Kamdhenu Limited ($KAMDHENU)

Ladies and gentlemen, good day, and welcome to Q4 and FY '26 Earnings Conference Call of Kamdhenu Limited. [Operator Instructions] Before we begin the conference, a brief disclaimer. This conference call may contain certain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. This call is restricted to Kamdhenu Limited steel business, we would like to restrict the questions only to our business. I now hand the conference over to Mr. Satish Agarwal, MD from Kamdhenu Limited. Thank you, and over to you, sir.

Good morning, and a very warm welcome to everyone present on the call. Along with me are Mr. Harish Agarwal, Group CFO; and SGA, our Investor Relation at Roger. We have uploaded our results and investor presentation for the quarter and full year ended on the stock exchanges and company's website. Hope everyone had a chance to go through the same. I'm pleased to report that FY '26 has been a strong year of execution for our business. Our performance reflects the enduring strength of the Kamdhenu and the proven scalability of our franchisee-based asset-light operating model. We continue to consistently maintain a strong presence in the organized retail branded TMT segment, position we have deepened over the years. We have expanded not just the reach of our distribution network, but also trust that the end consumers place in the Kamdhenu name. I'm delighted to share that during the year, we were awarded The Extraordinaire Brand: Most Trusted Brand Infrastructure & Building Materials at the India Leadership 2026. This recognition is a proud testament to the credibility that we have built and reinforces our conviction that brand leadership is the most durable competitive advantage in our industry. Coming to the industry trend now. On the raw material front, prices displayed a mixed but largely from trend during the FY '26. Domestic iron ore prices have trended upwards supported by an up cycle driven by strong domestic demand. While global iron ore prices have remained relatively stable. Geopolitical disruptions continued to create volatility in other key input costs, particularly crude oil and natural gas, which have a meaningful bearing on overall cost structure across the steel industry. Now these sectors may expect near-term pressure on margins, both for us and for our franchisee partners the resilience of the underlying demand environment provides confidence in the ability to manage through this period. Our franchisee model buys very nature distributes much of this input cost risk across our partner network, which is another structural advantage of our approach. While the average selling price for TMT bars were marginally softer on a year-on-year basis, largely the function of the broader pricing environment in the steel sector. We did not allow this to dilute our focus on volume growth and market penetration. We believe that pricing softness was temporary in nature and our franchisee model resilience through the cycle further validates the structural and soundness of our approach. We are pleased to announce that despite the challenging environment, we recorded profit before tax grew to INR 106 crores compared to INR 80 crores in FY '25, representing a year-on-year increase of approximately 1%. Now turning to volumes. This has been a standout year. During FY '26, our total sales volume grew by 10% year-on-year to 39 lakh metric tons. We intend to scale the franchisee model further year-on-year given the capital efficiency it enables by asset-light model. We are also investing in strengthening the quality of our dealer relationship through training, support and technology-enabled tools that help dealers manage their business more effectively. We now have over 12,500 dealers spread across India. This network, one of the most extensive among branded steel players and providers with both breadth and depth of the market access. This is a significant milestone for us at franchisee volume scale, royalty income scales with them, thereby supporting stronger result ratios for the company. This royalty led revenue model is in our view, the defining financial characteristic of Kamdhenu's business, and we expect it to contribute an increasingly larger proportion of our overall earnings over the coming years. We will continue to focus on expanding the royalty income strained by growing franchisee volumes, deepening brand adoption and supporting our franchisee partners in improving their operational performance. In terms of the growth outlook, the Indian steel industry remains one of the most attractive long-term growth opportunities in the country. India witnessed high single-digit growth in steel consumption during FY '26, reflecting healthy underlying demand across key end user segments, including real estate, infrastructure and industrials. We expect this demand trajectory to sustain and potentially accelerate over the medium term, driven by a confluence of structural factors. Steel is a foundational input foundation building and with India's continued investment in road, railways, housing, urban infrastructure, renewable energy and industrial development the sectoral demand outlook is highly encouraging. The government has signal its commitment to capital formation through a capital investment outlay of INR 12.2 lakh crore announced in the union budget which is expected to act as a strong multiplier for construction activity and allied industries. Policy initiatives such as National Steel Policy, Make in India, a further underpin this structural growth thesis. Government focus on affordable housing, smart cities and expansion of urban and rural infrastructure provides us with broad-based end market exposure. Unlike cyclical commodity business, our franchisee and royalty model means we can participate in this structural growth without taking direct commodity price risk on a large balance sheet. As we look ahead of FY '27 and beyond our strategic priorities are clear and focused. First and foremost, we will continue to strengthen the Kamdhenu brand through sustained marketing investments, quality reinforcement and consumer engagement initiatives brand equity is our most valuable asset, and we will invest to protect and extend it particularly as more consumers shift towards organizing and branded steel, a trend we expect to accelerate in line with India's urbanization. With this, I would hand over the call to our Group CFO; Mr. Harish Agarwal for the financials. Thank you all.

