SURYAROSNI - Surya Roshni Ltd. Share Price

In the Q3 FY 2026 earnings call for Surya Roshni Limited, management provided a positive outlook for the company's performance. They reported consolidated revenue of Rs. 1,927 crores, up 3% year-on-year, with an EBITDA of Rs. 148 crores and a PAT of Rs. 80 crores. For the nine-month period ended December 2025, revenue was Rs. 5,377 crores, EBITDA stood at Rs. 371 crores, and PAT was Rs. 188 crores. The company maintains a zero-debt status with a net cash surplus of Rs. 245 crores.

Management highlighted key growth drivers, particularly in the Lighting and Consumer Durable segment, which saw Q3 revenues of Rs. 476 crores, marking a 6% increase year-on-year. The steel pipe segment recorded revenues of Rs. 1,451 crores, buoyed by a dispatch volume of 2.37 lakh tonnes, reflecting steady year-on-year growth.

For FY 2026, management anticipates total dispatches to be around 9.35-9.40 lakh tonnes, with an ambitious target of 11 lakh tonnes for FY 2027, projecting an EBITDA per tonne of Rs. 5,000. They expect to achieve an EBITDA of Rs. 540-550 crores in the Steel division and Rs. 200 crores in the Lighting division by the next fiscal year, which would contribute to a total EBITDA of Rs. 750 crores.

Management also addressed recent challenges, including a significant reduction in API segment volumes due to market conditions, and indicated recovery in orders and volume in the coming quarters. They remain focused on capacity expansions and have plans to enhance operational efficiencies to improve margins. The order book stands at approximately Rs. 500 crores for Steel and Rs. 150 crores for Lighting, underscoring ongoing demand and growth potential amidst market volatility.

Here are the major questions and detailed answers from the Q&A section of the earnings call transcript for Surya Roshni Limited:

Q1: The volume we targeted for this quarter was 2.6 lakh tonnes, but we fell short by 10% - 15%. What was the reason for this decline?

A1: We expected around 6.5 lakh tonnes overall and targeted 2.5 lakh to 2.6 lakh tonnes for this quarter. The main setback was a 35% decline in the API segment. While we saw growth in categories like Section Pipes and Galvanizing with increases of 25% and 13% respectively, the overall volume was affected by lower stocking as prices fell, particularly in the Black Round Pipe category, which saw an 8% decline.

Q2: Steel prices have increased recently. Shouldn't we expect restocking to occur now?

A2: Yes, restocking has already begun as of late December. We anticipate a significant volume surge in January and February. In Q3, EBITDA was impacted by a stock loss of around Rs. 12 crores and a drastic decline in API, totaling an effect of approximately Rs. 20 crores. Moving forward, in Q4, the stock gains are expected to uplift EBITDA by around Rs. 40 crores to Rs. 45 crores.

Q3: What is your EBITDA expectation for Q4, considering inventory gains and projected volumes?

A3: For Q4, we estimate an overall EBITDA of around Rs. 200 crores to Rs. 210 crores, which includes contributions from both Steel and Lighting divisions. We expect to achieve approximately 2.90 lakh tonnes of volume in this quarter.

Q4: Are you concerned about losing market share due to missing volume targets? What actions will be taken?

A4: We don't believe we've lost market share. Our data shows we're performing consistently against peers. The difficulties were primarily tied to API performance in this quarter. We're increasing CAPEX and expect to maintain our EBITDA around Rs. 585 crores to Rs. 590 crores for the full year, which reflects our operational strength.

Q5: Regarding exports, do you foresee a contraction in volumes due to issues like EU quotas?

A5: With recent FTAs signed with the EU and US, we are optimistic. Although the EU quota may reduce our export volumes, we've countered this by increasing exports to the Middle East and entering new African markets. In Q3, our export volumes grew about 19%, and we continue to pursue recovery in the Hollow Sections market.

Q6: Can you provide insight into the order book for Professional Lighting and expected margins compared to B2C?

A6: We currently have an order book of around Rs. 150 crores for the B2B sector, with an execution timeline of 3-4 months. This segment enjoys better margins than the B2C sector, driven by robust infrastructure spending. We foresee strong demand as all state budgets increase for infrastructure.

Q7: What is the outlook for API Pipe volumes in the coming quarters?

A7: While the API market has contracted, we expect a rebound as new tenders come into play. We're adapting our strategy toward ERW pipes for ONGC, which we believe will be advantageous moving forward. These pipes are expected to see increased demand as older installations reach their end-of-life.

Q8: Given the current challenges and past volume targets, are you considering options like share buybacks?

A8: We appreciate your insights. While past targets have faced challenges, we boast a strong balance sheet. Share buyback is a valid suggestion we will present to the Board. Our intention is to maximize shareholder value, potentially through interim dividends or buybacks as we continue generating cash surplus.

Q9: How will the Carbon Border Adjustment Mechanism impact our market?

A9: We expect some impact, resulting in a reduction of our exports to Europe. Currently, we export about 2,500 to 3,000 tonnes monthly, and we anticipate a loss of around 10,000 to 12,000 tonnes annually to this regulation. However, we aim to offset this with increased sales in the Middle East and Africa.