Hariom Pipe Industries Limited (HARIOMPIPE) Earnings Call Transcript
November 14, 2025
Earnings Call Speaker Segments
Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q2 and H1 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; 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 period ended September 2025, the growth plan and vision for the coming year, post which we will open the floor for Q&A. Over to you, sir.
Good morning, everyone. This is Rupesh Kumar Gupta. I extend a warm welcome to all participants joining us for the discussion on Hariom Pipe Industries Limited performance for the second quarter and half year ended September 30, 2025. The first half of FY '26 has been a period of steady progress for Hariom, even though the industry faced some challenges and the monsoon season is usually slow for the steel sector, we are still able to grow our volumes and revenue while keeping our margins strong and maintaining a healthy balance sheet. The softer performance in Q2 happened mainly because we took a planned maintenance shutdown at our ISP plant and dispatches were lowered during the heavy monsoons, which has been extended. These were expected events and do not indicate any weakness in demand or in our operations. In fact, despite these factors, we still recorded a 7% growth in both volumes and value in Q2 FY '26 compared to Q2 FY '25, which shows the underlying strength of our business and steady demand for our products. Our sales volume for the half year stood at 1.38 lakh metric tons, marking a 21% year-on-year growth, while revenue from operations reached INR 797 crores, also up 21% year-on-year with all units now running on demand momentum returning strongly in the second half. We expect a meaningful pickup in volumes. Our trajectory continues to remain broadly aligned with our medium-term growth aspirations, although the pace of ramp-ups suggest there may be a marginal deviation from the originally envisioned volume path. Importantly, the demand environment remains robust and operational momentum is building steadily. Our underlying demand pipeline is strong and order flow from core user industries in infrastructure, fabrication and construction continues to grow traction month after month. A key driver of our performance in the increasing contribution of value-added products, which now account for nearly 90% -- 97% of total sales. This strategic emphasis on engineering grade pipes, CR, GP coils and scaffolding has helped us sustain an EBITDA margin of 12.6%, even in a relatively softer pricing environment. Our EBITDA for the half year stood at INR 100 crores and PAT at INR 34 crores, both stable on a year-on-year basis. The resilience of our margins underscores the strength of our integrated business model from sponge iron and billets to finished pipes which provides natural hedging, operational flexibility and cost efficiency across the value chain. On the balance sheet front, Hariom continues to remain financially strong with a debt-to-equity ratio of 0.65x, ROCE of 21% and ROE of 11%. Our operating cash flow of INR 40 crores, reflecting healthy EBITDA to cash conversion demonstrates our disciplined approach to working capital and liquidity management. Now on the strategic front, this quarter marks an important milestone for Hariom. We have signed an MOU with Government of Maharashtra to set up a 1.5 million tonne per annum integrated steel plant at Gadchiroli under the state's mega project policy. The project comes with substantial fiscal incentives such as SGST reimbursements and power tariff support, which will significantly reduce the overall project cost. At this stage, our focus for the next 18 months is not on starting major CapEx. Our first priority is to fully set out our existing assets and in parallel, finalize the land and complete all land-related documents and clearances for the new project. The plant will be developed in a phased manner, which allows us to plan carefully and execute without putting pressure on our current operations. We also do not expect any major equity dilution or large increase in debt at this stage as the project will benefit meaningfully from the incentives offered under the mega project policy. This approach keeps the project financially safe and well aligned with our long-term strategy. We entered the second half, we remain optimistic about stronger volume growth and improved profitability supported by firm demand, higher capacity utilizations and improving realizations. Our strategic priorities continues to resolve around profitable growth, disciplined capital allocation and consistent value creation for all stakeholders. In summary, while Q2 reflected temporary softness due to planned operation shutdowns and seasonality, the core fundamentals of Hariom remain exceptionally strong. Our integrated business model, robust product mix and operational efficiency continue to position the company for sustainable and long-term growth. Thank you once again for joining us today. Thank you, all.
Thank you, sir. We'll now begin the question-and-answer session. [Operator Instructions] We take the first question from Yatharth Saxena.
Congrats on good set of numbers. So I have a couple of questions to ask. So, my first question is, like HRC prices are in the range of INR 45, INR 46 and Patra is in the range of INR 38, INR 39. And as more capacity of HRC will come in the next few quarters, so HRC prices will shoot like go down and billet prices will go up. So it would further lead to narrowing down of gap between HRC and Patra. So how would you compete with HRC? Or what will be your strategy going forward against HRC market? Like don't you feel the pressure with HRC as the market is very strong with good quality products?
