Hariom Pipe Industries Limited (HARIOMPIPE) Earnings Call Transcript
August 11, 2025
Earnings Call Speaker Segments
Ladies and gentlemen, on behalf of Kaptifi Consulting Investor Relations team, I welcome you all to the Q1 FY '26 Post Earnings Conference Call of Hariom Pipe Industries Limited. Today on the call from the management team, we have with us, Mr. Rupesh Kumar Gupta, Managing Director. Today, we are also happy to welcome Mr. Soumen Bose, Non-Executive Director, who was the former Managing Director of Tata Thailand, and he joined the Board of Hariom Pipe Industries on June 10, 2022, as an Independent Director and was redesignated as Non-Executive Director on 4th of Jan 2024. He currently serves as a representative of HPIL's Thailand Foreign Office. We also have Mr. Amitabha Bhattacharya, Chief Financial Officer, and Ms. Rekha Singh, Company Secretary. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to brief us about the business and performance highlights for the quarter ended June 2025, the growth plan and vision for the coming year, post which we will open the floor for Q&A. Over to the management team.
Good afternoon, everyone. I'm Rupesh Kumar Gupta, Managing Director of Hariom Pipe Industries Limited. I thank you all for joining this Q1 FY '26 earnings call of Hariom Pipe Industries. I am pleased to present to you the financial and operational performance for the first quarter of the financial year '25 - '26. It is my pleasure to share that we have started the year on a very strong note both in terms of operational performance and strategic progress. That reflects both the strength of our business model and the disciplined execution of our strategy. At the start of FY '26, we had set a clear growth outlook aiming for around 30% year on year volume expansion and I am happy to share that we have met and even exceeded that target in Q1. Our sales volumes stood at 78,221 metric ton reflecting a 35% growth as compared to Q1 FY25 and a 5% sequential increase. This performance demonstrates the resilience of our demand based across multiple sectors and efficiency of our operations across our integrated manufacturing units. Our average selling price improved to INR 58, 931 per metric ton, a 9% sequential increase, which helped cushion the impact of input cost fluctuation. This improvement is a result of a healthy product mix, strong value-added product sales, and our ability to command better pricing through quality and customer trust. Revenue from operations came in at INR 416.96 crores registering a 34% growth over Q1 FY25 and a 15% increase over the previous quarter. Our strategic focus on value-added products, continued to yield results. With this product competitive, 98% of our revenues, in line with our consistent product mix. On the profitability front, EBITDA excluding other income was INR 57.58 crore, showing 39% YOY growth and 18% sequential growth. With EBITDA margins yielding a healthy 12.49%, this reflects our continued emphasis on operational efficiency, prudent cost management, and the benefits of our backward integration operations. PAT stood at INR 23.61 crore up 35% YOY and 27% sequentially with PAT margins improving to 5.11. EPS for the quarter was INR 7.63 reinforcing our commitment to value creations for shareholders. Strategically we have made strong progress on innovation and market development. We have developed new products and strengthened relationships with original equipment manufacturers, especially in the fast-growing renewable energy sector. A notable highlight has been our transition in solar structure manufacturing. Moving away from conventional [H.R. steel] channels, with cost intensive Hot Dipped Galvanising to high strength pre-galvanized (GP) steel pipes sections. This shift not only registers a steel way but also enhances durability and efficiency, making traditional design imitation and enabling our customers to achieve better cost effectiveness in their projects. As we look ahead, we anticipate a significant boom in solar renewable energy infrastructure, both in India and globally. Our innovation products position us to play a pivotal role in supporting this growth, contributing to reduced carbon footprint and improving sustainability and viability of solar projects. In summary, Q1 strong performance reaffirms our confidence in meeting our FY '26 targets and sustaining our momentum. We will continue to focus on volume growth, margin stability, operational efficiency and innovation, ensuring that Hariom Pipe remains well positioned to deliver sustained value to all stakeholders. With that, I look forward to addressing your questions and sharing further details on our outlook for the year ahead.
[Operator Instructions] Thank you. We take the first question from Agastya Dave.
Congrats on good performance. I had some very small questions; I'll go through them very quickly. First is, sir, given the kind of volume jump that you are seeing this year, sorry, this quarter, what's the state of the inventory in the system? And let me define system as the inventory that all your customers are carrying plus any of the dealers, what's the total inventory? And do you see this 35% run rate continue for some time?
We see, 30% growth rate will be continued [Foreign Language]
[Foreign Language] I am not looking at a specific number, just qualitative commentary.
