Surya Roshni (NSE:SURYAROSNI) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Surya Roshni Limited Q2 H1 FY 'twenty seven 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.

0:20 These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

0:46 Please note that this conference is being recorded. I now hand the conference over to Mr. Raju Vista, Managing Director, for his opening remarks. Thank you. And over to you, sir. Thank you, and good afternoon, everyone. On behalf of Surya Roshni, I extend a very warm welcome once again to everyone for joining us today. On this call, we are joined by Mr. B. B. Singal, CFO and Company Secretary Mr. Gaurav Jain, CEO, Steel Division Mr. Vasumitra Pandey, CEO, Lighting and Consumer Durable Mr. Naresh Singhal, Executive Director and S. J, our Investor Relations Adviser. As we approach Diwali, I extend my warmest wishes to you and your families for a bright and prosperous Diwali.

1:40 I hope everyone had an opportunity to go through the financial results. Now quickly moving on to the overall financial performance highlights. Q2 FY twenty twenty seven has been a quarter of record performance of Surya Roshni. Consolidated revenue grew by 33% year on year and 20% sequentially to INR 2,448 crore. EBITDA stood at INR 143 crore and paid at INR 77 crore, up 1929% quarter on quarter, respectively. For H1 FY twenty twenty seven, consolidated revenue grew 30% year on year and 4,495 crore.

2:32 EBITDA grew 18% to crores and debt grew by 26% to INR136 crores, driven by 22% volume growth in steel pipe and string and 16% revenue growth in Lighting and Consumer Delivery. With a combined order of over 1,400 crores across both businesses and the second half traditionally being our strongest period, H2 FY twenty twenty seven with strong visibility and remain on track to deliver our FY twenty twenty seven target and promises. We remain a zero debt company with a cash surplus.

3:23 Now coming to Lighting and Consumer Durable. The Lighting and Consumer Durable segment delivered its best ever second quarter with revenue of INR $50.07 crore, up by 17% year on year and 11% sequentially. Even though Diwali falls in Q3 this year, for H1 FY twenty twenty seven, revenue grew 16% to $9.64 crore. EBITDA for Lighting for the quarter stood at crore with margins steady sequentially to 7.8%.

4:11 Input cost rose across copper, aluminum, steel and metallurized material. In house manufacturing absorbed much of the increase, and we are also passing on price increases quickly. Professional Lighting ended the quarter with an order book of over 200 crore, our strongest in many quarters, giving clear execution visibility for H2 FY twenty twenty seven. We remain on track for our FY twenty twenty seven guidance of 22% to 23% value growth and about 25% volume growth or about 2,200 crore of revenue and INR 200 crore of EBITDA.

5:04 With Diwali Festival in Q3, that is running at full capacity, a strong order book and expanding distribution, we expect a better even better second half. Beyond FY twenty twenty seven, we target about 20% value growth in FY twenty twenty eight and about 15% of CAGR through FY twenty twenty with EBITDA margins of about 9% to 9.5%. Now moving on to the Steel Pipe and Strip. Q2 FY twenty twenty seven was a defining quarter for Steel Pipe and Strip segment.

5:49 Volume reached a record of 2.67 lakh tonnes, up by 23% year on year and 17% sequentially. Ahead of our guidance of 2.6 lakh tonnes, making a seasonal weak quarter our strongest ever. Revenue grew 38% year on year to crore. For H1 FY twenty twenty seven, volume grew by 22% to INR 4.96 lakh ton and revenue 35% to INR 3,531 crore. EBITDA for the quarter stood INR803 crore with EBITDA per tonne improving to per tonne from in Q1 FY twenty twenty seven.

6:49 Export rose 64% year on year to about 65,000 tonnes with U. S. Volumes more than doubling sequentially. Value added product contributed about 48% of entire volumes and hollow section grew 35% as rising steel price from August lead the distributor to restock. We enter H2 with our strongest visibility in years. Our order book stand at about INR 1,200 crore including about one lakh ton of export order worth of INR850 crore, of which about 80,000 tons are API pipes, all for execution in Q3 and Q4.

7:43 Domestic oil and gas tendering has revised after a prolonged lull and our domestic APA order book has grown to about 20,000 metric tons. Having delivered about 500 tons in H1, we are confident of about 600 tons in H2 and our FY twenty twenty seven volume target of 1,100 with exports at

8:11 22% to 25% of volumes. Looking further ahead, we target about 14 lakhs ton in volume in FY twenty twenty and EBITDA per ton of about 4,600 to INR 4,800 and about 2,000,000 ton by FY twenty twenty.

8:36 Now I request our CFO, Mr. B. B. Singhal to share his thoughts. Thank you, respected MD sir, and a very good afternoon to all the participants on the call. For the quarter, the revenue was INR2448 crore as compared to INR $18.45 crore, a growth of 33% year on year basis. Beta and PAT stood at INR 143 crore and INR 77 crore as compared to INR 141 crore and INR 74 crore in Q2 FY twenty twenty six, a growth of 13% year on year basis, respectively. For H1 FY twenty twenty seven, the revenue was INR 4,495 crore as compared to INR 3,450 crore, a growth of 30% Y o Y basis.

9:31 Beta and PED stood at INR $2.63 crore and INR 136 crore as compared to INR $2.23 crore and INR 108 crore, a growth of 1826% year on year basis, respectively. In Lighting and Consumer Durable, revenues for the quarter stood at INR $50.07 crore as against INR $4.34 crore, a growth of 17% Y on Y basis. EBITDA and PBT stood at INR 40 crore and INR 28 crore as compared to INR 39 crore and INR 29 crore in Q2 FY twenty twenty six. For H1 FY twenty twenty seven, revenue stood at INR $9.64 crore as against INR $8.32 crore, a growth of 16% Y o Y basis.

