Hi-Tech Pipes Limited (HITECH) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the earnings conference call hosted by Hi-Tech Pipes Limited. [Operator Instructions] 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, ladies and gentlemen. A very warm welcome to all of you, and thank you for joining us on the Q1 FY '26 Earnings Conference Call of Hi-Tech Pipes Limited. I'm joined today by Mr. Arvind Bansal, Executive Director and Group CFO; and Mr. Arun Sharma, Company Secretary and Compliance Officer. Let me take this opportunity to walk you through the highlights of our financial and operational performance for the quarter ended June 30, 2025. In Q1 FY '26, our revenue from operations stood at INR 791 crores compared to INR 866 crores. Sales volume increased to 1.24 lakh tonnes compared to 1.22 lakh tonnes in the corresponding quarter last year, demonstrating our sustained market momentum. We recorded an EBITDA of INR 41.03 crores and our profit after tax stood at INR 21 crores, marking the highest ever quarterly PAT in the company's history, a significant milestone and validation of our disciplined execution. On per tonne basis, our EBITDA stood at INR 3,308 reflecting a notable improvement of 10% on quarter-on-quarter basis, driven by better product mix and improved realizations. Now let me provide an update on our ongoing capacity expansion initiatives, which will take us beyond 1 million tonnes of installed capacity post commissioning. Our greenfield plant at Sikandrabad is in final stage of commissioning and is expected to begin commercial production in Q2 FY '26. This advanced facility will manufacture specialized ERW pipes catering to infrastructure, defense and renewable energy sectors and is set to significantly strengthen our presence in North India. Our brownfield expansion at Sanand Unit 2, Phase 2, is also on track to commence production in Q2 FY '26. This facility is being developed as dedicated manufacturing hub for the infrastructure and renewable energy segments. Encouragingly, we are consistently witnessing strong order inflows from the renewable energy sector, and our special grade pipes have been very well received in the market. This validates our strategic focus on innovation and engineering excellence. We continue to enhance our product portfolio in the alignment with market needs and application trends. During the quarter, we added new SKUs across our product categories, enabling us to cater to a broader spectrum of customers and expand our relevance in both infrastructure and industrial markets. Strengthening market presence remains a core priority. In Q1 FY '26, we executed our targeted door-to-door campaign across South India and North India, where our teams engage directly with fabricators, contractors, retailers and architects. These efforts are building client trust, customer loyalty and positioning High-Tech Pipes as a preferred name in key micro markets. Looking ahead, we remain committed to our vision of achieving 2 million tonnes of installed capacity by FY '29 in alignment with India's accelerating infrastructure and industrial growth. As part of this growth road map, we are also undertaking a strategic foray into API-grade pipe manufacturing aimed at significantly increasing our share of high-value, precision engineered products. This initiative will be integrated into our 2 million tonne vision. Currently, we are in the process of finalizing vendors, technology tie-ups, infrastructure planning, quality certifications and compliance, et cetera. With the commissioning of upcoming capacities, deeper penetration into value-added segments, a growing export footprint and continued cost discipline, High-Tech Pipes is well positioned to deliver sustainable, scalable and profitable growth. We now open the floor for any questions. Thank you.

[Operator Instructions] The first question comes from the line of Nishant Gupta from Minerva Capital Research Solutions.

Congratulations on posting the highest ever PAT. Sir, I wanted to understand first the new capacities, which are coming from Q2 FY '26. What are we expecting in terms of the top line? And how going forward we see the contribution of value-added products in the future, if you could clarify this?

So basically, this -- both the facilities in Sikandrabad and Sanand, the cumulative capacity is around 250,000 tonnes annually. And with this, we are hopeful that in the first year, we'll have a 50% utilization from these -- both the expanded capacities. So this is the volume growth that we are looking at from Q3 onwards. Secondly, when it comes to value addition, so both the projects are focused mainly towards high value-added products, whether it is renewable energy sector side or some defense pipes that we have identified and some special SKUs and coated products. So this added capacity is mainly in the value addition segment. So we are hopeful once these capacities come up and we'll have a good room for our EBITDA margin growth.

So sir, can we see this value-added products which you -- in your investor presentation of 37% probably go up to, let's say, 45% -- north of 45%, [ closer to 50% ]. Can we see that going forward?

Yes, yes. For sure. We are looking upwards of 45% with this expanded capacity.

Sir, could you also clarify, so there was -- the volume still grew, but the top line contracted. I believe the prices were a bit of a concern. So going forward, sir, what is the optimal operating profit margin that we can see once the value-added products share start to go up?

Yes, Nishant. So the volumes have gone up, but the total revenue has come because -- has come down because of the steel price fluctuations and volatility compared to last year. And what we see is like, you know how the tariffs are playing in the international market, and it is having its impact on the steel prices also globally. So these prices are still not stabilized and they are fluctuating quite rapidly. So we are keeping an eye on this. And -- but I certainly feel the prices where we are right now operating at, these are like in the bottom range only. So I don't see any further deterioration in the steel prices from here on. And if the Indian government increases the safeguard duty or if there is any other import restriction mechanism, then that will aid steel price hike. So we'll have to wait it out.

Got it, sir. Got it. Any impact on your order book? So to say you are seeing -- because of these tariffs, a lot of export -- at least on the export side, I mean people have started to see issues, but you are saying that there is a very strong demand still in the renewable sector, which we are seeing. So any issues that you have started to foresee in your end-customers' demand with these tariffs and everything or any [ deferment ] of orders which have started to happen -- or any intimation around that?

So Nishant, this is a bit interesting for our sector. So what has happened is U.S. has placed uniform tariff of 50% on steel and steel products across all the nations. So India is also in that 50% category like any other country? So now it's sort of a level playing field for any other country which is outside of U.S., which is willing to export to the U.S. market. So we are in the same bracket. So no other country enjoys extra benefit compared to another one. So this is a slight positive for the -- for our sector. And going forward, once this dust settles of tariffs and everything, I think we will have some opportunity in the U.S. market.

Got it, sir. Got it. Just one final question from my side before I fall back. So what is the optimal margins that you expect, like once the steel prices stabilize and things come back to normal? Obviously, it will take some time, but what is the optimal operating profit margins that you're targeting internally, which you can probably share that this is something that we are looking at? It can be a long-term target, but still what is something that we are looking at?

Nishant, with our new product development focus, new markets, international markets, now we are going in API segment. We launched new jumbo sections in last quarter. So if the markets had been well aligned and perfect, INR 4,500 to INR 5,000 EBITDA is not an impossible target for us. But once this volatility comes down, I think we'll be in that range pretty shortly. But to give exact idea is difficult right now because we see every month fluctuations happening. So -- but once this stables and with our -- this new capacity that is coming up, upwards of INR 4,000 is not a very big deal. So we are just waiting for things to settle down, the prices -- steel prices to stabilize.

[Operator Instructions] Our next question comes from the line of [ Soham ] with RV Investments.

[indiscernible] guidance for FY '26 on the volume side?