MAANALU - MAAN ALUMINIUM LIMITED Share Price

Management provided a strategic outlook emphasizing Maan Aluminium's transformation from a commodity extrusion player to a technology-driven, high-value-added aluminum converter. Key forward-looking points from the call include:

1. Expanded Capacity: The company has significantly increased its extrusion capacity from 10,000 tons to 24,000 tons per annum and is now able to handle 300mm wide profiles and 7 series alloys. This expansion aims to enter growth markets like defense, aerospace, automotive, and complex architectural applications.

2. Strategic Investments: Maan Aluminium is planning a cumulative capex of approximately INR 190 crores over the next three years, which includes further enhancements at its Pithampur facility and expansions at the Dewas plant to focus on precision tubing and high-value downstream products.

3. Revenue Projections: For FY 27, the management expects to achieve more than 18,000 tons in volume, projecting around INR 500 crores in turnover for the manufacturing side.

4. Margin Improvement: The outlook suggests that EBITDA margins could normalize around 8% over the medium term, supported by operating leverage, improved product mix, and a higher contribution from value-added products.

5. Market Positioning: The management highlighted strong opportunities for import substitution, particularly in defense and aerospace, while they remain cautiously optimistic about the prospect of improved conditions post the discussions surrounding the withdrawal of US tariffs.

6. Short-Term Challenges: While the current quarter reflected performance impacted by lower trading volumes and muted export demand, the management sees the ramp-up of new capabilities and operations leading to a gradual improvement from FY 27 onwards.

7. Expected Contributions from Dewas Facility: From FY 28 onwards, the Dewas plant is expected to contribute around INR 100 crores of annual revenue at optimal utilization, enhancing profit margins beyond the existing commodity-focused offerings.

The management conveyed confidence in the long-term growth trajectory, underscoring the shift in focus towards more profitable sectors while acknowledging the transitional challenges faced.

Question: Sir, I just wanted to understand that on the manufacturing business, you indicated that the volume and the revenue was driven by the higher volume by 10%. So, can you help us understand what was the capacity utilization during the quarter and how shall we see a ramp-up of the newly expansion capacity from 10,000 to 24,000 over next 9 to 12 months?
Answer: Our capacity utilization was approximately 25% for the quarter. The ramp-up for the new capacity typically takes 12 to 18 months to stabilize, particularly for complex profiles. We are onboarding new customers in sectors like automotive and defense, so we expect gradual sequential improvement starting FY27 rather than an overnight jump.

Question: I wanted to understand, what is the realization per metric ton premium that we'll get on this anodizing and the powder coated extrusions? And what is the margin, additional margin we can expect from these value-added products?
Answer: We expect to earn around Rs.15,000 to Rs.20,000 per ton for anodizing and about Rs.10,000 to Rs.12,000 for powder coating. Our facility will focus on these value-added processes, and with the ramp-up in capacity, we anticipate improvements in our overall margin profile.

Question: So, during this quarter, what was the cost pertaining to depreciation and the ramp-up cost pertaining to the new unit that we capitalized during the quarter?
Answer: The depreciation cost for the quarter was around Rs.2 crores. I will need to get back to you regarding the expenses related to the ramp-up costs from the new facility.

Question: Sir, in terms of the margin, because Dewas would be a key profitability driver, what sort of EBITDA per ton one can work on with Dewas kicking in and the anodizing facility also coming in?
Answer: We anticipate gradually improving EBITDA margins, normalizing around 8% over the medium term. The key drivers will be operating leverage and a higher share of value-added sales. Current margins reflect transitional factors such as underutilization and higher costs from recent expansions.

Question: So, on these value-added capacities, won't they create a bottleneck towards adding margins ahead?
Answer: No, we don't expect bottlenecks. We're actively working to execute additional facilities for value addition. The plans for anodizing and powder coating at Pithampur are underway, and we aim to expand our capabilities, addressing any existing constraints in a timely manner.

Question: What kind of volumes do we expect for FY '26, '27, and '28, and what kind of EBITDA per ton can we expect on a conservative basis?
Answer: We expect to achieve over 18,000 tons next year, with total revenue from manufacturing predicted at around Rs.500 crores. As for EBITDA per ton, we are looking at approximately USD450 overall, reflecting a strategic transition towards higher-value products and improved margins over the medium term.

Question: What is the pricing differential between your costing and local supplier pricing in the US market?
Answer: Local prices are higher; for anodizing, it's around $500 to $600 per ton, and for extrusion, around $300 to $400 per ton. There's also a potential subsidy of $300 per ton for using American products, affecting our competitiveness.

Question: What kind of EBITDA per ton can we expect from the precision tubing at Dewas?
Answer: We anticipate EBITDA margins of around Rs.100 per kg from the precision tubing segment once operational, which should positively impact our overall profitability as we ramp up production.