Thank you, sir. First, I would like to share the financial highlights for Q4 FY '26. Our steel volume from franchisee route have stood at 10.2 lakh metric tons in Q4 FY '26 compared to 9.4 lakh metric tons in Q4 FY '25, a year-on-year growth of 8%. Our steel volume from on manufacturing stood at 31,624 metric tons compared to 31,950 metric tons which was flat on a year-on-year basis. Royalty income through franchisee stood at INR 46 crores in Q4 FY '26 as compared to INR 38 crores in Q4 FY '25, a growth of 19% year-on-year. Total revenue stood at INR 208 crores in Q4 FY '26 as compared to INR 198 crores in Q4 FY '25, a growth of 5% year-on-year. Our profit before tax stood at INR 24 crore in Q4 FY '26, which increased with a growth of 8% on a year-on-year basis. Profit before tax margin stood at 11.7% for Q4 FY '26. Profit after tax stood at INR 17 crores for Q4 FY '26, a growth of 2% year-on-year. Now I would like to share the highlights for the financial year 2026. Our steel volume from franchisee route have stood at 37.9 lakh metric ton in FY '26 as compared to 34.4 lakh metric tonne in FY '25 year-on-year growth of 10%. Our steel volume from 1 manufacturing stood at 21,092 metric tons as compared to 1,841 metric ton, which was flat on year-on-year basis. Royalty income through franchisee stood at INR 175 crores in FY '26 as compared to INR 139 crores in FY '25, a growth of 25% year-on-year. total revenue stood at INR 763 crores in FY '26 as compared to INR 747 crores in FY '25, a growth of 2% year-on-year. Our profit before tax stood at INR 106 crores in FY '26 as compared to INR 80 crores in FY '25, a growth of 31% year-on-year basis. Profit before tax margin stood at 13.8% for FY '26. Profit after tax stood at INR 78 crores for financial year as compared to INR 61 crores in FY '25, a growth of 29% year-on-year. We continue to remain debt-free as June 31 March 2026. ROCE and ROE stood at 26.8% and 19.8%, respectively. The Board has decided to announce a dividend of INR 0.40 per share and 40% of the face value of INR 1 each. And this is from our side, and we can open the floor for question and answer.

[Operator Instructions] The first question is from the line of Dana from Choice Institutional Equities.

I have a few questions. So first being in FY '26, our royalty income grew by 25%, whereas our volume growth was only 10%. So what has led to the superior growth in the royalty income? Could you throw some light to that?

Yes. We have also increased the rate per tonne of the royalties. That is why growth is volume growth but the revenue growth is 25%. We have increased the rate of royalty.

Got it. And sir, can you please provide the royalty realization per ton trend over the last 3 to 5 years and its outlook going forward?

Yes. This year, the average rate is INR 435 per metric ton which was INR 398 last year. And earlier to that, it was also around INR 380. Right now, I'm not having the figure of last 4, 5 years. I have only 2 figures for '25 and '26. So it again increased by 10%

And going forward?

Yes. Going forward, we are also planning to increase 10% to 15% every year along with a volume growth of around 10%, which we are achieving from last 2, 3 years.

And sir, I had one more question regarding -- we have around INR 300-odd crores with us, and we are actually asset-led business. So what are we planning to do with those INR 300-odd crores?

Yes. We are working on that. We are framing a policy for treasury and we are planning on that how we can reward to our shareholders. We are working on that and come back to you.

Sure. And sir, I had last one question. Sir, we had invested around INR 20-odd crores in March 2026 in the paint business. So why was that investment and how -- and in future, are we -- can we expect more?

No. We are not having any such plan to invest more money in the paint business. In fact, this is only the investment, which we are planning because the rate of the share was so low. And with the investment of INR 20 crores, we have increased the equity of 4% in this business. Business valuation is much higher than the share price, which we have taken. So we have invested INR 20 crores. But in the future, we have not any plan to further make any infusion in the paint business. The treasury will be utilized only for the steel business and reward to the shareholders.

Next question is from the line of Rohit Kumar from ADM Advisors.

Sir, my first question was -- could you please give us some guidance on the revenue growth from our own manufacturing facility versus growth from rating income for FY '27. And any margin guidance that you can give?

We have only one plant from where we are catering Delhi and ACR market. The capacity is around 1.25 lakh metric ton of our plant, which we are utilizing 100%. Last year, we have utilized 100%. This year, we have utilized 100%, and it will continue to have 100% utilization in the near future also. But the top line is impacted on the price elections. If price is INR 50,000 then the top line would be different. And if at INR 55,000 , then the top line would be different. Correspondingly, the raw material price also increased. So the top line will increase only with the price difference or the increase in the revenue of royalty income. The bottom line will be affected with the price fluctuation in the manufacturing, but mainly from the royalty income.

Got it. And my second question was that we see have great presence as we first in over the year. But are you seeing any competition in the TMT bar segment?