10:26 EBITDA and PBT stood at INR 76 crore and INR 51 crore as compared to INR 70 crore and INR 51 crore, a growth of 81%, respectively. Industry, Pipe and Stips, during the quarter, the revenue was $19.41 crore as compared to INR $14.11 crore, a growth of 38% year on year basis. EBITDA per metric tons stood at INR 4,105 compared to INR 5,013 in Q2 FY 'twenty three and INR 4,006 in Q1 FY 'twenty seven. EBITDA and PBT stood at INR 103 crore and INR 75 crore as against INR 102 crore and INR 70 crore, a growth of 17%, respectively.

11:24 For H1 FY twenty twenty seven, the revenue was INR 3,531 crore as compared to INR 2,618 crore, a growth of 30% Y on Y basis, with a beta per metric ton of INR 4,059 compared to INR 4,037. The beta and PPT stood at INR 188 crore and INR 132 crore as against INR 154 crore and INR 95 crore, a growth of 2240%, respectively. In Q2 FY twenty twenty seven, our net working capital cycle was sixty three days with a return on capital employed, ROCE, of 15.74 and return of equity, ROE, of 11.35%.

12:13 We continue to be a zero debt company with a cash surplus of 75 crore as of September 3026. With this, I conclude the presentation, and we can now open the floor for further questions and answers. Thank you very much. We will now begin the question and answer session. The first question is from the line of Keshav Garg from Counter Cyclical PMS. Sir, my question is regarding our EBITDA per tonne for the steel division, which has come around INR 4,000 per ton for the first half. And so going forward also, we are expecting it to be around INR 4,504 thousand 600 per ton versus our earlier guidance of over INR 5,500 per tonne. So should we expect this number of around INR 4,004 thousand 500 per tonne to be the new normal for profitability of steel division?

14:39 Improvement. So going forward, H1 So Q3 4,800 to 4,900 or quarter four

15:18 competitive environment or demand conditions or raw material moving parts control So, sir, we... All that we can do is to put our best foot forward. Sir, but despite repeated guidance, sir, disappointment So, sir, yes, sir. Share buyback earning per share, sir, again, Thank

17:26 you, sir. Thank you very much, and sir, very happy Diwali to you and your team. Thank you. Thank you. Next question is from Saket Kapoor from Kapoor and Company. Please go ahead.

18:15 Q1 versus Q2 or Q3 or Q4

19:25 both division record numbers weekly and now but Sir, Aggaram, captain work in progress.

20:17 We have seen the closing balance for CWIP at closer to INR 59 crore. So first first half CapEx, I think, from to second half expense or planning CapEx Sir, eight question professional lightning order

27:30 booking mentioned exactly sir maintenance it is only supplying of the electrical goods that constitute the professional lightning part. And if this segment margins and growth comparison 65, 70% of volume is maybe.

28:47 Yes, sir. And, sir, wires and cables segment crowded business

28:59 checking case afterwards. Segment exactly backward integration price sensitive consumer focus. It's job

29:21 work and all In fact, sir, Lightning business outsource percentage backward integration white level become part part part part Wire business 95 to 100 or price overall lighting consumer 80%

30:22 in house manufacturing 18 to 20% Thank you. Ladies and gentlemen, before we take the next question, a reminder to all the participants, We will take the next question from Resham Jain from Vividi Asset Managers. Please go ahead.

32:11 But Okay. Or it is demand condition I think plant DFT capacity mostly.

33:08 Overall section square growth India or price pressure. Sir, third question for putting up a larger capacity because south, west, or north

35:14 Okay. Sir, buyback investor please consider Thank you. Thank you. Next question is from, an individual investor. Go ahead. Thank you for taking my question. Primarily other expenses we've seen go up 70%. Can you just break that down in terms of how that has gone up so much? Question is 70% increase the other expenses year over year. So can you explain, like, what is driving that increase? Is it just freight or is it something else also?

36:26 Got it. Got it. And sir, one more question I had was with regards to working capital. You've seen an... GD? Hello?

36:39 We have lost the participant connection, so we will move ahead. Next question is from Keshav Garg from Counter Cyclical PMS. Sir, prices China, Vietnam or the Southeast Asian countries due to duties and so on. So, sir, current export market, are we facing some disadvantage of high steel prices?

37:58 Understood, sir. So, sir, basically, advance authorization scheme say duty free steel import export Okay, Sir, electronic division light being wire. So, sir, steel division or be going further higher value added product evaluate altogether different spiral investment or API investment or export Understood, sir. Also, lighting

40:10 division coffee products for example, gas stove. So, sir, plastic pipe So, is it a well defined vertical profitable plastic pipe kitchenware business So gradually, I have looked 75% to 80% distribution segment

43:04 Thank you very much. Thank you. Next question is from the line of Anja Sahib, an individual investor. Please go ahead. Happy to to all, sir. Sir, Indian pipe business growth outlook for next two quarters. Last call call government spending business dependent to government spending next two quarter please?

43:44 Overall, India growth spending

45:16 Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. P. B. Singles for closing comments. Over to you, sir. Thank you, everyone, for joining us today on this earnings call. We appreciate your interest in Surya Roshni Limited. I sincerely once again thank our MD sir and the CEOs for sparing their valuable time and addressing queries raised by the participants who attended the call. As we celebrate Diwali on behalf of the entire SURYAROSNI family, I extend our warmest wishes to you and your families for a joy and prosperous festive season. For any further query, if any, SGA, our Investor Relations Advisor. Thanks. Good evening. Thank you, and happy Diwali tour.

46:04 Thank you very much, sir. On behalf of SURYAROSNI Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your line.