Hi-Tech Pipes Limited (HITECH) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '27 Earnings Conference Call hosted by Hi-Tech Pipes Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anish Bansal, Whole-Time Director from Hi-Tech Pipes Limited. Thank you. And over to you, Mr. Bansal.

Good afternoon, everyone, and thank you for joining us on this conference call to discuss Hi-Tech Pipes Limited performance for the second quarter and the first half of the financial year 2027. I'm joined on this call by Mr. Arvind Bansal, ED and Group CFO. We are pleased to report that the company has delivered a robust performance across several key parameters, reflecting the positive momentum in our business, the strength of our strategic initiatives and our continued focus on sustainable and profitable growth. Starting with this quarter, our total sales volume increased 32% to 1.65 lakh tonnes from 1.25 lakh tonnes in Q2 FY '26. Correspondingly, our revenue from operations grew by an impressive 70.7%, reaching to INR 1,466 crores versus INR 850 crores (sic) [ INR 858 crores ] in the same period last year. Our EBITDA increased by 27.63% to INR 56.58 crores compared to INR 44.33 crores in Q2 FY '26, while our EBITDA per tonne stood at INR 3,429 compared to INR 3,540 previously. For the first half of FY '27, our revenue from operations accelerated by 74.47% to INR 2,879 crores as against INR 1,650 crores in H1 FY '26, driven by a 29% increase in sales volume to 3.21 lakh tonnes from 2.49 lakh tonnes. EBITDA registered healthy growth of 24.12%, reaching INR 106 crores versus INR 85 crores in the corresponding period last year. We have also made significant improvements in our working capital management, with the net working capital days decreasing from 56 days to 33 days in H1 FY '27. This improvement reflects our continued focus on efficient working capital utilization, better inventory management and disciplined cash flow management. Debt equity ratio is stable at 0.23x from 0.18x. Now coming to the business momentum and market opportunities. The growth in our sales volume reflects encouraging demand across all our major product categories and key end user industries, highlighting the strength of our diversified product portfolio. Alongside this broad-based growth, solar and export segments are making increasingly valuable contribution to our business. Our specialized solar tubes and pipes are receiving wide market acceptance and establishing a distinct niche in the industry. Our export business is also performing very well, with encouraging demand from international markets. Additionally, we are witnessing promising demand from emerging sectors such as data centers apart from our traditional sectors. We remain focused on strengthening our presence across these opportunities through innovation, specialized products and enhanced customer engagement. Alongside business expansion, we are continually focused on enhancing the visibility and positioning of the Hi-Tech Pipes brand. As part of these efforts, the company is actively participating in various industry exhibitions and trade shows, showcasing diversified range of products, advanced manufacturing capabilities and technological offerings. These platforms provide valuable opportunities to engage in existing and prospective customers, strengthening industry relationships and enhance awareness of our brand across domestic and international markets. Now, coming to the capacity expansion and strategic initiatives. We remain firmly committed to our long-term vision of becoming a 2 million tonne capacity company. Towards this objective, we are on track to add another 1 million tonnes of capacity by FY '29. Our expansion projects are progressing well. The DFT facility at Sanand Unit II Phase 3, the project is progressing as scheduled and is expected to be commissioned by Q4 FY '27. This will enhance capabilities in high-quality and specialized pipe segments. API facility, the work on the API pipes is also advancing as planned, with readiness expected by Q4 FY '27. This facility will enable us to serve niche markets, including the oil and gas transportation sector while further enriching our value-added products offering. Hindupur integrated coated facility, the construction of our integrated coated steel facility for ERW pipes and specialized solar pipes and other advanced steel products is progressing as planned, with commissioning expected by Q4 FY '27. These capacity additions will further strengthen our manufacturing capabilities, expand our product portfolio and enhance our ability to address the evolving requirements of customers across multiple sectors. Looking ahead, we remain optimistic about the structural growth opportunities in the steel tubes and pipes industry. The continued development of infrastructure, construction, renewable energy, solar power, oil and gas and industrial applications is expected to provide strong growth drivers for the sector. The growing demand for specialized and high-technology products, particularly in the renewable energy and solar segments present significant opportunities for Hi-Tech Pipes. Our expanding product portfolio, increasing manufacturing capacities, improving operational efficiencies and strengthening export presence position us well to capitalize on these opportunities. We will continue to focus on profitable growth, operational excellence, prudent working capital management and strengthening our brand presence across domestic and international markets. With our ongoing capacity expansion program and increasing presence across high-growth sectors, we are confident of sustaining our growth momentum and creating long-term value for all our stakeholders. I now invite the moderator to open the floor for questions.

[Operator Instructions] The first question is from the line of [ Sandeep Dayal ], an Individual Investor.

