JINDALSAW - Jindal Saw Ltd. Share Price

Management provided a cautiously optimistic outlook for Jindal Saw Limited, emphasizing improvements and potential growth despite current challenges. In Q3 FY '26, the company reported a total income of INR 4,157 crores, showing a notable increase from INR 3,409 crores in Q2 FY '26, but a decrease from INR 4,550 crores in Q3 FY '25. EBITDA improved to INR 527 crores from INR 335 crores in the previous quarter, albeit still below the INR 882 crores recorded in the same quarter last year. PAT was reported at INR 227 crores, significantly higher than the INR 79 crores in Q2 but lower than the INR 477 crores in Q3 FY '25.

A key highlight was the total order book for pipes, which grew to 19.64 lakh metric tons in December '25 from 19.25 lakh metric tons in September '25, indicating a strong backlog mainly in the water sector. The DI pipe order book represented about 40% of the total, valued at approximately $570 million, with around $45 million attributed to exports.

Management acknowledged challenges in the domestic water pipe business due to extended payment timelines but noted a strategic pivot towards export opportunities to mitigate risks. They expect the forthcoming union budget to maintain support for initiatives like the Jal Jeevan Mission, which could accelerate project execution.

Forward-looking, management expressed confidence in production improvements from a new seamless plant expected to enhance total capacity by 4 lakh tons per annum. They forecast volume growth in FY '27 and believe the current market conditions are temporary, supported by strong order backlogs and a robust liquidity position. Key numerical targets include a target capacity increase of 2.2 million tons per annum and ongoing initiatives to optimize working capital and cash flows.

Questions and Answers from the Q&A Section

Question 1: "In the last earnings call, you indicated that seamless pipe production will ramp up to 90,000 tons per quarter in 4Q from the current run rate of 40,000 tons, driven by the new piercing line. Could you explain the demand visibility and the order book that is giving you confidence in ramping up the capacity?"

Answer: We believe the new piercing line enhances our production capabilities for larger pipe sizes and improves overall productivity. Currently, our order visibility is dependent on tenders from ONGC and similar entities. While our existing order book is less robust than before, we're optimistic about upcoming tenders that should boost seamless pipe production and sales in the next fiscal year.

Question 2: "What kind of growth do you expect in FY '27?"

Answer: Forecasting growth in FY '27 depends on market conditions and secured orders. Nonetheless, we anticipate growth given our improved capabilities. The extent of growth hinges on successful tender participation and market demand stabilization.

Question 3: "Can you provide the volume breakup reported in 3Q? And given that DI demand remains challenging, what are the steps we are taking to de-risk dependence on domestic demand through exports?"

Answer: Our total order book stands at 19.64 lakh tons, with DI comprising about 40%, roughly translating to 750,000 tons. We're pivoting towards export opportunities that we initially overlooked, with $45 million in DI export orders now on the books to alleviate domestic reliance.

Question 4: "What is your expectation regarding the reviving Jal Jeevan Mission? Is a sharp decline in budget allocation likely?"

Answer: While speculation is difficult, we anticipate the budget will allocate funds for the Jal Jeevan Mission similar to last year or potentially higher. This would open up funding, reigniting stalled projects and strong demand for DI pipes.

Question 5: "Are we seeing a reduction in receivable days? Was this due primarily to SAW pipes and job work, or are DI pipes also improving in this regard?"

Answer: Yes, we're experiencing a reduction in receivable days, largely due to receiving retention monies from previous exports and ongoing efforts to optimize collections. While DI has seen challenges, we are working on securing new realizations to mitigate overdue situations.

Question 6: "With respect to the DI segment, what are the current EBITDA per ton figures?"

Answer: Although we typically don't disclose product-wise margins, you're correct about margin compression. Current market conditions, influenced by disruptions in JJM funding, are affecting margins in the DI sector as excess supply has shifted the market dynamics.

Question 7: "What are your views on the oil and gas capex in light of moderating crude prices? Will this impact future capital expenditures?"

Answer: The volatility in crude prices doesn't seem to affect long-term demand-related projects in the oil and gas sector. Demand remains stable as projects are driven by consumption trends, suggesting that we won't witness a significant impact on capex due to short-term oil price fluctuations.