Man Industries (India) Limited (513269) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Man Industries Q3 FY '25 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Pritish Urumkar from ICICI Securities Limited. Thank you, and over to you, sir.

Thanks, Avian, and good afternoon, everyone, and thank you for joining us today for Man Industries Q3 FY '25 Earnings Con Call. First of all, I would like to thank management for providing us this opportunity to host the call. From the management side, we have Dr. Ramesh Chandra Mansukhani, Chairman; Mr. Nikhil Mansukhani, Managing Director; Mr. Sandeep Kumar, CFO; Mr. Rahul Rawat, Company Secretary; and Mr. Vijay Gyanchandani, DGM, Investor Relations. So without any further delay, I would now hand over the call to the management for opening remarks. Thank you, and over to you, sir.

Hello.

Yes, sir. Please proceed.

Yes. Good afternoon. Thank you very much for joining this con call. This is R. C. Mansukhani, Chairman of the company. And I welcome you all to our earnings conference call for the third quarter and 9 months of the financial year 2025. To start with, let me take you through the financial performance of the company, followed by the operational highlights. And now I'm handing over to our CFO, Mr. Garg. He will give the highlights of the results. Thank you.

Good evening. Let me take through the financial performance of the company, followed by the operational highlights. In Q3 FY '25, standalone total revenue stood at INR 746 crores, which is slightly 12% lower on a Y-o-Y basis. The EBITDA stood at INR 87 crores, which grew by approximately 2% Y-o-Y and 12% Q-o-Q with EBITDA margin of 11.6%. Net profit grew by 1% Y-o-Y and 7% Q-o-Q to INR 38 crores with a PAT margin of 5%. On a consolidated basis, the total revenue for the quarter declined by 13% Y-o-Y of the INR 738 crores. The decline was mainly due to our export shipment on non-availability of vessels. If it wasn't for the delay in the shipment, our revenue would have been higher by approximately INR 66 crores during the quarter. EBITDA came in at INR 84 crores, which grew by around 7% Y-o-Y and 13% Q-o-Q, while EBITDA margin at multi-quarter high of 11.4%. Net profit was INR 34 crores, which grew by around 12% Y-o-Y and 7% Q-o-Q. On a 9-month basis, the standalone total revenue was INR 2,317 crores, which declined by 1.4% Y-o-Y, mainly because of some delayed shipment, which couldn't happen in this quarter, while EBITDA was down by around 2% Y-o-Y to INR 226 crores with EBITDA margin stood at 9.8% same as corresponding period last year. The net profit for the period grew by 4.6% Y-o-Y to INR 97 crores. On a consolidated basis, total revenue for the same period was down by around 2% Y-o-Y INR 2,323 crores with EBITDA reporting at INR 270 crores, resulting in an EBITDA margin of 9.3%. The net profit grew by 5% Y-o-Y to INR 85 crores. Currently, we have a very strong order pipeline of INR 2,900 crores that must be executed within the next 6 to 12 months. Hence, we remain confident that we will meet our FY '25 full year revenue guideline of INR 3,300 crores. And for FY '26, with current visibility and also the new projects which we are planning to execute, we will have -- we can have achieved turnover of around INR 4,000 crores of top line. Our bid -- book pipeline is of INR 15,000 crores. On our new project, our Saudi and Jammu projects are progressing in full swing. Both projects are on track and likely to start production in the quarter 3 of next year, FY '26. Lastly, we have successfully completed the ERW plant assessment by [indiscernible] for API 5L and 70 grade and company has started exporting ERW pipes. With this, we can now open the floor for question-and-answer session.

[Operator Instructions] We take the first question from the line of Darshil Pandya from Finterest Capital.

Sir, just wanted to understand what will be the kind of debt levels for FY '26 and FY '27 since almost INR 815-odd crores, we are taking it from the debt. So I just want to understand that.

Yes. The current date, Mr. Darshil, the current debt is INR 135 crores -- is having the cash by way of FDR, our last year balance sheet also and the current position INR 230 crores. So we are a surplus. And to complete the project, whatever we are putting up over there, that is an independent company, which is borrowing and doing the work and the company is giving only the guarantee. So right now, there is no additional debt in the Man Industries. But in future, we will see what is -- what can be -- what it will be worked out.

So this debt you are saying that it is not on the books of Man Industries?

