SURYAROSNI - Surya Roshni Ltd. Share Price

Surya Roshni Limited's management provided an optimistic outlook during the earnings call for Q4 and FY '25. For FY '26, they are targeting double-digit revenue growth in the Lighting & Consumer Durables segment, expecting revenues to reach approximately Rs.1,890 crores, driven by strong market demand and strategic expansion into the domestic wiring cable market with a projected first-year revenue of Rs.100 crores.

In the Steel Pipes segment, management anticipates crossing a volume of 1.1 million tons, supported by the completion of new capacities and an increase in efficiencies. They highlighted historical quarterly sales volumes for Q4 FY '25, which reached 2.60 lakh tons, representing a 9% year-on-year growth. Overall revenue from the Steel segment for the year was Rs.5,749 crores, with a strategy focused on value-added products, notably API and galvanized pipes.

Key financial numbers shared include:

• Revenue for Q4 FY '25: Rs.2,146 crores (3% YoY growth)
• EBITDA: Rs.211 crores (22% YoY growth)
• Profit After Tax (PAT): Rs.130 crores (25% YoY growth)
• For FY '25, total revenue stood at Rs.7,436 crores (5% decline), yet EBITDA improved by 4% to Rs.609 crores, and PAT grew by 5% to Rs.347 crores.
• The company has a zero-debt status with a net cash surplus of Rs.342 crores as of March 31, 2025.

Management outlined a capital expenditure plan of Rs.500 crores over two years, focusing on enhancing production capabilities, particularly through a new facility in Hindupur and upgrades in existing plants, thereby expecting improvements in EBITDA per ton to reach Rs.5,800-Rs.6,000 in FY '26.

In summary, management is confident in achieving robust growth driven by strategic expansions and operational efficiencies while maintaining a strong financial position.

1. Question: "Once we commence our Hindupur facility, what type of cost saving can one assume on the overall number?"

Answer: I can confirm that we have planned an investment of Rs.500 crores, with Rs.250 crores aimed at capacity enhancements. This will significantly improve our EBITDA margins, as our fixed costs will be reduced. We anticipate an improvement of approximately Rs.250 to Rs.300 per ton in our existing facility once Hindupur is operational.

2. Question: "So, how confident are we in terms of achieving the volume guidance of 1.1 million tons, especially with the export target of 20,000 tons in the US?"

Answer: We are quite confident based on our current capacity utilization of around 85%. The U.S. market opening for API pipes presents a substantial opportunity, allowing us to achieve our volume target. We believe the growth trajectory this year can reach up to 20%.

3. Question: "What assurances can you provide on your ability to achieve Rs.100 crores in revenue from the wiring cable segment in the first year?"

Answer: We plan to reach Rs.100 crores in the first eight months, starting operations in June. Our existing channel partner relationships with electrical outlets already engaged in selling similar products give us a solid foundation to meet this target. We see a robust market opportunity.

4. Question: "What is your outlook on the new capacity, and how will it impact volume and revenue?"

Answer: We have an overall capacity plan to reach approximately 2 million tons by 2027, with significant contributions from greenfield projects. This enhanced capacity should allow revenue potential in the range of Rs.3,500 crores to Rs.4,000 crores, associated primarily with higher-margin products.

5. Question: "Could you elaborate on the impact of tariffs on your exports, particularly with the U.S. market?"

Answer: The reduced import duty for our API pipes from 19% to 2.3% provides a significant competitive advantage. This will enhance our market prospects in the U.S. Overall, the tariff dynamics will likely be beneficial for our growth strategy in exports across categories.

6. Question: "How do you project EBITDA margins per ton over the next two years with new capacities coming online?"

Answer: We're targeting an annual improvement of Rs.200 to Rs.400 per ton. Our strategic focus on high-value products, particularly API and spiral pipes, positions us well. Overall, steady growth in margins is expected, driven by our operational efficiencies and product mix enhancements.