Any current/future capex/capital investment/strategic investment?

Ongoing Capex of approximately INR 700 crores is progressing as per schedule; INR 410 crores spent till Q1 FY25. (Page 3) Target to enhance overall DI pipe manufacturing capacity to 1 million ton by the year 2026. (Page 3) Capacity augmentation by end of FY25: 5.5 lakh tons for South unit and 3.5 lakh tons for Eastern unit, totaling 9.0 lakh tons. (Page 3) Additional 75,000 tons capacity expected from Srikalahasthi plant for FY25, with most of it planned to be sold within the year. (Page 5) Plans to acquire land in Odisha for upcoming Greenfield DI pipe and fitting project; scale is in final s

Future growth expectations in sales/revenue/volumes?

Electrosteel Castings targets DI pipe sales volume of around 8.5 lakh tons for FY25. Expansion plans include increasing DI pipe manufacturing capacity to 1 million tons by FY26. Additional 75,000 tons capacity is expected from the Srikalahasthi plant in FY25, with most of it planned to be sold. Fittings capacity is being expanded with a planned installed capacity of 24,000 tons, aiming to increase fittings contribution to 5-10% in 2 years. The company sees robust domestic demand driven by water infrastructure projects such as Jal Jeevan Mission and Amrut 2.0. Export volume is expecte

Future growth expectations in earnings/operating earnings/profits/EPS?

Company optimistic about sustaining EBITDA per ton around INR 15,000 in the foreseeable future; recent quarters have seen upward of INR 18,000, but INR 15,000 considered sustainable. EBITDA surged 102% YoY to INR 378 crores in Q1 FY25, with PAT growing 202% YoY to INR 226 crores, indicating strong profitability momentum. Capacity expansion progressing as planned; target to reach 1 million tons capacity by FY26 to capture growing demand and economies of scale. Domestic demand driving growth, supported by government schemes like Jal Jeevan Mission and AMRUT 2.0; company expects robust volu

Current/ Expected Orderbook/ Pending Orders?

Current order book stands at approximately 11 months. Around 15% of the order book is from exports, with the remaining 85% from domestic markets. The company has robust demand across various states including Andhra Pradesh, Odisha, Madhya Pradesh, Rajasthan, and UP. Exports constitute around 12-20% of sales, with plans to maintain approximately 20% export contribution. The company expects to sell around 8.5 lakh tons of DI pipes in the current financial year. Orders primarily come through EPC contractors, with about 85% backed by letters of credit, bank guarantees, or advance payments. Capacit

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Electrosteel Castings LtdQ2 FY24Industrial Products

Electrosteel Castings Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹79.8P/E: 14.4Market Cap: ₹5.1K CrSector: Industrial Products

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Order

N/A

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Electrosteel Castings targets DI pipe sales volume of around 8.5 lakh tons for FY25.
→Expansion plans include increasing DI pipe manufacturing capacity to 1 million tons by FY26.
→Additional 75,000 tons capacity is expected from the Srikalahasthi plant in FY25, with most of it planned to be sold.
→Fittings capacity is being expanded with a planned installed capacity of 24,000 tons, aiming to increase fittings contribution to 5-10% in 2 years.
→The company sees robust domestic demand driven by water infrastructure projects such as Jal Jeevan Mission and Amrut 2.0.
→Export volume is expected to stabilize around 20%, recovering from a temporary dip to 12% in Q1.
→Growth is anticipated across multiple regions with demand picking up in Andhra Pradesh, Odisha, Madhya Pradesh, Rajasthan, and UP.
→The company aims for steady revenue growth supported by capacity expansion and strong market demand.

Margin guidance

Category 3

→Company optimistic about sustaining EBITDA per ton around INR 15,000 in the foreseeable future; recent quarters have seen upward of INR 18,000, but INR 15,000 considered sustainable.
→EBITDA surged 102% YoY to INR 378 crores in Q1 FY25, with PAT growing 202% YoY to INR 226 crores, indicating strong profitability momentum.
→Capacity expansion progressing as planned; target to reach 1 million tons capacity by FY26 to capture growing demand and economies of scale.
→Domestic demand driving growth, supported by government schemes like Jal Jeevan Mission and AMRUT 2.0; company expects robust volume growth (~8.5 lakh tons in FY25).
→Operational excellence and scale benefits are core drivers for continued margin and profit expansion.
→Management maintains prudent debt levels (net debt around INR 1,500 crores) ensuring financial strength to support growth.
→Export contribution expected to normalize around 20%, broadening revenue sources.
→Overall, consistent earnings and profit growth expected, supported by capacity expansion, operational efficiency, and favorable demand-supply gap.

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Fundraise plans

- Currently, Electrosteel Castings has not indicated any plans for new fund raising through equity (such as QIP). - In response to a query about why they are not taking QIP like other companies, Madhav Kejriwal stated they see a sustainable level of debt and their working capital debt is well managed, so they do not feel the need for QIP at this time. - The company has repaid INR 30 crores of debt in Q1 FY25, with net debt approximately INR 1,500 crores as of June 2024. - Ongoing Capex of about INR 700 crores is progressing as scheduled, with no mention of new fundraising for this. In summary, as of the latest earnings call, Electrosteel Castings is not pursuing new debt or equity fundraising and considers their current debt sustainable.

Order book

→Current order book stands at approximately 11 months.
→Around 15% of the order book is from exports, with the remaining 85% from domestic markets.
→The company has robust demand across various states including Andhra Pradesh, Odisha, Madhya Pradesh, Rajasthan, and UP.
→Exports constitute around 12-20% of sales, with plans to maintain approximately 20% export contribution.
→The company expects to sell around 8.5 lakh tons of DI pipes in the current financial year.
→Orders primarily come through EPC contractors, with about 85% backed by letters of credit, bank guarantees, or advance payments.
→Capacity expansion is ongoing with a target to enhance overall DI pipe manufacturing capacity to 1 million tons by 2026, supporting order fulfillment.
→Management expects stable demand with 11 months' order book providing good visibility on near-term sales.

Capex plans

Yes

→Ongoing Capex of approximately INR 700 crores is progressing as per schedule; INR 410 crores spent till Q1 FY25. (Page 3)
→Target to enhance overall DI pipe manufacturing capacity to 1 million ton by the year 2026. (Page 3)
→Capacity augmentation by end of FY25: 5.5 lakh tons for South unit and 3.5 lakh tons for Eastern unit, totaling 9.0 lakh tons. (Page 3)
→Additional 75,000 tons capacity expected from Srikalahasthi plant for FY25, with most of it planned to be sold within the year. (Page 5)
→Plans to acquire land in Odisha for upcoming Greenfield DI pipe and fitting project; scale is in final stages. (Page 2, 5)
→Exploring expansion in Southeast Asian markets via acquisition in Singapore to serve as a hub for Vietnam, Thailand, etc., capitalizing on competitiveness against China. (Page 11)

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