Vibhor Steel Tubes Limited (VSTL) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 and 9 Months FY 2026 Earnings Conference Call for Vibhor Steel Tubes Limited. We have with us today Mr. Vibhor Kaushik, Managing Director of the company. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vibhor Kaushik, Managing Director of the Board, Vibhor Steel Tubes Limited, for his opening remarks and to share with the audience the company's performance in Q3 and 9 months FY '26. Thank you, and over to you, sir.

Hello, everyone. I am Vibhor Kaushik. Welcome everybody, all the old and all the new investors to this earnings call. This quarter 3 has shown a lot of promise as we were anticipating, and we talked about it in the last quarter meeting as well that the uptake and production growth and the turnover growth shall become visible with a lot more clarity in quarter 3 and then going ahead. So before we start, I'll give you an update on everything that is happening. I would like to highlight that compared to Q3 of last year, now we have a jump -- a clear jump of 21% year-on-year in our revenue, which stands at INR 301 crores and as opposed to INR 247.5 crores last year. So the Jharsuguda plant has started to show its potential. And it took a little while around about a couple of quarters for us to spread the awareness in that region that our plant is operational, and we have arrived in the market. And after that now everything is -- seems to be getting very streamlined, which we were anticipating as well. So the revenue has increased. And I'll primarily talk about the Odisha project today. Having said that, Bombay or Maharashtra plant and Telangana plant are consistent, year-on-year it is touching the installed capacity of 70% to 72%. So they are performing continuously at the same levels fuel level up, not a few level down. So because the Odisha is a new plant, so I will talk more on Odisha and its development and where we have reached, and what it appears to be in an incoming time for us. So the overall revenue year-on-year has seen 15% growth. It stands at INR 814 crores. Last year was INR 708 crores. For all the new investor, I will give a short background of Vibhor Steel Tubes. What we've been doing for the past 20 years and what we plan to do in the future. It will not take a lot of time, I'll only give a brief on it. So Vibhor Stell started off as a manufacturing unit in Maharashtra in 2003, 2004, with a very small unit, only one pipeline, one mill. Over the years from one tube mill, it became 2 to 3 with one galvanizing line, it became 2 galvanizing line and that started to increase production. The production increased subsequently every year. We were at 60,000 capacity then it became 90,000 capacity, and we're seeing a lot of growth. We started our export of pipes, ERW pipes in Egypt. Now we have our export presence in Europe quite a lot from Maharastra unit. This happened from 2003 to 2017, '18, when we established our Telangana unit, and that was also a pipe production unit both the units were by Maharashtra was from 0.5 inch to 8-inch or currently is also from 0.5 inch to 8 inch. Telangana, we had added a few divisions of 5 few diameters of pipe. That is from half-inch to 12 inch. From there, the company has always increased its turnover, it's production. First, Maharashtra, then Telangana. Telangana added to its production then we realized that there is potential to add more projects because India is our infrastructure, growing country and an infrastructure requires a lot of steel and different infrastructures, road requires highway guard rails, our electricity requires a lot of transmission lines. So keeping in all these in view, we kept on expanding into other divisions as well. So 2 years, 3 years ago in Telangana, we started besides 5, we started highway crash barrier or highway guardrails, which are used on the highway, and they play a significant role in the safety of the vehicle in case of any unseen event, it can -- it does prevent major accidents to occur because the steel acts as a barrier of if a car skids of the highway to the left or -- and if it ever has gone out of balance and it goes off track, these branch barriers keep them under control and keep them within the highway because of the steel, which is on both sides of the highways. Then we put up our plant Jharsuguda and we realized that the Northeast does not have our presence for pipe. We've been catering to West from Maharashtra, the state of Maharashtra, the state of Gujarat was catered from