sharing further details on our outlook for the year ahead.

[Operator Instructions] Thank you. We take the first question from Agastya Dave.

Congrats on good performance. I had some very small questions; I'll go through them very quickly. First is, sir, given the kind of volume jump that you are seeing this year, sorry, this quarter, what's the state of the inventory in the system? And let me define system as the inventory that all your customers are carrying plus any of the dealers, what's the total inventory? And do you see this 35% run rate continue for some time?

We see, 30% growth rate will be continued [Foreign Language]

[Foreign Language] I am not looking at a specific number, just qualitative commentary.

So basically, this quarter, we have not disclosed the balance sheet as per the guidelines. You already have the last quarter Q4 number, I think 128 days we are holding days we have. Now roughly we have 89 days. This improvement is largely due to the better procurement planning, faster conversion of raw materials into finished goods and improved sales percentage.

Sir, my question was different. My question was in the sales channel that you're selling your products, are your customers increasing their inventory; not your inventory, sir, their inventory. Are they increasing their stocks? Are your dealers increasing their stocks because the steel prices were falling last year, they have started stabilizing. So, I'm just wondering if there is, again, they're increasing their stocks of inventory.

[Foreign Language] The customer needs to maintain the inventory

[Foreign Language] So the change is not much, just negligible.

[Foreign Language] Yes, not much. But with this our customer footprint is increasing.

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[Operator Instructions] We take the next question from Smith Gala

[Foreign Language]

Actually, the gross margin is always retained on the raw material versus sales. Last year last quarter what we have witnessed is that the 9% sale realization was more and raw material price remains same. There will be no other factorization, the main thing is why gross margin can be increased, and what is the possibility, as it always depends on product mix consistency, backward integration and operational efficiency. Presently we are already 98% of sales coming from value added products and our marginal is based depending on raw steel pipes drills.

Second question is that we have already started our sales to Maharashtra. So if you have the number handy, what is the percentage of sales coming from Maharashtra in volume terms, and also we had released a notification that one of our plants in Mahbubnagar, will be having a plant shutdown maintenance for 10 days inQ2, so wat will be the impact of those on Q2 numbers.

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[Foreign Language] PPA was signed and it is in public domain, we have signed the PPA to supply of 60 MW solar power for 25 years to NTPC at a price of INR 2.96 per kWh. The deadline of the completion of the project will be 2nd September, 2026 and after completion, first three ears, we are getting, additional INR 0.25 as an incentive per unit. Apart from that, as for the PM-KUSUM Scheme, we are getting the equity subsidy during the construction period. So these are the scenarios we have, and moreover, out of the total project, we have already finalized about 115 acres of land, which are consistent to supply the 32 MW of solar power can be able generate, and out of 13 locations we have finalized 8 locations. These are the business stratus of this project.

We take the next question from Raman KV.

I just want to understand what was the volume growth guidance for the year and what the EBITDA per ton during the quarter?

Can you please repeat that

What is the volume growth guidance for the year and what the EBITDA per ton during the quarter

30% volume growth in our last concall in Q4 and EBITDA per ton as of Q1 2026 is 7,362.

We take the next question from Sagar Shah [Break] We move on to the next person. We take the question from Yash Sinha.

Congratulations on a good set of numbers. I just wanted to understand your volume and revenue split by product similar to how you've given on Page 18 of your Powerpoint.

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For this quarter sir?

We take the next question from Radha Agarwalla

Sir, about 6 to 9 months back, your cost of production for billets was about INR 37,000 per metric ton versus the market rate at that time was INR 42,000 per metric ton. So, the EBITDA per metric ton at a billet level used to be INR 5,000 and then INR 3,000 additional from billet to MS tube conversion. So, I wanted to understand how the scenario is currently. So comparatively in this scenario, the market price of billet has come down to INR 37,000. So, at these prices, what is your cost of production of billets and the EBITDA per ton at the billet and the MS tube.