Thank you, Yatharth. [Foreign Language] Both the products are totally different. [Foreign Language] So, we have a combination of basket for HR also as well as Patra [Foreign Language] Patra is again a different quantum, which is very lower in product and all. [Foreign Language] In future we see as the monsoon has been disturbed [Foreign Language] will be wonderful for Hariom.
Okay. Okay. And I want to understand a little bit on the new emerging regional players like in Patra pipe segment, such as A-One in South or Madhav in North and SKS in West. So how will Hariom Pipe compete with them like due to the freight disadvantage or the local regional players? So what is the strategy on that part?
See, basically [Foreign Language] basically Hariom is targeting on the customer satisfaction plus quality. [Foreign Language]
Okay. But sir, like as you were talking about value-added, so what is the focus on value-added products? Like I want to understand more on value-added products, like what will we consider in this particular segment? And are we planning for some forward integration or it's just an industrial product? Like who are our customers in this segment for value added?
[Foreign Language] which takes minimum of six months to one year of time for their due diligences and quality checks and multiple things. [Foreign Language] we have entered with some good companies wherein long-term strategy is to give them the quality product and enter to them with a long-term strategy wherein the quantum of Hariom will be consumed by them and having an MOU sort of thing. [Foreign Language] Hariom is more focused on. [Foreign Language]
Okay. Okay. And my second question is like on the margins front. So like could you please share the product-wise margins, like what are the margins we are making in Q2 in FY '25, like GP, tubes, pipes, coils, like just a general trajectory so that I can build my projection, that would be suffice for me.
Yes, yes. So, Amit, you can please take it over.
Thank you, sir. Thanks for the questions. So, basically [Foreign Language]
And scaffolding and like...
[Foreign Language]
Okay. And this is sponge and billets will be like below 50 -- like below 40, sorry.
[Foreign Language] below 40 EBITDA. [Foreign Language] First concern [Foreign Language] more concern is for the value added product which is mainly [Foreign Language] that is for use for 65% for the niche market that is low thickness pipe which is used for construction and fabrication and interior and furniture segment. And parallelly [Foreign Language]
So, Yatharth, to sum up. Basically we're not targeting only one particular thing. See, [Foreign Language] That's a reason Hariom is totally different than others.
Okay. And sir, like as we are becoming big, so is there any plans to appoint a Big 4 auditor in the near term as it will bring a lot of credibility to the accounting practices?
[Foreign Language] There are also so many government institutions [Foreign Language] and not only that so many listed company [Foreign Language] So we don't think so [Foreign Language] because his name and reputation and [Foreign Language]
So we have not thought about it. Basically, let us take that in a Board meeting. [Foreign Language] on rotation basis. But again, we have not thought about it.
Thank you, and all the best for the coming quarters.
We'll take the next question from Smit Gala. And I request the participants to limit their question to two per participant.
So, my first question was, yes, if I recollect our last conversation during Q1 con call, the planned maintenance impact was not expected to be material. So if you remove the effect of planned maintenance for the quarter 2, what would have been the volumes in Q2? And so -- and we had guided for 30% volume growth for the full year. So now to achieve that, we'll require minimum 38% to 40% growth across quarter 3 and quarter 4. So, as things stands, where we are looking at the same?
So, on the growth side trajectory, what we have planned, we are on track basically. As extended monsoon has affected a lot throughout India, and moving ahead [Foreign Language] So, I don't think so, Smit, [Foreign Language] we're very much positive and 100% [Foreign Language].
[Foreign Language]
[Foreign Language] into OEMs, into dealer networking, establishing of more dealers establishing their own set of things, branding, [Foreign Language] we are very positive that achievement, see, on number side, yes. But on the profitability side, on the EBITDA side, on the marginal growth of that particular thing, we are very positive on the growth trajectory.
[Foreign Language]
[Foreign Language] That is already aligned with our estimation. And interest part is also aligned. Recent past, around INR 1 crore roughly you can take. [Foreign Language] as per the IndAS accounting norms. [Foreign Language] All the expenditures are in lined. And as per the industry norms and whatever the present scenario, it is much more minimal to any other [Foreign Language] but otherwise expenditure are in lined.
[Foreign Language]
[Foreign Language]
We'll take the next question from Sagar Shah.
Sir, first of all, my first question, sir, would be regarding our actually volume outlook means to just add to the point to last participant, you had guided for around 30% volume growth, but we understand because of the softness that you had in Q2, [Foreign Language] regarding the plant shutdown, extended monsoon, [Foreign Language] in the H2, you guided for a better volume outlook. [Foreign Language] basically, are you seeing some much better volume outlook on ground, sir due to the rise in infrastructure activities? Or can you highlight some point regarding that?
