JINDALSAW - Jindal Saw Ltd. Share Price

In the Q1 FY '26 earnings call held on August 6, 2025, Jindal Saw Limited management provided an outlook that acknowledges a challenging quarter but remains optimistic about future prospects. The management noted that Q1 results were softer compared to previous periods, mainly due to production issues stemming from scheduled maintenance of key facilities and geopolitical tensions affecting exports. They highlighted that approximately 60% of their business is tied to the water sector, which has been impacted by cash flow issues among EPC contractors.

The company reported an order book exceeding $1.5 billion, encompassing 1.6 million tons of confirmed orders and 265,000 metric tons of Letters of Intent (LOIs) in the ductile domestic market. They anticipate the operationalization of one of their blast furnaces in August 2025, which could enhance production capacity.

Management expects working capital utilization to improve, driven by inventory turnover and collections from outstanding receivables. They affirmed a comfortable long-term debt position, currently below INR 600 crores, and emphasized that despite lower profitability, they achieved an EBITDA margin of over 16%, indicating resiliency amid challenges.

Looking ahead, they stated that while Q1 performance may continue in the short term due to prevailing conditions, the outlook beyond that appears promising if governmental funding support resumes. Key initiatives include setting up new manufacturing facilities in Abu Dhabi and Saudi Arabia, expected to be operational within 1.5 to 3 years, enhancing their regional presence and capacity to meet local demand. They conveyed confidence that once geopolitical issues stabilize, and funding flows normalize, the company could ramp up productions and sales significantly.

1. Question: "Given the near-term challenges such as the lower government spends and weakness in the overseas market, how do we see volume growth in the current year?"

   Answer: We see a strong visibility for volume growth driven by a robust order book exceeding 1.8 million tons. As of now, our order book reflects approximately 1.5 billion USD, including confirmed orders and letters of intent. If the cash flow situation improves, we can rapidly ramp up production, especially since our inventory levels are manageable.

2. Question: "What were the key drivers of the robust performance reflected in the INR 671 crores EBITDA?"

   Answer: Our performance is a mix of product segments, even amidst shutdowns. While ductile pipe sales were lower, other segments performed well. The overall EBITDA for standalone operations was INR 560 crores, primarily driven by consistent demand across various products despite operational challenges.

3. Question: "What are the internal drivers that will support EBITDA growth in the interim period?"

   Answer: We focus on value addition and cost optimization to improve profitability. Initiatives, such as a new coke oven battery and a waste-based power plant, are aimed to reduce operational costs. While we don't provide specific guidance, our order book remains healthy, suggesting a positive outlook for earnings.

4. Question: "Can you provide more details on the current status of the Jal Jeevan Mission and its impact?"

   Answer: The Jal Jeevan Mission, extended until 2028, remains a priority for the government, ensuring sustained demand in the water sector. While there are short-term execution delays, the underlying demand from this mission continues, and we expect execution to ramp up as government funding stabilizes.

5. Question: "How much impact did the export orders have in this quarter, especially concerning deferred shipments?"

   Answer: Approximately 20,000 tons were deferred in one shipment due to geopolitical circumstances. We anticipate picking up these volumes in subsequent quarters as the situation normalizes.

6. Question: "Do you foresee any more significant allocation to the oil and gas sector from the government?"

   Answer: While we don't cater to the largest share in the seamless segment, we do supply to ONGC and Oil India. The government is increasing allocations in this sector, which creates a favorable environment for us as the demand from oil and gas continues to strengthen.