Right now, not only guarantee until unless they start the production.

Okay. Okay. But any ballpark number that what could be the debt levels if this once begins?

There will be debt burden will be the INR 400 crores for INR 390 crores for Jammu and INR 400 crores for Saudi.

INR 400 crores for Saudi.

Our will be the guarantee and they will borrow and there will be independent model of the business. But our consolidation, we will get the benefit of the consolidation of the revenue in coming years.

Okay. And sir, since almost we are deploying INR 1,100 crores of CapEx, what is the kind of asset that we're expecting on a full year basis for FY '27?

You are asking the revenue or what?

Yes. Since this new facilities will -- I'm expecting that, that will be live in FY '26 fully and from our existing business, what kind of revenues can we see?

Our projections, our guidelines and hopefully to achieve it, the next year, '25, '26, the main industry standalone would be around INR 4,000 crores. 25% growth we are anticipating. With regard to consolidation, there will be half of the year would be from Jammu and from Saudi. Yes, right now, we are estimating around INR 1,500 crores. And then full year '26, '27 would be our target is INR 6,000 crores plus.

Okay. Got it. For FY '26, you are saying INR 1,500 crores plus you expect from these 2 facilities coming in?

Once we start getting the revenue for the full year.

For the full year?

Yes.

The next question is from the line of [ Amar Maurya from Lucky Investments ]. Sir, your voice is breaking up.

Is it clear now? Better? Yes. So first question is what was your 9-month volume growth -- what was your 9-month volume growth?

Volume growth in the -- I have the figure, the amount only INR 2,300 crores 9 months.

No, I'm just saying that is the value. So normally, value may fluctuate based on the raw material prices and other things. So I mean I just want to understand what is the business volume growth we had seen at an overall level?

Okay. The volume is still we have not -- we are receiving the figures, but the volume is much higher than the last year.

Okay. Okay. What like it would be double digit or single digit?

You're talking about the growth.

I'm saying volume growth would be what, high double digit. You are saying volume growth would be better than the overall revenue growth which you had achieved in 9 months.

Volume for this 9-month period has been a little higher than the current last year number. However, because of the commodity steel prices going down, our total revenue in the rupee are reflecting a little lower number.

But volume is more.

But volume is more.

Okay. And secondly, when we are saying that Jammu plant is now going to start in third quarter, right? I mean, we were expecting that phase-wise, we will start from second quarter or first quarter onwards, right? So now we are saying that all of the plant or the Phase 1 of the plant is going to start from third quarter?

Not phase-wise because we were anticipating the phase-wise to start, but we are -- whatever we are saying, the full plant should start from October onwards.

From October onwards. And for this plant to start, like we got the whole land in Jammu now?

Now clear.

Yes. All land required for the project.

Now it's clear. Initial there was [indiscernible] problem, which resolved. Now the construction already started. Most of the equipment already are before the land and the critical equipment from Europe and Japan already here.

Okay. So all plant and machinery also ordered?

Yes, yes, long back. The delivery time is 1.5 years.

Delivery time is 1.5 years. And that you are expecting to reach everything by -- so let's say, October, you have to start the plant then all equipment should be there by March, April to your plant, right?

Many already arrived and some equipments will come in the month of May, June and then 3 months for reduction commissioning.

And how about the Saudi progress?

Saudi is going very well. The equipment we already purchased and the construction is going on and the 6 months, it will take to start the operation. The equipment already arrived over there.

There also, you are expecting October, November only kind of production to start.

Yes.

And in next year, let's say, the INR 4,000 crore guidance and then INR 6,000 crore guidance, whatever we are expecting in that INR 1,500 crores, we are expecting of this ERW and SS, right?

Not ERW. INR 4,000 crores, our main company standalone and other companies, subsidiaries company, we have revenue, we are anticipating INR 2,000 crores plus in the full year. That will be the '26-'27. So then it will be INR 4,000 plus INR 2,000, INR 6,000 plus whatever the growth possible through SSW pipeline, which we have to calculate.

So in this INR 2,000 crore number, what would be your Jammu number and what would be your Saudi number?

Jammu, we are anticipating the first 6 months, INR 500 crores. Next full year is INR 1,000 crores and Saudi would be INR 1,500 crores. So we are giving the conservative safe side INR 6,000 crores plus.

Okay. Got it. And in Jammu, the mix between this INR 1,000 crores, what would be the mix between SS and ERW?