there. And then we put up a plant in Telangana. So we had South covered. The South, the state of Telangana, the state of Andhra Pradesh, the state of Tamil Nadu was covered from Telangana unit. So over the years, we realized that we need to install and have our presence in Northeast, which is a relatively good and even bigger market. So we identified Jharsuguda as one of the prime location for this vision. And in Jharsuguda, we also decided that besides pipe, we will go right from the beginning for other products as well. Therefore, at the same time, while we were installing pipe, we also installed highway guardrail. We also installed transmission line towers. We also installed a pole division which is used in lighting, stadium lighting, for polebooth lighting, street lighting and with all of it, our vision has always been to cater to products, which has healthier margins our baseline of pipe. So besides all of these divisions, we also have installed monopole, which is one of the best and one of the strongest machine in the country that we have installed in Vibhor Steel Jharsuguda and the installation of it just got completed around last month, that is capable of catering to a power transmission of 440, even 765 kilowatt. And it is a machine which is called press brake, which gives a plate or a sheet it folded into a form of a pole. And the diameter is we can go as large as even 765 kW. And I'm proud to announce that this is the biggest capacity, the biggest and the strongest machine installed in the country. And with all of this, I'd like to highlight our vision of highway crash barriers, we have touched over 1,000 tonnes in Jharsuguda already, which means that our installed capacity for highway guardrail has come to the maximum. And now we are in expansion mode. We are expanding, we're installing a couple of more lines. We are installing or galvanizing, new galvanizing unit, which is the galvanizing unit that we've installed has come to its maximum potential. So every step of Jharsuguda is very carefully watched. All the CapEx is very carefully deployed invested, seeing the market, gauging the market and taking the decision, not very soon, but also not very late, just when it is required, we're taking the decision of the expansion. So our product may that be pipe, may that be highway guardrail, may that be transmission line tower, the end result is galvanizing. So that galvanizing tank is the backbone of our factory, our company, may that be Maharashtra unit for galvanizing pipe, may that be Telengana unit for galvanizing of pipes and highway guardrail, may that be Jharsuguda for galvanizing of pipe, highway guardrail, transmission line towers, poles or monopole. At the end, most of our product, which is -- has a good EBITDA margin comes from our galvanizing tank. So I'm very happy to announce that our galvanizing capacity in Jharsuguda has already seen its maximum level. And I'm very happy to announce that we are now installing one more galvanizing line in Jharsuguda so that we can smoothly cater to all the new products that we have started. The new products, which recently been installed is the pole division, Octagon pole, high-mast pole, conical pole that's recently been established. We have a good order from EPC contractors and we are very connectively marketing this product, and we are very aggressively getting ourselves registered because this project -- this product needs to be certified and registered in every state department. So our files are submitted in most of the states. Either they are submitted or they are on the process of submission. So our hard work has started to pay off. As I've said, that the galvanizing tank is full, and we're putting another galvanizing tank. And I hope that the galvanizing tank for the third galvanizing in -- so we have one galvanizing in Jharsuguda so far. Second one we are installing. And I hope if the momentum continues, we shall very soon be installing one more galvanizing in Jharsuguda. I hope I've been able to narrate in a very short conversation, what Jharsuguda has achieved, where Vibhor Steel have come from the 20 years January, the growth that we've seen in quarter 3 and the same -- hopefully, the same growth we will continue to see in quarter 4 and years ahead. Having said and having explained what we have achieved in quarter 3 and so far as a company. I'm happy to take any questions or any comments of all the investors, new investors and all investors. So you're welcome to have any of the questions or comments.