So basically, this quarter, we have not disclosed the balance sheet as per the guidelines. You already have the last quarter Q4 number, I think 128 days we are holding days we have. Now roughly we have 89 days. This improvement is largely due to the better procurement planning, faster conversion of raw materials into finished goods and improved sales percentage.
Sir, my question was different. My question was in the sales channel that you're selling your products, are your customers increasing their inventory; not your inventory, sir, their inventory. Are they increasing their stocks? Are your dealers increasing their stocks because the steel prices were falling last year, they have started stabilizing. So, I'm just wondering if there is, again, they're increasing their stocks of inventory.
[Foreign Language] The customer needs to maintain the inventory
[Foreign Language] So the change is not much, just negligible.
[Foreign Language] Yes, not much. But with this our customer footprint is increasing.
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[Operator Instructions] We take the next question from Smith Gala
[Foreign Language]
Actually, the gross margin is always retained on the raw material versus sales. Last year last quarter what we have witnessed is that the 9% sale realization was more and raw material price remains same. There will be no other factorization, the main thing is why gross margin can be increased, and what is the possibility, as it always depends on product mix consistency, backward integration and operational efficiency. Presently we are already 98% of sales coming from value added products and our marginal is based depending on raw steel pipes drills.
Second question is that we have already started our sales to Maharashtra. So if you have the number handy, what is the percentage of sales coming from Maharashtra in volume terms, and also we had released a notification that one of our plants in Mahbubnagar, will be having a plant shutdown maintenance for 10 days inQ2, so wat will be the impact of those on Q2 numbers.
[Foreign Language]
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[Foreign Language] PPA was signed and it is in public domain, we have signed the PPA to supply of 60 MW solar power for 25 years to NTPC at a price of INR 2.96 per kWh. The deadline of the completion of the project will be 2nd September, 2026 and after completion, first three ears, we are getting, additional INR 0.25 as an incentive per unit. Apart from that, as for the PM-KUSUM Scheme, we are getting the equity subsidy during the construction period. So these are the scenarios we have, and moreover, out of the total project, we have already finalized about 115 acres of land, which are consistent to supply the 32 MW of solar power can be able generate, and out of 13 locations we have finalized 8 locations. These are the business stratus of this project.
We take the next question from Raman KV.
I just want to understand what was the volume growth guidance for the year and what the EBITDA per ton during the quarter?
Can you please repeat that
What is the volume growth guidance for the year and what the EBITDA per ton during the quarter
30% volume growth in our last concall in Q4 and EBITDA per ton as of Q1 2026 is 7,362.
We take the next question from Sagar Shah [Break] We move on to the next person. We take the question from Yash Sinha.
Congratulations on a good set of numbers. I just wanted to understand your volume and revenue split by product similar to how you've given on Page 18 of your Powerpoint.
[Foreign Language]
For this quarter sir?
We take the next question from Radha Agarwalla
Sir, about 6 to 9 months back, your cost of production for billets was about INR 37,000 per metric ton versus the market rate at that time was INR 42,000 per metric ton. So, the EBITDA per metric ton at a billet level used to be INR 5,000 and then INR 3,000 additional from billet to MS tube conversion. So, I wanted to understand how the scenario is currently. So comparatively in this scenario, the market price of billet has come down to INR 37,000. So, at these prices, what is your cost of production of billets and the EBITDA per ton at the billet and the MS tube.
[Foreign Language]
Sir, my question was, since you are backward integrated the EBITDA per metric ton for you would be significantly higher compared to a non-backward integrated secondary steel pipe manufacturer. So if you can tell me the EBITDA per metric ton at the billet level, then I will be able to understand how it is for the industry who are non-backward integrated as well.
EBITDA per ton depends on each during the quarter if you have done any billet sale. Then you can calculate, through integrated process, we are getting this quarter specifically 8,200 plus per ton EBITDA.
Sir, how much would it be for non-backward integrated players.
That is not we are integrated players, we can only talk about ourselves. As of now 8,200 plus, integrated process we are getting for this quarter.
And sir out of the 4.5 million ton market of secondary pipes in India, roughly what percentage of players would have backward integration like you
Again we would not be the right people to talk about it. Markt researchers would be able to answer this question for you. We can only talk about Hariom.
We take the next question from Sagar Shah. We move on to Ajit Sethi
Sir what is the current net debt level?
