JINDALSAW - Jindal Saw Ltd. Share Price

Management's outlook reflects cautious optimism despite recent challenges. The total order book has reached an impressive 19.25 lakh tons as of September 2025, up from 15.60 lakh tons in June 2025. This marks a significant increase, with strong orders particularly in the water infrastructure sector signaling future growth potential. A notable recent achievement includes securing a new export contract for 6.22 lakh tons of helical pipes for a project in Saudi Arabia, with manufacturing set to begin in Q3.

The company experienced a notable decline in financial performance for Q2 FY26, reporting total income of Rs.3,410 crores compared to Rs.3,327 crores in Q1 FY26 and Rs.4,479 crores in Q2 FY25. EBITDA dropped to Rs.335 crores from Rs.560 crores in Q1 FY26, and net profit decreased to Rs.79 crores from Rs.364 crores.

Management identifies the underlying challenges as extended payment cycles from EPC companies impacting cash flow and operational stability. Yet, they expect a rebound as overall macroeconomic indicators remain strong, and liquidity issues are anticipated to resolve in the coming months.

Forward-looking points include:

1. Gradual operational and financial performance improvement anticipated from Q3 FY26 due to robust order backlog and healthy liquidity.
2. Discussions on larger government-funded projects potentially enhancing revenue, indicating that execution may be dependent on timely payments.
3. A planned capacity increase of 1.5 lakh metric tons per annum from a new seamless piercing mill expected to enhance output.

Overall, management emphasizes their readiness to adapt strategies to navigate the current landscape while leveraging the solid order book for future performance.

Question 1: Sailesh Raja: "We have an exports order backlog of 8 lakh tons which includes 6.2 lakh tons of job work. Can you clarify the composition of the remaining 1.8 lakh tons?"

Answer: "We have a total order book of 19.25 lakh tons, with 30-32% being exports. The helical pipe order for KSA is 6.22 lakh tons, representing 12-13%. The remaining 1.8 lakh tons includes both LSAW and other types. So, exports for longitudinal pipes, around 1.15 lakh tons for oil and gas and 60,000 tons for seamless, are included."

Question 2: Sailesh Raja: "Is there scope to improve our gross profit to EBITDA conversion rate?"

Answer: "Last year, we achieved close to 2 million tons in sales. We've increased seamless capacity and are confident about returning to previous performance levels. The current liquidity issues may cause delays, but with an improved operational environment, we anticipate better conversion rates as we recover."

Question 3: Sailesh Raja: "Are we participating in any newly announced large government projects?"

Answer: "Yes, we plan to participate in these tenders. However, there may be delays from announcement to actualization. We're optimistic about improving our performance in Q3 and Q4 based on these opportunities."

Question 4: Praveen Agarwal: "How were production figures in Q2 compared to the previous FY?"

Answer: "Lower demand from the ductile iron sector led to reduced production in Q2. We did attempt to control production to manage inventory levels, but production figures were still lower compared to the previous year's Q2."

Question 5: Radha: "How much execution are you expecting for the 6 lakh tons of job work this FY?"

Answer: "We anticipate starting production shortly and expect to produce around 1.25 to 1.5 lakh tons this financial year. The profitability will align with our normal export orders, although shipment will depend on upcoming logistics."

Question 6: Rajesh Agarwal: "Is the decline in margins due to volumes or one-off issues?"

Answer: "The decline in margins primarily stems from lower production and sales, affecting overhead absorption. We expect an improvement in future quarters, but we advise that the recovery of margins will be gradual, not immediate."

Question 7: Bhavik Shah: "What gives you confidence that volumes will pick up in the next two quarters?"

Answer: "We are seeing increasing demand signals from domestic buyers, and state governments are making efforts to release funds. This should lead to improving demand and volumes, although recovery may be gradual."

Question 8: Shweta Dikshit: "What is the expected quarterly output from the new seamless plant?"

Answer: "From Q4 onwards, we project the annual output to increase to around 3.5 lakh tons. This equates to an approximate run rate of 90,000 tons quarterly, although actual figures will depend on various operational factors."

Question 9: Radha: "What is the CAPEX outlook for FY27 and FY28?"

Answer: "For FY26, we anticipate maintenance CAPEX between Rs. 600-700 crores, with no significant growth CAPEX planned in India. The focus will primarily be on efficiency and modernization projects to optimize existing capacities."

Question 10: Bhavik Shah: "Regarding the job work revenue recognition, will there be constraints in revenue visibility?"

Answer: "Yes, revenue will be recognized only to the extent of conversion fees for job work. The total revenue recognized will be reflective of this, not including the full value of the job work, thus limiting immediate impact on top-line figures."