[Operator Instructions] The first question is from the line of Disha, an individual Investor. Please go ahead.

Hi. Good afternoon. I want to understand that what is the plan for metal crash barrier product for the near future? And what are the margins in that segment? And how much positive impact can it provide to revenue and EBITDA?

Thank you for asking this question. We started metal crash barrier very recently compared to our pipe production, which has been happening for 20 years. We started with one galvanizing tank in Hyderabad, which was common between pipe and crash barrier or metal garden, second name. We realized that one carbonizing tank is not enough. We installed a separate dedicated to metal crash barrier, which received its full capacity and as soon as it started. Similarly, same thing happened in Jharsuguda as well. We installed one big tank of 13-meter which is 1 of its own kind galvanizing tank, I'm not sure in the country that, that type of galvanizing tank is available anywhere where you have, at the same time of production of and metal crash barriers from the same tank at the same time, and that has also come to a maximum level. Our installed capacity was around about 1,000 tonne in Hyderabad, about 1,000 tonnes in Jharsuguda. We have ordered one extra machine for Hyderabad and one extra machine for Jharsuguda because we have captured so much of the market that, unfortunately, some of the orders we have to outrightly regret because our capacity is full. At the moment, we have the orders, inquiries of more than 2,000 tonnes of what we can cater. So the machines that we have ordered are due to arrive. It will take 2 months. The new galvanizing tank in Jharsuguda will take 2 months. And while I'm happy that this question was put and I also would like to highlight that we are also considering putting another galvanizing tank in Hyderabad unit only for metal crash barrier. So the metal crash barrier at the moment has a lot of potential, and we see this potential for years to come because as we all know, the roads and transportation has gets a lot from the budget. It's a requirement of our nation that we make a lot of roads. Everywhere there's a road, we would have a crash barrier. And besides the roads, now we see the railways also stepping into this band wagon because they require crash barriers as well and we are installing -- we are catering to railways and we catering to the highways as well. So we see a lot of potential in this product, which is in 2 years, every machine that we've installed are almost running at full capacity and there are always increasing our production by increasing our installed capacity, made that be through making of it by installing the machine or by bumping up our galvanizing zinc cattle so that we can carbonize and give more production. So there is a lot of potential. And we are very streamlined to cater to the requirement of the nation.

Okay. So is there any new upcoming project or the new client with whom you will do in future apart from Jindal?

Jindal is-- we are associated with Jindal, it's a long-time agreement for the past 20 years for pipe. The product pipe is extensively for genders, although we do also do export in Maharashtra. At the moment, it is about 80% of our revenue that comes from Jindal and we are -- we are catering to Jindal as a brand in West for 20 years, 7 years now in Telangana and now in Jharsuguda. So that revenue stream shall continue to will continue for years because we are catering them for all of these states. So that partnership shall continue. But besides that, all the other products that we are doing they will increase their share. So the revenue bifurcation in the future will have more of these products as taking up in terms of percentage.

Okay. So is there any plan to do government projects or tie-up with the government?

Directly or indirectly, most of the products that we are doing is a government project, metal crash barrier is totally and completely taken out mostly by the government. Transmission line towers are taken up by State Electricity Board. So through -- we have already catered to a few electricity boards, [indiscernible] very recently, we are in conversation with other state. Hopefully, we'll get orders from other states as well. So most of our products, even the octagon pole and high masts, they're all taken up by government or by private large companies which have these requirements, especially in the area where we are in Jharsuguda, for example, NTPC have requirement of poles, of lightings, all the mining divisions, the strong mining companies have requirements of poles and lightning poles and high mast pole and stadium pole. So largely, the requirement is by the government or very, very large players who have acres of land to control where they want their lightings to be proper, where they want their communication to be proper, where they want to see surveillance to be proper. So all the new products are catering to government and to large payers.

Next question is from the line of [ Aditi Shah, ] an Individual Investor.

So my question is on CapEx. So any plan for FY '26 and FY '27?

When we do CapEx, generally, we try to gauge in which direction we are going and what is the call of the market. That's why even in Jharsuguda, we have taken our time to go ahead with the second governors in. So we are going to incur in '26, around about INR 10 crores in extra CapEx by buying all the machineries for crash barriers and buying the extra galvanizing tanks. And the year ahead, we will gauge it, but give or take, it shall be somewhere. It's difficult to say about the future but to the tunes of INR 5 crores or so next year and onwards. So the CapEx shall be there, but I am very, very vigilant in the CapEx. This is something I take a call after judging after measuring every angle and every aspect of the product and its requirement. So CapEx will only occur when it is gauged to be the utmost important and necessary step. That's when we get into the CapEx and install new machineries. So around about INR 10, you can say, for '26, we will be having.