363.70 as of 30th June
So going forward any plans for repaying our debt
Yes. The long term debt we already have repayment schedule so next year the long term debt will become negligible, we are expecting a substantial cash flow where Hariom is in a good situation and you can see financial metrics very positive growth I terms of debt.
Sir in Q1 we have done EBITDA per ton of around 7,300 so is it sustainable?
Yes,, yes, 100%
And last question we have backward integrated for MS Tube side and non-backward integrated for galvanized sies, so what kind of realization is sustainable?
I have just given the answer. It is a product mix category. So now 9% sales are coming from product mix category and value added product. In those terms, you can realize better because customer s given quality and consistent delivery not like retail products, where you are always struggling because of heavy competition. Now Hariom is always providing such products where customers are given good price because of quality and consistency, so for realization, Hariom is in a batter position.
So this is sustainable?
Yes, of course
We take the next question from Harsh Shah
You have shown a very strong volume growth in this quarter. So just wanted to understand which are the end user industries that is contributing to a solid growth from you? And what exactly helped you during this quarter to achieve this kind of a growth? Because if you look at overall market scenario, it's outlook is not that good in such a scenario you growing at 30%. So what exactly is helping you achieve this growth?
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We take the next question from Vedant Sharda
In the presentation there is 15% direct B2B sales, so this is only direct sales without distributors and dealers
[Foreign Language]
Who is our direct competitor?
[Foreign Language]
Our customers can give you a better answer
What is the capacity utilization this quarter
It is 72,000 metric ton net productions. That you need to calculate from 437. So about 40%, no 66%.
We take the next question from Raghav Rathi
EBITDA from last quarter to this quarter has jumped from INR 6,500 to INR 7,400. So what was the main reason?
9% our selling price, and remain operational and expenditure are consistent and controlled, that is why it is going up.
[Indiscernible]
Can you please repeat that?
What are the current days and the exact capacity we will have by FY26 and FY27 and what can be our utilization.
We have already given clarity in Q4, we are expecting 30% volume growth and this year also 32%-35% growth in coming two years, so presently we have 4,37,000 our final output.
We'll take the next question from Maitri Shah
Yes. Just one question on the solar structure. So currently, we have started with the trial production. What sort of, what sort of volumes do we expect from solar structures in FY '26 and FY '27?
So initially, we have got good order wherein we are engaging our bandwidth and the manufacturing capacities to get enhanced. So the trial orders are already received by 200 tonnes approximately per month. Moving ahead, this may multiply in coming months.
And what sort of EBITDA are we earning on this product right now?
I don't think readily it is available with us, but we are very much higher than the scaffolding as well as the pipe division. Trial runs are going on, right? So that EBITDA calculation would not be ready...
200 tons per month is the trial order for FY '26 that correct?
Yes, yes.
Okay. And any new trial orders that we have received this quarter?
Continuously, we are supplying it in the future we'll be adding on new parties also.
We'll take the next question from Aadesh Gosalia.
Congrats for a good set of numbers. I had a couple of questions. The first question was regarding our B2B business. So if you can share some light on that, what is the percentage of revenue from B2B and how are we planning to go about increasing our share from that business? And if any new contract we signed with the OEMs in this quarter any talks are going on with regard this?
B2B is around 74,000-75,000 plus for this quarter out of the total turnover. We are expecting more, as slowly it will increase. For B2B sales, we have to follow the standard process we have to send the sample, then the testing, approval, long term infrastructure, demand, supply, range, and lastly pricing, once the customer finalize, then it will be delivered.
[Foreign Language]
So now new OEM contracts have been signed right?
No No it is still in process and every month or so, something is getting added.
Any challenges that you are facing in this B2B business
Actually [Foreign Language]
Okay. And my second question was one of the previous participants you had answered that the demand we have a diversified basket so we are getting demand for all products from different OEMs. So if you can share something more on that?
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We'll take the next question from Yashvardhan
If you can just elaborate a bit on the capital expenditure plans for, say, the next 2 to 3 years -- and how will it be funded?
You are talking about capital?
Fixed capital investment sir
At present we don t have any major financial planning. Our current target is to touch upon the existing capacity and use the optimal capacity, whatever we have already invested. And little bit of CapEx is required to use the optimal level of the capacity, which isa common thing as an integrated player in the steel industry. This is our segmental requirement. Nothing much ore capex are required.
And sir, our newly incorporated power in Energy Private Limited, if you could just touch upon that and how will it impact the profitability and our risk moving on?
