JINDALSAW - Jindal Saw Ltd. Share Price

In the earnings call for Q4 FY '26 held on April 28, 2026, management provided a cautious outlook for the company, noting a decline in financial performance compared to both the previous quarter and the prior fiscal year. Key points highlighted include:

1. Revenue Declines: Stand-alone total income for FY '26 was reported at INR 14,745 crores, down 19% from INR 18,178 crores in FY '25. Q4 total income was INR 3,852 crores, a decrease of about 7% compared to Q3 FY '26. The consolidated total income for FY '26 stood at INR 17,987 crores, down 14% from INR 20,948 crores.

2. Profitability Challenges: For Q4 FY '26, EBITDA declined to INR 413 crores from INR 527 crores in Q3, while PAT dropped to INR 114 crores from INR 227 crores, indicating a 50% reduction in profitability.

3. Market Conditions and Demand: A significant factor affecting performance was the decline in sales in the ductile iron pipe segment and sluggish project execution under the Jal Jeevan Mission, despite positive policy announcements. Management noted that ongoing geopolitical issues in the MENA region led to the suspension of export shipments, with 6 lakh metric tons on hold.

4. Foreign Exchange Losses: The company recorded a foreign exchange cost of INR 48 crores due to a sharp depreciation of the Indian rupee against the dollar during the quarter.

5. Future Prospects: Management expects that improvement in the geopolitical landscape will lead to a rapid resumption of export shipments, with estimates suggesting that the MENA region will invest significantly in energy infrastructure. They also anticipate the continuation of momentum in the water pipe business as government funding flows from the Jal Jeevan Mission.

6. Capex Plans: Planned capital expenditures for FY '27 are projected to be around INR 500-700 crores to enhance operational efficiencies and capacity across various facilities, particularly in the MENA region.

Overall, while management remains optimistic about potential recovery and growth opportunities, the immediate outlook is tempered by current market volatility and geopolitical challenges.

Q&A Section Highlights from Jindal Saw's Q4 FY '26 Earnings Conference Call

Question 1: Dhananjai Bagrodia: How are we getting feelers from other regions? Is there a demand uptick expected in FY '27?

Answer: As of now, communication with MENA customers is limited, but there is a sense of urgency to resume stalled projects. Demand may not return overnight, but we expect an acceleration due to geopolitical factors. There's optimism regarding increased project activity in FY '27 as firms push to resolve delays.

Question 2: Dhananjai Bagrodia: How is the demand in India, particularly related to the Jal Jeevan Mission?

Answer: Demand remains stable, with state governments arranging their own funds independent of the Jal Jeevan Mission. While project executions have slowed, we expect a revival soon, as financing issues are addressed and past contracts are resumed.

Question 3: Dhananjai Bagrodia: With rising steel prices, will inflation affect margins?

Answer: We maintain a just-in-time steel inventory, reducing the impact of price fluctuations. Additionally, our pricing mechanisms protect us against significant margin impacts. However, uncertainty remains as external costs might still escalate unpredictably.

Question 4: Dhananjai Bagrodia: Are margins likely to improve heading into FY '27?

Answer: While there is hope for margin recovery, it's unpredictable. Factors like fixed overheads and raw material prices will play crucial roles in shaping our financial performance. We aim for better margins, but the environment remains volatile.

Question 5: Dhananjai Bagrodia: What is the expected CapEx for the next few years?

Answer: For FY '26, we project INR 500-700 crores in CapEx. In coming years, around INR 400-600 crores seems feasible as we still focus on enhancing current capacity rather than major new projects, allowing us to optimize existing assets.

Question 6: Digant Haria: Do we foresee overcapacity in our product segments?

Answer: Ductile iron pipes may face overcapacity due to previous expansions based on anticipated demand that has not materialized. However, other segments like seamless and LSAW pipes are positioned competitively, allowing us to ramp up operations without oversupply concerns.

Question 7: Gaurav Nigam: What potential impacts do increasing stainless-steel pipe capacities have on our business?

Answer: As competitors add capacity, we are focused on distinguishing our product quality in both seamless and welded sectors. We expect margin challenges but aim to capture high-value segments, particularly where stringent quality standards are required.

Question 8: Sailesh Raja: How will we manage order selection amid lower intake due to the MENA situation?

Answer: We will prioritize high-margin orders as the MENA region stabilizes. Currently, our production capabilities are fully booked; however, we're navigating the transport logistics challenge before resuming effective order fulfillment.

Question 9: Vanshika Jain: What is the expectation regarding executing projects under Jal Jeevan Mission 2.0?

Answer: Execution under Jal Jeevan Mission is likely to gain traction post-monsoon, as states secure necessary financing. We're currently seeing state-backed projects in execution, but anticipating a swift kick-off for Jal Jeevan related works will take some time.

Question 10: Falguni Dutta: Can you give insights on the current demand for seamless pipes in the domestic market?

Answer: Domestic demand for seamless pipes is around 1.5 million tons, with strong government support for new projects likely boosting this further. Margins are expected to improve as demand aligns with upcoming deepwater exploration initiatives.