Yes, there is a competition in the market. There is no such business in India, which has no competition. We have the competition. But at the national level, we are competing with a big brand like Tata Steel, Jindal or at a regional level, we are competing with the reasonably strong brands. But at a national level, we have the [indiscernible] and we have a dedicated network of 12,500 dealers across India. We can supply X in 24 hours in India, no one can supply at this shorter notice.

Next question is from the line of Prasath Raki from Elevate Research.

So I have a couple of questions. We saw some price uptick in steel prices in Q4 used to be West Asia. Can you help us understand the trend compared to the last year and how do we see this price moving off raw material as well as steel products and how has it impacted our performance for the quarter? And following up to this question, can you elaborate on how the realization are expected to move going forward for H1 as well as full year for FY '27?

Ma'am, first, you understand the model of the company. We are into the rerolling of the manufacturing business as well as in the branding business. If we are in the rerolling business then the price movement will not affect -- not much affect the bottom line because the price of finished product moved in the direction of raw material price, which is indeed billet. If intend billet price increase, then the corresponding finished product TMT bar price increase and vice versa. And in the branding model, we are only charging the royalty. We are not impacted with the price. We are charging royalty on per tonne basis, not on a percentage basis. So the price fluctuation is not impacting our business at all, either in manufacturing or in the branding business.

And sir, my second question is, can you throw some light on what would be our market share in the TMT bank in FY '26 versus FY '25?

Ma'am, exact data is not available for the TMT product but on the estimated basis, we are calculating retail branded market share is 20% of Kamdhenu product, retail branded.

Next question is from the line of Prashant Singh from MB Securities.

So I would like to ask 2 questions. First was how many franchises were added in FY '26 and what proportion of volume growth came from existing franchises versus the new franchisee additions? And what is the pipeline of franchise for FY '27?

Prashant ji,we are focusing on the volume growth of the existing units. We are not inclined to add new units, but inclined to increase the capacity of existing units. Right now, we have around 50 units, 100 units of all products out of which unit for TMT bar and the 50-unit for the structural steel pipe, pelleted sheet and other products. But 50 units are manufacturing E&T bars. So the number is -- last year was also around 100 units at this time also 100. During the year 4, 5 unit has gone, and 4, 5 unit new comes. But the volume we are increasing [indiscernible] We are giving opportunity to the existing unit to expand their production facilities and increase the production capacity. So we are focusing only to the existing units.

Understood, sir. And another thing I would like to note is with geographies, have you identified as underpenetrated regions to offer the large growth opportunities for Kamdhenu and where do you intend to deepen the market penetration going forward in FY '27 and ahead?

In fact, our presence is across India, but if I make a sequence from top to bottom, the north, east, west and south, so this is the percentage of resales, you can say. In North, we have 31%. East, we have 35% West, we have 19% and South, we have 15% on the overall volume. So obviously, we are planning to increase our market share in the South.

Next question is from the line of [indiscernible] Taluja from Coles Investment.

Yes. Am I audible?

Yes.

So I have a couple of questions. First one is that Kamdhenu has over 4 million metric tons of franchisee capacity against 3.9 million metric tonnes volume sold. So what is the current utilization level across the network? And how much headroom before additionally capacity is required.

In fact, the data which we have given in the presentation is the full compilation, we are in the process of compiling the new data and hopefully, in the Q1, we will release this data, the existing capacity is around 5 million. But we will declare that data after compilation of -- and having the other documents against which we have achieved a 3.9 lakh metric tons, 39 lakh metric ton.

And sir, the second question is that the company has crossed 100 franchisees. And so what is the optimal franchisee count? And does management see further expansion opportunities and an under penetrated regions or areas?

Yes. In the South, we are planning to add more franchisees. And the rest of India, we are planning to increase the capacity of existing units.

Next question is from the line of Ayushi from Sci Advisers.

I have a couple of questions. My first question is that

Can you speak [indiscernible]

Yes, sure, sure. my first question is that given the increasing shift from unorganized to organized to consumption how is consumer preference evolving towards branded products? And let's say, what tides the Kamdhenu brand enjoying this transition?

I did not get your question.

Okay. I repeat my question. Basically, I'm asking -- as the industry increases, like laser shift from an steel consumption, right? So how are the tenures evolving towards the branded product? And what advantages it needs to come deal as a brand.

[Foreign Language]

Got it. And I have a following question on that. Like management highlighted the strong opportunities from infrastructure or housing or industrial CapEx, right? So which end user segments are currently witnessing the strongest demand? And like where do you see the highest growth potential going forward?

[Foreign Language]

Thank you. That was the last question of the day. I now hand the conference over to management for closing comments.

I would like to thank you, everyone, for being part of this call, we hope we have answered your questions if you need more information, please feel free to contact us or our Investor Relations Advisor. Thank you.

Thank you. On behalf of Kamdhenu Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.