The company has delivered a strong revenue and volume growth during the first half of financial year '27. Could you please share how the demand environment is shaping up across you major end-user industries and whether you expect this growth momentum to continue in the second half of the financial year?

Yes. Thank you. So basically, as you can see from our results, the company has delivered almost a 30% volume growth in H1. This is despite the challenges of the war, the monsoon season. So, all these challenges were there in H1. But despite of that, the company was able to achieve a formidable growth of 30%. And while the effects of this war and the monsoon season getting over, so we see a much higher demand projection for H2. And we are all geared up to meet this demand, especially from the solar industry because now in the H2, the solar sector is at its peak, and we are trying to capitalize on this opportunity for Hi-Tech Pipes.

[Operator Instructions] The next question is from the line of [ Rithik Dhariwal ] from GK Capital.

I just wanted to address that there are market rumors suggesting APL Apollo is buying shares in our company in Hi-Tech Pipes. Can you give us some comments on that? It will be highly appreciated.

Sorry, I didn't get your name, please?

Rithik Dhariwal.

Yes. Rithik, your query about this APL buying shares in Hi-Tech, this is absolutely not correct. And I would like to reiterate that no such development, no such talks are there.

The next question is from the line of [ Kritika Sharma ], an Individual Investor.

So, my question is the Chairman mentioned that the specialized solar pipes business is receiving a good response from the market. Could you elaborate on the current growth opportunity in this segment and how important it could become for the company's overall business over the next 2 to 3 years?

Yes. Thank you, Kritika, for your question. So regarding the solar segment in Hi-Tech Pipes, you know that the company entered in this segment pretty early on. And we are now in a position to command a good respect when it comes to the module mounting structures and the solar tracker business. And we are dealing with all the top players in this category. And looking forward, as India is installing 40 to 50 gigawatt of solar plants every year, so every 1 megawatt requires at least 20, 22 tonnes. So this becomes like a 1 million tonne market in itself. And going forward, with the current plans and the new incentives and schemes by the Central and State Governments, we see this capacity increasing. So for next 3 years, I'm very confident that the solar will be one of the highest growing segments for us. And we have enough capacities and entire product range in this segment. So, we are confident of capitalizing on this opportunity going forward.

[Operator Instructions] The next question is from the line of Pallav Agarwal from Antique Stock Broking.

Sir, the first question. If you could just give us your volume guidance again?

Pallavji, just can you be a little louder, please?

Sure. Is it better now?

Yes. Yes, it's better now.

Yes. So, Anish sir, if you could just give us your volume guidance again for '27, '28 and '29?

So Pallavji for FY '27, we are confident of doing at least 6.5 lakh tonnes of sales volume for FY '27. FY '28, with our increased capacity, we should be between 8.5 lakh tonnes to 9 lakh tonnes. And FY '29, between 1.1 million tonnes to 1.2 million tonnes of sales volume.

Sure, sir. Okay. And when is -- like, what is the timing for new capacities to come on stream?

Yes. So in this year, we are adding 3 lakh tonnes, which is in Q4. I mentioned these 3 projects in my speech. So Q4, these capacities will be up and running. So by the end of this financial year, we will be at 1.35 lakh tonnes -- 1.35 million tonnes, sorry. And FY '28 at 1.7 million tonnes and FY '29, we'll be at 2 million tonnes.

Sure, sir. Okay. Also, if you could just -- I think we've done -- this quarter, our EBITDA per tonne was close to INR 3,500. So are we confident of maintaining this going in and improving because the VAP should increase?

Yes. So Pallavji, this H1 was challenging when it came to the energy prices and the logistics and the freight and especially the ocean freight. So, I think we have managed that period quite decently, and we have maintained our INR 3,500 per tonne EBITDA. This is despite that the new facilities just got operationalized in Q4 of FY '26. And all these facilities now are at their good optimum utilization level. So, now this -- the effect of war also is coming down when it comes to logistic costs. And the monsoon is also over and the government CapEx also seems to be okay for H2. So, we are pretty confident of maintaining the volumes and the EBITDA per tonne for the H2.

Sure. And also if you can just give us the CapEx spend that you're targeting for '27-'28 and '29?

Yes, Arvindji will elaborate on that.

Pallavji on CapEx spend, if you see balance sheet, it is showing CWIP of INR 200 crores and further some advances in the non-current assets. So in H2, our CapEx is going to be in the range of around INR 150 crores to INR 200 crores, which will complete 3.5 lakh tonnes of capacity. And going forward, as Anishji has mentioned, in FY '28 and FY '29, more capacities will be there. And accordingly, more CapEx we will incur. Part of that CapEx we will incur from internal accruals and part will be funded through term loans as per the requirement. But our focus will be to fund this CapEx more from internal accrual.

Sure. Sir, any indicative CapEx numbers for '28-'29 for the new capacity? Any broad numbers you can share?