See Hariom Power Energy private limited, presently it is our only subsidiary of the company of Hariom. The things is that the free cash flow and long term revenue are fixed. We have already signed the PPA with NTPC for 25 years for supply of 60 MW solar power at a price of INR 2.96 per kWh. Apart from that, the company will get INR 0.25 as an incentive for next year, if the project is completed on or before 26th September 2026. Additionally, it is covered under the PM-KUSUM Scheme, component C, where we are getting the equity subsidy during the completion of the project. Ur capital outflow is limited and our long term revenue is fixed and cash flow I predictable, and EBITDA is coming to about 75% as per financials. That is very nominal.
And if I may add, Amit, and basically for the shareholders of Pipe, the benefit is twofold in this new project. The company will retain the economic interest in the projects predictable 25-year-old revenue stream, point number one. Point number two, this project will also drive incremental volumes of high-margin solar steel structures from our existing facilities, which are built to Hariom pipe directly. So, meaning the parent company captures the value at the manufacturing level irrespective of the stake in subsidiary. So, it's a twin benefit for Hariom Pipes and the new company.
We take the next question from Smith Gala
Just wanted a clarification regarding the total capacity which we have currently 432,000, but does this include the 84,000 from Ultra pipes as well or it does not?
No, no, it's not including the ultra pipes.
So around 50 we have... The capacity. And what is the utilization and volume which ultra pipes currently?
That is the nameplate capacity, Mr. Smith you already you know that you are the pipe segment also so many years that you know that the pipe segment, whatever the nameplate capacity that cannot be going beyond 70% to 80% of this 0 up to 75% of the ultra...
So we are utilizing the 70%, 75% right now.
So we are utilizing around 60% will be going up to 70% to 80% maximum.
We'll take the next question from Sandesh Kumar. We will move on to Deepak Pandey
Sir, just 2 questions from my side. First is on working capital days and why is it higher versus the recently listed peer? And secondly, on the same question, what sort of EBITDA per tonne can we expect for FY '26? FY '26...
Talking about FY26 or this quarter?
FY26
We cannot predict, we have given the guidance of 40% of volume growth, and we have also spoken about realization. Working capital holding days, inventory holding days, 89 days as of June 2025.
Okay. And sir, on the HR coil, you give the data, how much HR coil did you purchase from the market this quarter?
Whatever our sales volume in Galvanized pipe that are produced from the HR coil only.
That reasons with the lower EBITDA for galvanized products...
So only INR 1,000, you can say roughly there is a difference as per Q1 data.
We take the next question from Radha Agarwalla
Sir, the general perception in the market is that secondary pipes cannot be used in high load bearing applications, like infrastructure, construction airports, etc. So with regards to MS Tubes, what is the user industry mix?
[Foreign Language]
Regarding the volume guidance of 40%, the market is growing at 8%, then from where are you getting this incremental 32% of volume growth and how much of this is due to the growth of Ultra Pipes in the business?
[Foreign Language]
So Ultra pipes sales volume this year would be 12,600?
We don t have this data. I will get back to you on this.
We will take the net question from Ajit Sethi
What is the total industrial capacity of MS Tubes and what is the current demand and what is total supply, and similarly with galvanized pipes also?
Presently we are having MS Tubes capacity 1,32,000 in Hariom, and 84,000 in Ultra pipes. We have concluded our long term lease, in Ultra Pipes, in the month of July itself, so they are from now onwards you can also take the Ultra Pipes capacity under the name of Hariom, so all together it is 2,10,000 of MS Tubes.
Sir, my question was about the industry capacity. I wanted to know about the demand, capacity and supply for the production.
Industry demand for this segment? I can only give you information about Hariom, you can find it online. Roughly it may be 4.5 million ton of capacity.
So, Sumit can you explain this if you have the data?
Basically, the total Indian Steel Tubes and Pipes, the production is roughly around 14 million tonnes and the consumption is around 12.68 million tonnes. That is the Steel Tubes and Pipes hemisphere. Now if you break it down to the type-wise consumption, so roughly out of this whatever figure I just told you, MS tubes and pipes will be around 60%, 61% of the total mix. So that is the industry standard.
Okay. Okay. And what is the supply situation in this..MS Tubes.
The supplier is equally big, but then because of our differentiated product mix and all that, our products are well sought after vis-a-vis competition. And probably our numbers would justify that as to how we are pushing our, by diversifying our product mix because as you know, it is just not one product. There is different thicknesses. There are so many, as we call it, SKUs. So, there are so many SKUs and Hariom has the maximum variety of the thicknesses and this. So that's why they're able to, as our Managing Director pointed out, we are a single-stop solution for most of the dealer level demand. That's the reason why we are able to cater to the maximum possible in the marketplace.
