Surya Roshni Limited (SURYAROSNI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Surya Roshni Limited Q2 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. Please go ahead.

Thank you very much. Good evening, everyone. On behalf of Surya Roshni Limited, I extend a very warm welcome to everyone for joining us today. On this call, we are joined by my colleague, Mr. Vinay Surya, MD, Surya Roshni Limited; and Mr. B.B. Singal, CFO and Company Secretary; Mr. Gaurav Jain, CEO of Steel Operations; Mr. Vasumitra Pandey, CEO for Lighting & Consumer Durables segment. Also Mr. Naresh Singhal, who is our Executive Director for Steel Operations; and SGA, our Investor Relations Advisor. Moving on to the overall financial performance of the company. In the Q2 FY '26, our consolidated revenue grew 21% year-on-year to INR 1,845 crores, while EBITDA rose to 69% to INR 141 crores, with margin improving to 7.6%. PAT is more than doubled, rising 117% year-on-year to INR 74 crores, driven mainly by better realization, product mix and operating leverage. Our Steel Pipe and Strip business reported about 24% revenue growth year-on-year. led by strong export and higher share of value-added products. Exports business were up by 45%, helping us achieving the highest ever Q2 volume in the company history. EBITDA more than doubled to INR 102 crores and profitability per ton improved by 73% year-on-year to about INR 5,013 per ton. The Lighting & Consumer Durable business continued to deliver steady growth with revenue up by 10% year-on-year to about INR 434 crores, supported by festive demand and double-digit volume growth in LED lamps, baton and street light segments. Margin expanded to about 9% from 7.7% in Q1, reflecting better mix efficiency gain and cost control. We are 0 debt company with a net cash surplus of INR 250 crores as of September 30, '25. And the Board of Directors has also declared an interim dividend of INR 2.5 per share, reflecting our continued commitment to shareholder value creation. Now coming to Lighting & Consumer Durable in Q1 FY '26. Our Lighting & Consumer Durable segment delivered a healthy performance, growing 10% year-on-year, supported by improved festive season demand and healthy contribution for both Lighting & Durable segment. EBITDA margin expanded sharply to 9% from 7.7% in this quarter, reflecting better operating leverage, a superior product mix and disciplined cost management despite continued pricing pressure in few LED category. The professional lighting business also maintained its strong momentum, growing by 25% in Q2 FY '26, mainly driven by healthy demand across solar, facade, industrial and outdoor lighting segments. The order book remained robust at over INR 150 crores for lighting, providing good visibility for the coming quarter as well. We remain confident to achieving our full year guidance for the Lighting & Consumer Durable business to a top line in the range of about INR 1,900 crores and EBITDA of about INR 180 crores. Looking ahead, our focus will remain on driving innovation, expanding our product portfolio and deepening our distribution and exploring new avenues of growth in adjacent areas such as renewable energy. Now moving on to the Steel Pipe and Strip segment. In Q2 FY '26, our Steel Pipe and Strip segment delivered a strong performance marked by a healthy rebound in volume and a significant improvement in profitability despite overall challenging operating environment. Revenue for the quarter grew by 24% year-on-year to INR 1,411 crores, mainly driven by a 26% increase in overall volume and a richer product mix. EBITDA for the quarter more than doubled year-on-year to about INR 102 crores with margin expanding sharply on the back of the better realization, disciplined pricing and improved operating leverage. On a per ton basis, EBITDA stood at INR 5,013, representing a 73% year-on-year increase and a 72% improvement. Despite some pressure from falling steel price in July, our inventory was efficiently managed and notional inventory loss of about INR 500 per ton was largely offset through higher operating efficiency and realization. We achieved the highest ever second quarter volume in the company history of Steel segment. From an operational standpoint, capacity utilization stood at about 80% during the quarter. Our export performance was particularly strong, recorded a 45% growth in volume and 29% increase in value terms year-on-year basis. Within product categories, API pipes grew by nearly 86% year-on-year, supported by robust demand from mainly private oil and gas player, while Cold Rolling and Strip segment continued to perform well following the commissioning of new Bahadurgarh. However, demand from GI Pipe was largely catered to the agriculture segment was impacted by the extended monsoon and delay in government fund releases, particularly to state agencies, which slowed rural and infrastructure project execution. We also maintained a healthy book of around INR 750 crores comprising order from oil and gas segment, water and export segment as well, providing strong visibility for the second half of the year. With a solid order book, operational efficiency and new capacity coming on stream, we are well positioned to sustain performance improve in coming months as well. Accordingly, we have prudently recalibrated our full year volume guidance to around 10 lakh ton, reflecting a balanced outlook grounded in realistic near-term demand. Trends and the visibility of strong execution in the second half. Now, I would like to request our CFO, Mr. B.B. Singal, to share his thoughts on some financial numbers. Thank you.