The next question is from of [indiscernible] Shanda, an Individual Investor.

Okay. So my question is by when do you expect the expanded capacity at the [indiscernible] unit to reach utilization?

We are expecting it to reach 30%, 40% of the utilized -- we see going forward, it's difficult to be very precise. But so far, what we have seen is, for example, in the month of December, because we're talking about quarter 3, we had reached 21% of our installed capacity. So it is very, very on the safer side to say that we shall be able to complete 30% to 40% in the next year and then 60% subsequently in the year after. If the momentum continues to be like this, and there are all the signs and all the signals, the requirement is there, the order bookings are there, so we shall be able to reach capacity utilization up to 60% in 2 years. That is how I'm looking at it at the moment.

Next question is from the line of Rahul Kumar, an Individual Investor.

Hello, everyone. I wonder what is the expected revenue share from the new products such as monopoles, transmission lines or et cetera, in the next 12 months?

I think it is very important to understand that the in terms of inventory or in terms of order booking, or in terms of sale in kgs or tonnage, crash wearer is increasing, pole is also increasing. Transmission line tower is also increasing. But at the same time, pipe is also increasing. So if we are to stay where are in pipe production, and look at crash barrier as everybody else, the percentage will look very big. But because pipe production and the pipe sale is also increasing because of our presence in Northeast. We will be somewhere at the moment, we can easily say that it will be 20% we will have from all the other products, crash barrier monopoles and transmission line towers and also pole. But the revenue is one thing. The EBITDA margins in all of it is fairly improved if a 3.8% or 3.5% EBITDA margins in pipe, it will be 4.5% in crash barrier, over 5% in transmission line and monopole could be as much as 10%. So it will have a significant impact on the EBITDA levels. And about the -- we will see what -- how the production will increase, and we will take further call on which product to emphasize on more or shall we take all of it together. So that decision, we will be able to take and once all of them start to show their potential. We successfully only really washed and tried and saw the result of highway crash barriers so far. Transmission line and pole is very, very recent in our division. Although they are showing a lot of potential, but it has a lot of challenges in terms of certification. So we have accelerated in a very big manner in quarter 3 in terms of getting ourselves registered everywhere. Once all of this happens, I think that is why I've already indicated that very soon, we will be putting galvanizing #3 as well because we are seeing all these products to show a lot and lot of potential in terms of its sale. So coming back to your question, these very easily will be 20%. And then from there, it will increase its share. So this year itself, once all the certification and everything happens, it will be very visible that this percentage of these products are showing the significant presence in terms of the revenue share with the pipes.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Vibhor Kaushik, Managing Director from Vibhor Steel Tubes Limited for closing comments.

Thank you, everyone, to be present in this conference. I hope I've been able to answer every question to the satisfactory level. Before we close, I once again want to highlight that the reason why at the time of IPO, we had mentioned that we are coming up with this unit and we had given a time line that we shall be able to start and our production, and we shall be able to cater to so many different divisions. I would like to highlight that we have kept up with that promise. And all these divisions are now running. Some have taken a very large leap of acceleration in terms of its production and sales. Some of them are showing a lot of potential and they shall be catching up the new products such as transmission and towers, the Octagon pole, they will be catching up, hopefully, sooner than what we anticipate as we have seen with other products. And as I've highlighted that our galvanizing tankers is already full. That is a clear signal that the products are -- have a lot of demand and is reaching its potential, and it is urging us to increase our installed capacities of galvanizing tanks and our installed capacities of machineries as well. So thank you very much for being a part of Vibhor Steel Tube's growth and we are very confident that Odisha plant. It's already showing a lot of potential, and it shall be reaching to a very, very high standard in a very short period of time. And once again, thank you, everyone, to be part of this conference. Thank you very much.

Ladies and gentlemen, on behalf of Vibhor Steel Tubes that concludes today's session. Thank you for your participation. You may now disconnect. Thank you.