Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hi-Tech Pipes Ltd (NSE:HITECH, Financial) reported a 22.5% increase in total sales volume, reaching 1.23 lakh tons in Q2 FY25, driven by rising demand for tubes and value-added solutions.
- The company achieved a 72% increase in profit after tax, reaching INR 18 crores, and a 57.6% rise in EBITDA to INR 42.2 crores, highlighting strong profitability despite revenue challenges.
- Hi-Tech Pipes Ltd (NSE:HITECH) successfully reduced its net working capital days from 63 to 60 and improved its debt-equity ratio from 0.7x to 0.49x, indicating better financial management.
- The company completed a successful Qualified Institutional Placement (QIP) raising INR 500 crores, showcasing strong investor confidence and providing capital for strategic initiatives.
- Hi-Tech Pipes Ltd (NSE:HITECH) is on track to double its manufacturing capacity from 1 million tons to 2 million tons, aiming to become the second-largest manufacturer of W steel tubes and pipes.
Negative Points
- Despite strong sales volume growth, Hi-Tech Pipes Ltd (NSE:HITECH) experienced a 5.3% decline in revenue from operations due to lower steel prices.
- The company faced inventory losses of INR 600 to 700 per ton, impacting overall profitability.
- There was an increase in inventory levels due to expanded capacities, which could pose a risk if demand does not meet expectations.
- Hi-Tech Pipes Ltd (NSE:HITECH) is still working on finalizing its branding and marketing budget, which could delay efforts to strengthen its brand presence.
- The company is exposed to market volatility, particularly in steel prices, which could affect future profitability if not managed effectively.
Q & A Highlights
Q: The inventory level has increased in the first half compared to FY24. Is this due to stocking up on lower steel prices?
A: The inventory increase aligns with our expanded capacities, particularly with the new facility in Gujarat. The rise in inventory is proportional to the incremental sales volume, which is less than the overall volume increase. - Anish Bansal, Whole-Time Director
Q: What is the current sales mix from dealers and OEMs, and how many manufacturing lines do you have?
A: Currently, 62-63% of sales come from our trade and distribution network, with the remaining 37-38% from OEMs and large corporates. We have six manufacturing facilities, with a new Greenfield unit in the pipeline, bringing the total to seven by the end of the financial year. - Anish Bansal, Whole-Time Director
Q: Despite inventory losses, have you seen an improvement in EBITDA per ton? What factors contributed to this?
A: We mitigated inventory losses by securing fixed-price orders from the energy sector and avoiding additional discounts to dealers. We also limited imports, reducing exposure to steel price reductions. - Anish Bansal, Whole-Time Director
Q: What is your volume guidance for FY25, given the strong first-half performance?
A: We have achieved approximately 2.5 lakh tons in the first half and maintain our guidance of 500,000 tons for the financial year. With new capacities coming online, we expect a significant increase in FY26. - Anish Bansal, Whole-Time Director
Q: Can you explain the acquisition of Hi-Tech Global Private Limited? Was there any premium paid?
A: We acquired Hi-Tech Global Private Limited as a 100% subsidiary to manage new projects and plants. There was no premium paid; it was based on the paid-up share capital. - Anish Bansal, Whole-Time Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
