MAHSEAMLES - Maharashtra Seamless Ltd. Share Price

During the Q3 FY26 earnings conference call, management provided a cautious yet optimistic outlook for Maharashtra Seamless Limited. Notable highlights include:

1. Financial Performance: The total EBITDA for the quarter showed an improvement, attributed primarily to enhanced margins in the seamless pipes segment and an uptick in other income due to positive market sentiment in the gold and silver sectors.

2. Order Book: The current order book stands at INR 1,302 crores, with 33% representing orders from ONGC and Oil India. This reflects a consistent outlook compared to the previous quarter, indicating stable demand.

3. Capacity and Production: A significant project is underway to expand the finishing capacity at the Telangana plant, which involves an investment of INR 90 crores. This expansion is poised to alleviate existing bottlenecks and is expected to enhance operational efficiencies.

4. Product Segment Dynamics: Management reiterated that their seamless pipe offerings remain robust, particularly in sectors where government spending is pivotal. Despite challenges in the broader economic environment, the company's tonnage dispatched remained stable at 1,01,000 tons in Q3.

5. Market Conditions: The company is keenly awaiting the upcoming Union Budget, which may offer insights into future government expenditure in the oil and gas sector"”essential for driving growth.

6. Cash Reserves: Maharashtra Seamless holds liquid investments of approximately INR 3,500 crores, providing a buffer for potential inorganic growth opportunities while being cautious about entering any acquisitions.

7. Margins: Management expects that EBITDA per ton will remain stable, projected in the range of INR 10,000 to INR 15,000 per ton, without anticipating a significant decline in margins.

8. Future Plans: There is ongoing consideration for participating in the premium connections segment, with market estimates between 50,000 to 100,000 tons annually, currently dominated by imports.

Overall, management remains focused on maintaining stability and exploring growth avenues while managing risks associated with the cyclical nature of the market.

Question 1: "Sir, I wanted to understand what is the current product mix between the standard and value-added products for us? And how is the margin difference between these two?"

Answer: We don't discuss product-wise margins, but our current order book stands at INR1,302 crores, with 33% from ONGC and Oil India. This order book is similar to the previous quarter, albeit with a higher proportion of oil sector orders.

Question 2: "Sir, any color on the capacity that we're planning to set up in...?"

Answer: We have initiated two projects, including a cold drawn pipes project, which is complete. For our Telangana finishing line, we've issued purchase orders worth INR90 crores and expect portions to be operational this quarter.

Question 3: "In the last quarter, you had mentioned that imports are around 20% to 25% of the domestic industry size of 9 lakh tons? Has it reduced this quarter?"

Answer: No, the import percentage hasn't reduced, remaining around that 20-25%. Despite ongoing dumping from China, we have maintained and improved our margins, and our tonnage dispatched has not declined.

Question 4: "Sir, I just wanted to know about your INR852 crores capital expenditure. By when do you plan to spend this amount?"

Answer: We've started the Telangana project and will address other capital items once this project is complete. The finishing line will increase finishing capacity, enabling us to utilize our existing production capacity better.

Question 5: "What is the current market size for premium connections in India, and what market share are you looking to acquire?"

Answer: The premium connections market ranges from 50,000 to 100,000 tons annually, primarily supplied by Jindal Saw and imports. Our goal is to capture a portion of this market through our planned production of premium connections, expected to commence in six months.