No, no, no. Jammu is only Stainless Steel.

Because there was some small plant of ERW also likely to come in Jammu, right?

No, no, no, that we dropped because we put here in Anjar. ERW plant we had Anjar. There was a small -- it was supposed to come in at Jammu, which we have put here.

Okay. So now whole ERW is in Anjar and Jammu will just have assets?

You are right. You are right, right.

So any reduction in the CapEx because of this?

No, no, no. Same. Reduction, no, nothing.

So total CapEx for Jammu would be how much, sir?

Roughly INR 500 crores -- INR 450 crores total.

And for Saudi?

Saudi INR 700.

So INR 400 crores plus INR 700 crores, INR 1,300 crores, INR 1,400 crores kind of CapEx. So sir, how we are going to fund it?

We are tying up with the loans as we gave our guidance for the loan, I think somebody asked earlier that around INR 800 crores -- practically INR 790 crores will be funded from the loan, balance will be from the promoters' contribution, overall contribution.

Sorry, come again, what you're saying promoters contribution would be how much?

INR 790 crores will be from the loan, balance will be from our internal accruals and.

From internal accruals. Okay. And then I think we had also given some enabling resolution for raising further equity and all. What is that?

No, no. That we have taken the -- we will see in future, if needed, then we'll see.

The next question is from the line of Dhananjay Mishra from Sunidhi Securities.

So just one clarification on FY '26 guidance. So I mean, based on 9-month number, this year, we will be doing INR 3,200 crores kind of turnover. And next year, you are saying 25% growth on the standalone basis. So that will be INR 4,000 crores. And incrementally, you are saying this Jammu and Saudi plant will be contributing INR 1,500 crores in FY '26 itself or it will contribute in FY '27?

Okay. Your question for the current year, almost accurate, we have done the INR 2,300 crores and INR 1,000 crores we are aiming to achieve in the current quarter. So then our guidance was INR 3,200 crores, INR 3,300 crores, which is right. The next year, we are seeing 25% growth in our business, Indian business. And meantime, the production is going to start from Stainless pipe from quarter 3 as well as Saudi plant. So we are -- first 6 months, we are expecting INR 2,300 crores addition. And next year, we are anticipating INR 2,000 crores plus additional revenue apart from INR 4,000 crores and some growth next year, which will be -- which will be announced subsequent. Right now, whatever we have order on hand, that's why we have INR 4,000 crores is easily to reach.

So INR 4,000 crores is I'm getting that is understandable. So plant will start in Q3, both the plant. So in the first 6 months itself, you are giving guidance of INR 1,500 crores. So isn't it a little bit of aggressive guidance or next year, you're saying INR 2,000 crores only. So that is not -- I mean, this number is not matching.

I will repeat again. What we are saying current year, our guidance is INR 3,200 crores to INR 3,300 crores FY '26, we will generate INR 4,000 crores revenue from our existing facilities. And our new project will start producing from Q3 FY '26. We will get almost half quarter revenue or met the most 2 quarter revenue. But depending on the schedule, October, November when the product will start, depending on that, we'll get additional revenue in the second H2 of the next year, which will be around INR 1,500 crores. Total revenue, which we are expecting at a consolidated level for FY '26, INR 5,500 crores. And FY '23, we are talking about around INR 6,500 crores plus revenue when the full year of production from the new plant will start contributing to the revenue.

So guidance is -- overall guidance is INR 5,500 crores for FY '26 and close to INR 6,500 crores for FY '26.

You are right.

Okay. And now coming back to this debt position. So you said that we only -- we have INR 135 crores of debt as of now. But as per PPT, we have already invested close to INR 400 crores in these 2 projects. So where -- so I mean, we had cash of close to INR 400 crores. So that money has been invested in that project or it is still there?

We are investing every day and INR 380 crores, we already tied up. The financial arrangement already done and debt will be drawn once the equipments are coming, LC is already opened. There is a regular affair. INR 380 crores will be our subsidiary books as well as INR 400 crores will be in abroad funding.

Okay. As of now, we have given loan to subsidiary in close to INR 300 crores from our book.

We put our equity portion.

Okay. So -- and this entire thing will happen by September, all INR 1,150 crores CapEx.

The next question is from the line of [ Ayush Jalan ], an individual investor.