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Sir, my question was, since you are backward integrated the EBITDA per metric ton for you would be significantly higher compared to a non-backward integrated secondary steel pipe manufacturer. So if you can tell me the EBITDA per metric ton at the billet level, then I will be able to understand how it is for the industry who are non-backward integrated as well.

EBITDA per ton depends on each during the quarter if you have done any billet sale. Then you can calculate, through integrated process, we are getting this quarter specifically 8,200 plus per ton EBITDA.

Sir, how much would it be for non-backward integrated players.

That is not we are integrated players, we can only talk about ourselves. As of now 8,200 plus, integrated process we are getting for this quarter.

And sir out of the 4.5 million ton market of secondary pipes in India, roughly what percentage of players would have backward integration like you

Again we would not be the right people to talk about it. Markt researchers would be able to answer this question for you. We can only talk about Hariom.

We take the next question from Sagar Shah. We move on to Ajit Sethi

Sir what is the current net debt level?

363.70 as of 30th June

So going forward any plans for repaying our debt

Yes. The long term debt we already have repayment schedule so next year the long term debt will become negligible, we are expecting a substantial cash flow where Hariom is in a good situation and you can see financial metrics very positive growth I terms of debt.

Sir in Q1 we have done EBITDA per ton of around 7,300 so is it sustainable?

Yes,, yes, 100%

And last question we have backward integrated for MS Tube side and non-backward integrated for galvanized sies, so what kind of realization is sustainable?

I have just given the answer. It is a product mix category. So now 9% sales are coming from product mix category and value added product. In those terms, you can realize better because customer s given quality and consistent delivery not like retail products, where you are always struggling because of heavy competition. Now Hariom is always providing such products where customers are given good price because of quality and consistency, so for realization, Hariom is in a batter position.

So this is sustainable?

Yes, of course

We take the next question from Harsh Shah

You have shown a very strong volume growth in this quarter. So just wanted to understand which are the end user industries that is contributing to a solid growth from you? And what exactly helped you during this quarter to achieve this kind of a growth? Because if you look at overall market scenario, it's outlook is not that good in such a scenario you growing at 30%. So what exactly is helping you achieve this growth?

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We take the next question from Vedant Sharda

In the presentation there is 15% direct B2B sales, so this is only direct sales without distributors and dealers

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Who is our direct competitor?

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Our customers can give you a better answer

What is the capacity utilization this quarter

It is 72,000 metric ton net productions. That you need to calculate from 437. So about 40%, no 66%.

We take the next question from Raghav Rathi

EBITDA from last quarter to this quarter has jumped from INR 6,500 to INR 7,400. So what was the main reason?

9% our selling price, and remain operational and expenditure are consistent and controlled, that is why it is going up.

[Indiscernible]

Can you please repeat that?

What are the current days and the exact capacity we will have by FY26 and FY27 and what can be our utilization.

We have already given clarity in Q4, we are expecting 30% volume growth and this year also 32%-35% growth in coming two years, so presently we have 4,37,000 our final output.

We'll take the next question from Maitri Shah

Yes. Just one question on the solar structure. So currently, we have started with the trial production. What sort of, what sort of volumes do we expect from solar structures in FY '26 and FY '27?

So initially, we have got good order wherein we are engaging our bandwidth and the manufacturing capacities to get enhanced. So the trial orders are already received by 200 tonnes approximately per month. Moving ahead, this may multiply in coming months.

And what sort of EBITDA are we earning on this product right now?

I don't think readily it is available with us, but we are very much higher than the scaffolding as well as the pipe division. Trial runs are going on, right? So that EBITDA calculation would not be ready...

200 tons per month is the trial order for FY '26 that correct?

Yes, yes.

Okay. And any new trial orders that we have received this quarter?

Continuously, we are supplying it in the future we'll be adding on new parties also.

We'll take the next question from Aadesh Gosalia.