[Foreign Language] The replacement to that particular thing with nominal amount is only the structure of pipe. And that particular pipe sector will 100% have an impact in coming quarter also. [Foreign Language] So we are very much bullish and positive on to the demand side. [Foreign Language]
[Foreign Language] It will depend on the next year's government's budget also. But in H2, [Foreign Language] and it will actually further add to demand actually on the ground.
We, being in Telangana, and the very prosperous state of the country [Foreign Language] because of monsoon [Foreign Language] in continuation with this call or previous days we're getting inquiries. [Foreign Language].
My second question, sir, was related to CapEx. [Foreign Language] So, first of all, I wanted to know what is the reason regarding the sync [Foreign Language]. So, can you guide us for the amount. And secondly also the reason behind increasing in MS Tubes.
[Foreign Language] It's an regular CapEx whatever we're doing. Amit, am I right? [Foreign Language]
Actually the thing is MS Tubes [Foreign Language] up to the 70% because of the various size and thickness, and multiple times you have to change the rolls. So, basically [Foreign Language]
[Foreign Language] for FY '26 and FY '27.
[Foreign Language]
[Foreign Language]
[Foreign Language] but as a steel, integrated steel plan, we always having some sudden maintenance CapEx.
[Foreign Language] How much approximately?
10% to 15% [Foreign Language].
10% to 15% of the...
Gross block.
Gross block.
We'll take the next question from Rakesh Goyal.
So I just had a couple of questions. So I just want to understand that since the HRC prices are nearby in the range of INR 45 to INR 46 and the Patra prices, which are basically our raw material, it's in the range of INR 38 to INR 39. And since due to the incremental capacity in the short term, the prices of the gap will be narrowing down. So I want to just understand how Hariom Pipe will be able to protect its market share along with its margin. I mean, what are the strategies?
So, basically -- Rakesh, thank you for the question. Basically [Foreign Language] we're very much near to the HRC pricing only. [Foreign Language] we're very much on a higher pace than the peer competitors. [Foreign Language] valuation in terms of brand, in terms of quality, in terms of service, in terms of dealer network, in terms of on-time delivery, in terms of keeping the stock readily available [Foreign Language] customer satisfaction is the prima facie work which we do. [Foreign Language] that's the whole strategy which people may not do it. I mean basically [Foreign Language] one is better in one particular area, which we are in. [Foreign Language]
We'll take the next question from Ishan Modi.
What I'm saying that in result, we have decrease in EBITDA per tonne Y-o-Y basis. Also, we have suddenly ForEx jump in purchase in stock in our income statement. So what are the reason for that? Also, what I'm seeing is that there were a few competitors in the market -- in a listed market where they were able to grow EBITDA per tonne. Also the volume growth was quite better than us. So, I understand there was a monsoon reason, but would you give to some answer on this, like what's the reason behind that.
See, firstly, [Foreign Language], we will not focus on that. What Hariom does, we can just concentrate on that, and we can focus on this line only. But as this is preventive maintenance, which has to be a mandate thing [Foreign Language] we are not aware of what exactly people are doing.
Okay. And what about like EBITDA per tonne decrease and also the purchasing stock in trade is also jumped by 4x on a Y-o-Y basis?
Amit [Foreign Language]
So, basically EBITDA per tonne [Foreign Language] that is not because of softness [Foreign Language] charges that is always incurred fixed rate. So this is impacted around INR 300 to INR 400 per tonne EBITDA. That is the one major reason. And your second question is comparatively to the others. So, comparatively to the other [Foreign Language] Hariom is much more ahead from any others in terms of EBITDA percentage and in terms of profit margin to in the steel segment because our product is very low thickness pipe where we are getting better margin comparatively to the general volume type pipe where the thickness is high.
Okay. And also like purchase in stock, I'm saying the ForEx jump Y-o-Y in income statement. So any reason for that?
Regarding that. Sorry?
Purchase of stock in trade, there is one line item in income statement.
Purchase in stock in trade means certain items actually, we have purchased and sale. [Foreign Language]
Okay. And also like I would also just like to reiterate that as another analyst also asked the same thing that if you want to achieve a 30% volume growth then in Q3 and Q4, we need almost 30% to 40% Y-o-Y volume growth. So are we really, really confident to achieve that? Or do you like to revise the guidance for next...
[Foreign Language]
So, are you confident to achieve 38% to 40% Y-o-Y volume growth in Q3, Q4, right?