Could you please give some update on Merino Shelters?

Yes, Merino Shelters as we already taken the resolution, enabling resolution to sign the deal, etcetera, from shareholders. And now the deal is likely to sign next 10 days and we got some advance -- our solicitor and other money also is going to some amount in next 10 days as we execute the deal. And then accordingly, we will announce the nature of the deal and everything as per the regulation.

The next question is from the line of [ Varun Mehta from Welllink Investments ].

This quarter, we have seen improved EBITDA margins. So is it due to ERW plant or the product mix has changed or something has happened on that?

Mainly due to the product mix change. We have some order which has better profit margins, which is reflecting into our bottom line.

Because this is mostly the value-added products depend on project to project. So that's why EBITDA margin has improved. And I hope we're hoping the company, it will continue to improve considering the order book position.

So the current order book of INR 2,900 crores we have, so it's more of a value-added product or commoditized?

Mostly, mostly value-added product.

What would be the percentage on that, sir?

Percentage, anything between 10% to 14%, depending on which project, water works, or value-added gas pipeline, oil pipeline. But that's why company is trying to achieve 12% average data like we did this quarter, but the volume is going to increase. And that's why we are hopefully to get the better realization.

And going in FY '26, sir, as you said, from Jammu plant, we are expecting and from Saudi, we are expecting INR 1,500 crores of additional revenue. Like Jammu plant, we are expecting EBITDA margin to be range of 20% to 25%. So going ahead, I think -- yes, in FY '26, the margin should improve quite well for our company.

Yes, '26, '27 will be much better because once should we stabilized once we're stabilizing everything. That's why very conservative side, we are estimating same EBITDA, 12% as an overall average. And then '26, '27 will be a much, much better position. But let's wait and the new figure will come in future also.

The next question is from the line of Satyan Wadhwa from Profusion Investment Advisors.

Sir, could you give us volumes for December quarter and what were the volumes in September quarter?

What is your question? Can you repeat, please?

What was the sales volume in this current quarter, the Q3? And what was the sales volume in Q2 in tonnage terms?

I think I have told you that [indiscernible] our growth in the.

2,267 the current quarter and 2,302 was the corresponding. Volume is higher, we are getting the figures. And because of the steel prices softened compared to last year, although that's why the volume was much better.

Correct. That's what I'm trying to get to is what is the EBITDA per tonne this quarter versus last quarter -- because steel prices pass through anyway, right? So when steel prices go down, margins go up. So whether it's because of that in terms of percentage margin going up or actual margin per tonne has gone up.

Right now, we do not have the volume because we are getting the figures from the plant. But volume is definitely improving because of the value-wise, we are a little bit lower, but quantity-wise, we are higher.

Right, right. And if you could just add the volume figures in future quarterly presentations, I would all the other pipe companies kind of give us what the volumes were and break it down by type of pipe in terms of ERW and others. One more question for me. In terms of the Jammu plant, because it's SS seamless, right, which is new to you, how long do you think it will actually take to stabilize production and get the right sort of quality that is required? And how much help will you be getting from the machine supplier or anybody else to stabilize production?

Okay. Regarding your question, we are new, but actually, we are a metal man -- you know the metal business. Last 2 years we are working very closely with our equipment supplier, technology market, et cetera. So I don't think it will be difficult to achieve our target. Equipment, some equipment already arrived from Japan and some equipment from you are expecting in next 3, 4 months. That's why we are predicting from October onwards the production.

October onwards. Okay. So we should expect some -- definitely, the sales should come in the Jan to March quarter, right, even if October, December is still trial production and just getting everything sort of sorted out in terms of quality.

Can you repeat your question?

I said so actual saleable production will be in Q4, right, mostly Q4.

You're talking about ERW?

No, about stainless out of Jamal.

It will be coming in next year.

So from the Jan to March quarter next year, calendar '26.

So there will be -- you know the new plant then will be the regular business over there, and then it will pick up because we are doing the proactive actions we are taking to get as much as possible from the new plant. But market conditions are good. Order not a problem. And that's why we are confident to get some value-added product from very beginning, which we are working.

And what, if any, approvals, et cetera, do you require for the stainless steel plant, the Jammu plant?

Not necessary. What approval from government?

From any -- I mean, do you need any approvals from anybody to sell it or you just selling it in the market, the stainless steel pipes?