We will take a follow-up question from Vedant Sharda
Promoter shareholding from23, 24 and 25it is reducing can you give us more information.
It is not reducing. In FY 24,
[Foreign Language]
[Technical Difficulty]
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Do we have a government business?
No we don t supply to the Government
Sir, by supplying to OEMs, can it affect our distributor supply chain
No it is separate, it is a different line, and we ae not dealing with distribution network we are dealing with dealer network, so no link.
Our next question comes from Aadesh Gosalia
I just had question regarding the maintenance CapEx that we are going to do in FY26.
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Our next question comes from Sandesh Kumar
We have around 7 lakh metric ton capacity and we have given 30% volume growth for net two years and separately we have 60 MW solar radar, can we cover all this with our existing capacity?
60 MW solar radar , this is different it is not linked with Hariom. It is a different, yes now whatever capacity we have, now can we meet the 30%, yes we can.
About solar hurdles, for 1 MW, we may require around INR 3 crores, so total INR 180 crore required, so any fund raise on cards?
No, we are not doing any fund raising doing so far.
So how are we managing this then?
In the last board meeting, we are given a mix of capital subsidy, and we have contributed to a certain [Indiscernible]
The next question from Mohammed Sheikh
Sir the price from between the primary and secondary steel is 9000 per ton, so do you see any volume gains in terms of the market share of the primary steel that is produced?
It is entirely possible. At this point in time, I cannot zero in on a particular number and tell you. But the confidence what the metric that you cited very rightly, we are gaining the confidence of 30% volume growth from those metrics only. But if you want to zero in on a number, I'm sorry, I cannot give you that number. But our confidence for 30% growth for the very differential that you just talked about.
Sir, what is your criteria for considering value-add? Like how much do you make in terms of EBITDA per ton to...
So if you have seen our financials, our the percentage of value-added products have increased year-on-year. Currently, I'm happy to inform the gathering that it is 98% of the total production, the value-added stuff. Coming back to your specific question on what do we consider value addition. We do not consider just because we have an ISP or the integrated steel process. So basically, we make the steel processes one. The secondary process onwards, for example, MS to MS billets from MS billets to MS pipes, the second level of value addition from that on, we consider as value addition. So while MS pipes and tubes are one good example of value-added product. So one which is not very basic. Now for example, HR coil, CR coil cannot be classified in the truest sense as value-added because those are the starting blocks for our further production like pipes and tubes.
My last question from [Indiscernible]
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We take our last question from Harsh Jhanwar
You mentioned that our inventory days have reduced to 89 days. Is it because we are a what should be steady state inventory days we are targeting for FY26?
Whenever you see that Q4 is the peak season for our industry. It is not only for Hariom, it is for segmental, you can take any company, steel competitor balance sheet also Q3 is the peak quarter, Q3 and Q4, then Q1 is coming. This is because of our very disciplined inventory management, where we have taken very nominal as per our requirement and production planning and according we decide our requirement and supplies, and we have managed our inventories on our ERP software base therefore we can manage this kind of matric from 128 to 9 days, and I am sure it will be round about in this limit, in the future also.
How much can we improve?
We can trying to reduce this as much as possible, you can see in the last three years, it has been continuously improving.
Sumit Ji I would like you to announce the trend of [Foreign Language]
Sure, sure. Thank you, sir. I just would like to inform this August audience that internally, we have decided on forming a committee for green steel. The reason why we are doing it is because the government of India is pushing green steel for sustainability purposes in a very, very big way. And in future, in government procurements, a hefty percentage will have to come from the green steel makers. Therefore, internally, a committee is being formed, and we will deliberate on the newer technologies for green steel we will scout out a reliable partner with sufficient expertise. And we want to absolutely increase our green steel footprint by a substantial margin. I wish I could have given you the numbers, but the plan is always in place. And so basically, we, our basically fundraising and all that is behind us. We are now basically reaping the harvest of capital raise for the last few years. And we are now, this kind of volume growth and all that you're seeing is basically the result of our past fundraising operations. So going forward, this green initiative is, we are taking it rather very seriously, and it is being driven right from the highest level. And we expect that we would be, going forward, a large portion of our production will be from the green steel initiative. Thank you.
Thank you, sir. Thank you to the management, and thank you to all the participants for joining on this call. This brings us to the end of this conference call.
Thank you.
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