[Foreign Language]
And any color on the solar EPC segment? I think we had discussed to enter that segment. So any demands we are seeing from that segment?
We have collaborated with a few of the companies who are into the EPC contracts, and we are trying to supply the structures to them basically. We are not planning to go for a complete EPC contractual works because it's out of the goal and out of the things what we are doing. And its competition is very high over there, and the groundwork is really pathetic. So we are just planning to supply them the material, which is required by them.
Yes, on that side also. So are we seeing any major kind of demand or any major scope in by which we...
Demands are huge basically. Demands are huge in solar industry, but targeting the right customer to the right place is again a thing which we are working on.
Okay. Okay. And also, sir, last question, like I have this doubt. I'm not able to understand. Like in our last con call also, it was asked that what will be the impact of this, maintenance of the plant over the next quarter, but it was said from the management that there will be almost no impact or very minimal impact. But I am seeing that decrease in the volume growth also was contributed by the plant maintenance. So I'm not really able to connect these two things.
So it was then basically preventive maintenance because to avoid -- see, when the liquid is been casted, the structure cannot be weak. So it's a very big [Foreign Language]. Safety will also be covered out. [Foreign Language]
[Foreign Language] But we did more than we planned in maintenance activity that's why -- that was the one of the impact. Am I right?
[Foreign Language]
We'll take the next question from Praneet Gudipaty.
Andhra Pradesh is seeing strong investment momentum in data centers, renewables and industrial expansion. Given Hariom's strong presence in the region, how are you positioned to leverage this opportunity? And what portion of future growth could contribute?
[Foreign Language] in terms of supplies, in terms of our dealer network, in terms of our supplies to the government [Foreign Language] government supplies plus dealer networks or establishment of new dealers [Foreign Language] we'll be partnering to it.
Okay. What is the revenue bifurcation like how much you are getting from Andhra as a percentage of total revenues?
I think we'll not be having that particular data right away. Amit [Foreign Language]
[Foreign Language]
We'll give you whatever you said, Praneet.
Which region are you getting most incremental growth in the South, sir?
Which region?
Karnataka is doing good. Telangana is going good. We are very much focused on Kerala. So all these states -- whatever the states are there, [Foreign Language], equally good, not an issue.
We'll take the next follow-up question from Smit Gala.
So my next question was, what are the developments for the power project plant, which are undertaken by us? What stage have we reached in that?
So, in this particular segment, we have finalized a few of the lines and on the lease basis. And we are probably planning to fix it up by March end or April 1 week. So that particular thing will be -- it's on basically, and we are moving ahead with that particular thing, not an issue.
So what is the cost which is already incurred and the cost to be incurred in this project?
One second. So, sir, actually, basically, already in our past con call and press release also we have given. So it is under the PM-KUSUM subsidy scheme. And out of 13 locations, we approximately land requirement is 210 acres. Out of 210 acres already we have completed the lease deed, long-term lease deed 56, roughly 56 acres of land. And now that lease quantum is very less. You can say INR 50,000 per acre per annum. So that is not a big amount. You can say overall project cost will be coming near to about INR 200 crores to INR 220 crores after completion of this project. And then we'll get the reimbursement of the subsidy during the construction period only. So it will not impact to any sort of existing operational financial impact or not having any big debt in the coming future also. And this is -- this will be developed not at a single stage. Every location-wise, we have to develop and we start the generation of revenue so that it will not impact to the P&L also not very much. [Foreign Language]
[Foreign Language]
[Foreign Language] This is a continuous process. [Foreign Language] we developed this a lot. [Foreign Language]
We take the next question from Helly Shah.
So since we're not doing any major CapEx and we will see a lot of infrastructure demand, just wanted to understand the company's expectation for the next two, three years on the basis of -- on the revenue basis and also the EBITDA and PAT margins, how are we planning to kind of expand that? What will be the major factors affecting our margins going forward?
Helly, basically [Foreign Language] See, we can do multiple things which is there. I can announce in this platform, we are the cleanest company. We don't want to give anything which is nonfavorable to any of our stakeholders, and we remain focused on that particular thing. That is our main strength.
In the next two, three years, we're planning the same margins or we're planning any expansion in those margins?
Margins will minimized -- sorry margins will grow minimally [Foreign Language]
And on the top line basis, any guidance for next three years?
[Foreign Language] I think that will be continuing.
That will be maintained.
We'll take the follow-up question from Sagar Shah.