No, market, not approval required. Export, no approvals. Indian approval required. There are different, different things.

The next question is from the line of Darshil Pandya from Finterest Capital.

Just one question for you. With regards to the recent tariffs the U.S. President has put on, are we going to see some issues with us as well? Just want to confirm.

No, this U.S.A. new tariff, it is not going to impact our industry because our most of the market in the Middle East, we -- around 75%, we have business to Middle East export business and the balance in India. It is not going to make impact to us because U.S.A. we do not have any much presence. It represents maybe hardly 2%, 3%, 5% of our turnover. I don't think it is going to make big impact to us. But now the U.S.A. antidumping, not an increase of the duty, which is going to impact what kind, what degree, which we have to examine in coming time.

Okay. Maybe next quarter, we might be talking about this.

[Operator Instructions] The next question is from the line of [ Harsh Nilesh Vasa from SBI Securities ].

Sir, I have a couple of questions. Sir, the first question is that I missed on the CapEx part. So around INR 1,100 crores is the CapEx. So how much is spent and how much is yet to be incurred? So what is the bifurcation or entire is left to be spent on the CapEx part? That is the first question.

Roughly, we spent INR 150 crores our equity portion, we already put in the Jammu and the disbursement now we will take because our LC exposure already taken by more than INR 100 crores. So that's why now the account will be debiting over there. So out of INR 380 crores, I think so the money will go very fast after 2, 3 months once the shipment is done.

Okay. And sir, the loan thing like which you had mentioned that you are tied up with like around INR 790 crores. So what will be the average cost of funds? And has the loan started or it is yet to begin?

The loans has not been started. Both the loans are tied up, but we have not drawn anything till date. Drawing after I think when the LC due payment will be -- currently, all the investment is made from our internal resources, internal accruals, that portion we have been spending on the project.

And rate of the interest et cetera, you know so far in 200 basis points roughly.

The next question is from the line of Viraj Mahadevia from MoneyGrow India.

Our FY '25 target of INR 3,200 crores is almost spoken for with your INR 2,500 crore order book. Are you confident of this INR 5,000 crore number for '26 given that your bid book is?

Sorry to interrupt. We are not able to hear you.

I said are you confident of your FY '26 number given that your bid book today is about INR 1,500 crores or 10% of the bid book is what one can assume?

We have already confirmed order of INR 2,900 crores in hand -- the orders for the new projects. But our guidance is that INR 2,900 crores plus other order expected in next year, we'll be completing INR 4,000 crores from our existing capacities. So we are hopeful of achieving INR 5,500 crores guidance in FY '26.

Our order, we have to complete in 1 year, still the 14 months to go to complete the year. And that's why we are confident ultimately in business, we have to do the confidence in the projections also.

So I think you need to meet those numbers, you need to win INR 1,100 crores of orders in the next 2 months.

No problem. We already -- we have bid INR 15,000 crore bid is there, and we are very confident to get it.

[Operator Instructions] The next question is from the line of [ Yash Mehta from Art Ventures ].

Wanted to revenue guidance for FY '26 is INR 5,500 crores. What is the volume growth are we expecting in FY '26?

So volume growth because of the market is softened a few months in last 1 year. So the volume growth we are anticipating around 20%, 25% more.

This is for FY '26, right?

Yes, sir.

[Operator Instructions] The next question is from the line of Viraj Mahadevia from MoneyGrow India.

What will be the net-debt-to-EBITDA in FY '26 and '27 as you see it?

'26, '27, as we already communicated, there will be the borrowing in the subsidiaries company. And main industry is having only guarantee in partly in some cases.

But sir, at a consolidated level, you would still have to show it as a borrowing.

Around -- if you're talking about '27 after both the projects implemented, our -- will be around INR 950 crores. We are giving same around 12% -- 11% to 12% going forward, which we are maintaining now. We are hopeful to maintaining same EBITDA margin guidance in the next year.

Understood. So I'm just doing a quick math. So we're talking about 1.25 net-debt-to-EBITDA, INR 950 crores on about INR 780 crores.

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for their closing comments.

Thank you all the participants in this earnings con call. I hope we were able to answer your questions satisfactorily and at the same time, offer insight into our business plans. If you have any other further questions or would like to know more about the company, please reach out to our Investor Relations Manager at Valorem Advisors. Thank you very much.

Thank you, members of the management team. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.