JINDALSAW - Jindal Saw Ltd. Share Price

In the earnings call held on May 5, 2025, Jindal Saw Limited's management provided insights about the company's outlook and forward-looking points.

Management highlighted that the last quarter's results showed plateauing performance, attributable to delayed budgetary allocations affecting the Jal Jeevan Mission (JJM), which is expected to improve in Q2 FY2026 as the government has released Rs. 70,000 crores for water infrastructure projects. Specifically, they project a turnaround in growth trajectory for these projects from Q2 onwards.

Regarding their financial outlook, the company maintains an EBITDA margin target of 19% to 20% for the upcoming year and noted that raw material prices are stabilizing, mitigating potential disruptions. The term loan stands at Rs. 600-700 crores, with a net worth around Rs. 10,000 crores, reflecting a healthy financial position.

On the JITF arbitration case, a significant point mentioned was that Jindal Saw has repaid Rs. 850 crores to NTPC with contributions from the promoter group, indicating no cash flow strain on Jindal Saw from this repayment. The management remains optimistic about the appeal against the Single Bench judgment, citing high confidence about a favorable outcome.

Management envisions that the company will benefit from the upcoming capacity expansions in both seamless and DI pipes, projecting the capacity in Nashik to grow to 4.5 lakh tons and an additional 1 lakh ton in Haresamudram. They anticipate that these developments, alongside cost reduction initiatives, will positively impact future financials.

Overall, while maintaining a conservative strategy and ensuring no cash flow strain, Jindal Saw Limited is positioning itself for growth following the expected recovery in project spending and operational efficiencies.

Earnings Call Q&A Summary

Question 1: "How is the current demand for the Jal Jeevan Mission (JJM) projects and what is the order book situation considering the recent funding releases?"

Answer: The government released Rs.70,000 crores for JJM, reinstating project momentum. The full impact will be visible from Q2 FY2026. Despite rumors of funding cuts, demand for water infrastructure remains robust, supported by new hybrid annuity models encouraging EPC contractor participation.

Question 2: "What are your thoughts on the recent cash losses in JITF amounting to Rs.345 crores this year compared to Rs.157 crores last year?"

Answer: The cash losses reported include a Rs.146 crore adjustment. Excluding this, cash losses are consistent with previous figures. I'd recommend contacting Rajeev Goyal for detailed accounting inquiries, as they may not be resolved in this format.

Question 3: "Have you observed any green shoots in order inflow for water projects in April?"

Answer: Yes, bid activity has resumed, indicating a positive trajectory for Q2. This uptick comes from ongoing discussions and tender processes in multiple states.

Question 4: "In terms of DI pricing, how do you foresee market price adjustments in the event of weak demand?"

Answer: We maintain stability in DI prices and do not anticipate any declines. Our pricing remains firm, with current orders reflecting our desired margins. Fluctuations in demand will not affect our pricing strategy under the present circumstances.