Just one question related to OpEx, sir. Since our CapEx will be relatively lower just maintenance CapEx means hardly we are going for the solar plant in a phased manner. But looking ahead, what would be the OpEx would be around -- can you give some color on the employee as well as the other expenses front? Will we see some sort of operating leverage going through because not so much CapEx and we'll be guiding for almost 30% CAGR volume growth [Foreign Language]
So, basically, sir, our OpEx outlook remain stable. We do not expect any major increase in operating expenses in the coming quarter. Since we are not adding new capacity right now, there are no new fixed cost coming into the system.
Okay. Okay. Fine, sir. So normalized OpEx around single-digit growth in OpEx, can we assume?
Yes. Most of the operating costs like power, labor, maintenance and logistics are expected to stay within a normal and predictable range. As volume improve, the cost per tonne will naturally reduce because fixed cost spread over more production.
Exactly. And that will aid your EBITDA?
Yes.
We'll take the next question from Pawan Mehta.
[Foreign Language]
[Foreign Language] I think whatever the existing capacity we have that will be utilized in optimum level and we will be reaching, see, INR 2,500 crores, I accept in this platform that was very early stage where we are fixing our target in terms of value instead of in terms of volume because at that time, the steel realization price was very high. And we thought it will be continuing remain in the coming four to five years. But the thing is automatically change and you are better witnessed. So, basically, we are not fixed on the top line in terms of value. Yes, in terms of volume, will be concluded by next year.
Okay, sir. Secondly [Foreign Language]
[Foreign Language] starting from September 2028 onwards that is the as per the contract. That also we can start it and it will be duly completed in a phased because 13 locations are there [Foreign Language] backed by the PM-KUSUM scheme. So we are getting capital subsidy from the central government directly. There is no involvement in any other state government or any other.
So for what will be the debt position going forward? Will be required to raise more debt or not?
No, not much more. It is within the range, within the range. And it will not impact to whatever the present scenario, it will not impact. In the consolidation figure, it will not impact much more.
We'll take the follow-up question from Ishan Modi.
Sir, my question is regarding the steel, power -- steel plant MOU signed with the Maharashtra government. So I think we are selling the [indiscernible] I think INR 3,000 crores almost more than that, which is almost double than our market cap of our company. Like do you like to give some color like why such a huge CapEx is planned with the government and how we are funding? And like what are the phases and what are the time lines we can maintain to -- we can track to get that on live and what are the benefits in the top line we are aiming for from that particular CapEx?
[Foreign Language] In that only, we are planning to place this unit, which is INR 3,135 crores, which has been already signed. [Foreign Language] then what's next [Foreign Language] it's not easy [Foreign Language] that is a major thing which we are planning to have as in Maharashtra is a rich state which is giving the subsidies also, and owned by the guardian of that particular district, it will never fall down. And third important that is on the raw material side [Foreign Language] it's not one stage [Foreign Language] which is not practical also [Foreign Language] So, we have planned this in a very, very fantastic way [Foreign Language]
Sir, we'll take the next question from Nikhil Kanade.
I just had one question. Like we are in planning for the CapEx and the current capacity is -- which we are doing it. So what are the utilization levels as of today for the current capacity and how this will be planned out going forward?
So, basically, sir, so far, we are running almost all, if you say, 60% of our installed capacity we are running because as we are an integrated steel player, we are having so many products like sponge iron, MS billets, HR strips these are the products that are captively used. We are not going for sale. So, basically, almost 60%, we are utilizing whatever our installed capacity. And accordingly, moving forward also the maximum level we can utilize of this total capacity altogether maximum to maximum 70% to 75%. That is the -- if we installed 100%, we can utilize 75% of the optimum level.
Sir, we'll take the last follow-up question from Smit Gala.
Continuation to my past question. [Foreign Language]
[Foreign Language] By the end of, you can say maximum, January or February [Foreign Language]
[Foreign Language]
In terms of land acquisition you are talking?
[Foreign Language]
[Foreign Language] in line with the government subsidy as well as with the revenue generation. [Foreign Language]
[Foreign Language]
[Foreign Language]
Sir, since that was the last question, Rupesh, would you like to give any closing comments?
[Foreign Language] submission to all the stakeholders, to all the people on the call, off the call. [Foreign Language] with all the ethics [Foreign Language] in Hariom which is the prima facie thing. [Foreign Language] So, it's not for one quarter or so. Long term perspective, we're the best, we're the nest, we're the best. [Foreign Language]
Thank you, sir. Thank you to the management team, and thank you to all the participants for joining on this call. This brings us to the end of today's conference call. Thank you.
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