Surya Roshni Limited (SURYAROSNI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Surya Roshni Limited Q1 FY '26 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Raju Bista, Managing Director of Surya Roshni Limited. Thank you, and over to you, sir.

Thank you very much. Am I audible?

Yes, sir.

Thank you very much, and good evening, everyone. On behalf of Surya Roshni Limited, once again, I extend a very warm welcome to everyone for joining us today in the call. On this call, we are joined by Mr. B.B. Singal, CFO and Company Secretary; Mr. Gaurav Jain, who is newly appointed as a CEO of Steel Business; Mr. Vasumitra Pandey, newly-appointed CEO for Lighting & Consumer Durables; Mr. Naresh Singhal, Executive Director, Steel Division; and SGA our Investor Relations advisor. I hope everyone had an opportunity to go through the financial results of today. Moving on to the overall financial performance highlights. We are pleased to share the consolidated performance of Surya Roshni Limited for the first quarter of FY financial year '26. In Q1 FY '26, our consolidated revenues stood at INR 1,605 crores, down 15% year-on-year, while EBITDA came in at INR 83 crores, representing a 48% decline over last year for the same quarter. Our EBITDA margin was at 5.14% compared to 8.37% in Q1 FY '25, reflecting the impact of softer commodity prices, muted execution of certain government projects and seasonal demand factors linked to the early onset of monsoon. In Steel Division, company has implemented the SAP HANA software with effect from 1 of April 2025. However, there were initial disruptions in SAP implementation, integration process and other teaching troubles in April and a few days in May also, which resulted the sale loss to the tune of 25,000 to 30,000 metric tons in Q1 FY '26, which approximately value about INR 180 crores to INR 200 crores. The Steel Pipe and Steel segments saw headwinds from delayed fund disbursion in domestic project market and raw material price volatility. But export volumes has -- grew by 23% year-on-year, led by strong demand from the Middle East sector. The Lighting & Consumer Durables business delivered a modest revenue increase supported by healthy double-digit volume growth in LED lamps, batten and water heater for the category, despite pricing pressures in certain categories. While our top line and margins were under pressure this quarter, our diversified business mix, operational disciplines and healthy order book provide a solid foundation for recovery in the coming quarters. We have continued to invest in strategic initiatives, including capacity expansion, product innovation and brand building. Now we are a 0 debt company with a net cash surplus of INR 331 crores as of June 30, 2025. Coming to Lighting & Consumer Durables. In Q1 FY '26, our Lighting & Consumer Durables segment posted revenue of INR 397 crores, up by 3% year-on-year basis, driven by strong volume growth, despite industry headwinds. EBITDA stood at INR 31 crores versus INR 35 crores last year, with margin at 7.8%, compared to 9%, a slight decline due to price erosion in consumer lighting, early monsoon, LED demand volatility and moderated government procurement in professional lighting products. Margins are expected to recover, supported by festival demands, premium product offering and upcoming launches. In Professional Lighting, we maintain an order book of about INR 100 crores. Our pipeline of 2, 3 new categories and a diversified product portfolio should help meet FY '26 target, despite slower government spending. Our INR 25 crore house domestic wire cable facility in Gwalior plant will launch on the 18 of August this month, targeting about INR 150 crores in the first year and scaling to about INR 500 crores in the next 2 to 3 years period. For FY '26, we maintain a Lighting Division, our double-digit growth guidance with capacity expansion, new product and alignment with the government initiatives. So we are well positioned to grow both domestically and internationally even in lighting also, focusing on premium product category of personnel efficiencies and strong channel engagement. On to the Steel Pipe and Steel Division, in the Q1 FY '26, our Steel Pipe & Strips segment operated in a challenging environment marked by subdued domestic demand, raw material pricing volatility and the early onset of monsoon. While revenue stood at INR 1,207 crores, down 20% year-on-year, while EBITDA declined to INR 52 crores from INR 24 (sic) [ 124 ] crores. EBITDA per ton was INR 2,922 per ton, lower by 52% year-on-year basis, mainly due to lower high-margin product contribution, inventory losses from steel by segment and muted project demand. Overall, volume fell 13% year-on-year, with domestic products segments volume down nearly about 30% due to slower government project execution, funding constraints, and softer API and Spiral Pipe demand. The monsoon disruption causing buying in trade and actually the segments amid the expectations of further steel price softening also weighed on demand. In contrast, export rose by about 23% year-on-year despite geopolitical challenges driven by strong Middle East shipment, including Hollow Section Pipe aligned with our overseas growth strategy. We closed the quarter with a healthy INR 750 crore to INR 800 crore order book across oil and gas and water, even in export also, including large dia-coated pipe water for water infrastructure. Execution of pending orders is expected between July to September, adding Q2 and Q3 recovery. Operationally, our cold rolling mill was commissioned in June this year. Although its contribution to Q1 FY '26 was minimal to about 6,000 tons during the month, but we'll expand our product range and margin and as volumes ramp up. Capacity utilization for overall Steel segment was 68% in Q1 and should improve in the coming quarters. Our expansion program is on track. The 60,000 capacity of DFT Forming Technology mill at Anjar Bhuj will commission by March/April '26. I am pleased to announce that we have appointed Mr. Surya Kumar Yadav, T20 captain of Indian cricket team, as a brand ambassador, a strong name synergized with -- that align with our brand-building push. We'll continue to invest in publicity and marketing to strengthen our domestic and export presence. Looking ahead, we expect steel prices to remain broadly stable or see a slight uptick with no major downside. GI orders should improve from quarter 2 as government projects pick up. With a strong order book, growing export capacity enhancement and brand investment, we are confident that our performance will improve in -- from quarter 2 onwards. This was from my side. Now I will request our CFO, Mr. B.B. Singal, to share his thoughts on the results.

Thank you, respected MD sir and a very good evening to all the participants on the call. For the quarter, the revenue was INR 1,605 crores, as compared to INR 1,893 crores. EBITDA and PAT stood at INR 83 crores and INR 34 crores, as compared to INR 159 crores and INR 92 crores, respectively. In Lighting & Consumer Durables, for the quarter the revenue stood at INR 397 crores as against INR 385 crores, a growth of 3% year-on-year basis. EBITDA and PBT stood at INR 31 crores and INR 21 crores, respectively. In the Steel Pipes & Strips, during Q1 FY '26, the revenue was 1,207 crores as compared to INR 1,509 crores. Similarly, EBITDA per metric ton stood at INR 2,922 compared to INR 6,065. EBITDA and PBT stood at INR 52 crores and INR 24 crores. Improved capacity utilization, working capital optimization and cost rationalization enabled us to become a 0 debt company and having cash surplus fund of INR 331 crores as of 30 June '25. With this, I conclude the presentation, and we can now open the floor for further questions and answers.

[Operator Instructions] The first question is from the line of Mr. Viraj from Enigma Investment.

Sir, my first question is, in your May 15 -- May 14 presentation, you had mentioned that we will grow by more than 20% in the full year. You had also mentioned that our EBITDA looks to be around 5,500. And this is when half the quarter was gone of last quarter. And we did not talk about any disruption from SAP implementation or lower sales coming due to government tightening the budgets. It's just really contradictory when half the quarter is gone and the tone is very different from what the results you have reported. Can you just elaborate how did things change so dramatically, or we just missed completely the slowdown?

[Foreign Language] Substantial growth in terms of volume or in terms of EBITDA. [Foreign Language]

[Foreign Language]

[Foreign Language]

Sir, second question. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

Sir, last question. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

Next question is from the line of Mr. Jatin from Swan Investments.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]