Thank you, respected MD, sir, and a very good afternoon to all the participants on the call. For the quarter, the revenue was INR 1,845 crores as compared to INR 1,529 crores, a growth of 21% year-on-year basis. EBITDA and PAT stood at INR 141 crores and INR 74 crores as compared to INR 83 crores and INR 34 crores, a growth of 69% and 117% year-on-year basis, respectively. For first half FY '26, the revenue was INR 3,450 crores as compared to INR 3,422 crores, EBITDA and PAT stood at INR 23 crores and INR 108 crores as compared to INR 242 crores and INR 127 crores, respectively. In Lighting & Consumer Durables for the quarter, the revenue stood at INR 434 crores as against INR 395 crores, a growth of 10% Y-o-Y basis. EBITDA and PBT stood at INR 39 crores and INR 29 crores, a growth of 10% and 11% Y-o-Y basis, respectively. For H1 FY '26, the revenue stood at INR 832 crores as against INR 781 crores, a growth of 7% Y-o-Y basis. EBITDA and PBT stood at INR 70 crores and INR INR 51 crores as compared to INR 70 crores and INR 52 crores, respectively. In the Steel Pipes and Strips, during Q2 FY '26, the revenue was INR 1,411 crore as compared to INR 1,135 crore, a growth of 24% by Y-on-Y basis. Similarly, EBITDA per metric ton stood at INR 5,013 compared to INR 2,901, a growth of 73% Y-on-Y basis. EBITDA and PBT stood at INR 102 crore and INR 70 crore as against INR 48 crore and INR 20 crore, a growth of 113% and 258% by Y-on-Y basis, respectively. For H1 FY '26, the revenue was INR 2,618 crore as compared to INR 2,643 crore. Similarly, EBITDA per metric ton stood at INR 4,037 compared to INR 4,653. EBITDA and PBT stood at INR 154 crore and INR 95 crore as against INR 172 crore and INR 117 crore, respectively. Improved capacity utilization, working capital optimization, and cost rationalization enabled us to become a zero-debt company and have a cash surplus fund of INR 246 crore in H1 FY '26. In Q2 FY '26, our net working capital cycle was 63 days, with an ROCE of 16.46% and a return on equity, ROE of 11.90%. With this, I conclude the presentation, and we can now open the floor for further questions and answers. Thank you.

[Operator Instructions] The first question is from the line of Raj Mehta from Enigma Investment Partners LLP.

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[Operator Instructions]

Yes, ma'am. Just last one. One question -- this is my last question. [ Foreign Language ]

I'll stop again, sir, but please join the queue. [Operator Instructions] The next question is from the line of Rachna from SiMPL.

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[ Foreign Language ] This is my second question, please let me speak. This is my second. Hello?

Yes, yes, go ahead.

[ Foreign Language ] In Lighting & Consumer durable, we have ecosystem already in place to capture fast growing markets and categories. [ Foreign Language ]

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The next question is from the line of Andrey Purushottam from Cogito Advisors.

Yes, I think you give guidance for your Lighting division in terms of revenue and EBITDA. Could you give the same for the Steel business as well, and so and therefore the total for this year?

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You have mentioned very rightly. [ Foreign Language ]

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