Surya Roshni Limited (SURYAROSNI) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Surya Roshni Limited Q1 FY27 Earnings Conference Call. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company which are based on beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and may involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. Should you need assistance during this conference call, please signal an operator by pressing star 10-0 on your touch-door phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Raju Bista, Managing Director, for his opening remarks. Thank you, and over to you, sir.

Yeah, good evening, everyone. I am Daju Bista, Managing Director, Surya Roshni Limited. On behalf of Surya Roshni Limited, I extend a very warm welcome once again to everyone for joining us today. On this call, we are joined by Mr. B.B. Singhal, CFO and Company Secretary, Mr. Gaurav Jain, CEO, Steel Division, Mr. Vasumitra Pandey, CEO, Lighting and Consumer Durable, Mr. Naresh Singhal, Executive Director. Steele and S.J., our investor relations advisor. I hope everyone had an opportunity to go through the financial results, which were published just almost one hour before. Now, moving on to the overall financial performance highlights. In Q1 FY27, our consolidated revenue stood at 2046 crore. Up by 28% year on year. Epita for the quarter at 120 crore. Paid for the quarter stood at 60 crore. Up by 77% year on year. We remain a zero debt company with a net cash surplus of about 155 crore as of June 30, 2026. Coming to the lighting and consumer durable, the lighting and consumer durable segment delivered its strongest ever first quarter with revenues of 456 crore at about growth of 15% year-on-year. Good morning, everyone. Broad base led by LED bulb, baton, downlighter alongside continued momentum in appliances and professional lighting. EBITDA for the quarter stood at 36 crore, which is up by 17% year-on-year, with margins improving to 7.9% in Q1 FY26. Even as we pass on an input cost increase of approximately about 7% due to the quarter with minimal impact on profitability, professional lighting ended the quarter with an order book of approximately 150 crore providing healthy near-term education visibility. In wire and cables, we achieve close to our FY26 sales volume within Q1 of FY27 itself, supported by our direct benefit transfer electrician loyalty program, where enrollment have gone up to 36,000 as of today. Our FY26 revenue target for the wire business remains to 50 crore on track with our three years guidance of 500 crore rupees. We remain fully on track to deliver our FY27 guidance of about 22 to 23 percent value growth and about 25 percent of volume growth. In lighting, and with the festive seasons now underway, we expect the next three quarters to be more strongly supported by deeper distribution penetration and continued investment in brand building. Now, moving on to the steel pipe and strip segment, the steel pipe segment delivers a strongest start to the year. Revenues for the quarter stood at Rs.1590 crore, which is up by 32% year-on-year, with volume growth of around 21% year-on-year to 2.28 lakh tons, achieving its ever-highest sale in quarter one. The growth was based led by Section 5 ERW API pipe, supported by a sharp rise in export volumes, following the opening of our U.S. market, spiral cold rolling and GP pipe, even as galvanized pipes remain soft due to continued delay in government fund releases. EBITDA for the quarter stood at about 84 crores, up 63% year-on-year, with EBITDA pertained to Rs. 4,006 against Rs. 2,922 in Q1 of FY26. The capacity utilization stood approximately 82%, value added product contributed 47% of overall volume, and export accounted for 20% of segment volumes. Our order book across trade, export, APN, spiral pipe stood at 808 crore, including 78,000 ton of export API orders for the U.S. market. Looking ahead, our strategy for the business rest on three pillars, capacity expansion and depending our value-added product mix and An instructional cost reduction. Three new DFT mills are being commissioned across Gujarat, Malanpur and Badulgarh plant between August and December 2026, and we will continue to add 2 to 3 lakh ton of capacity every year, targeting overall capacity of about 16 lakh ton in FY26 and approximately 2 million ton of capacity by FY28-29. On cost, our various automation, energy efficiency, and replacing all plants, initiatives are directed at important cost reduction of about 1,100 rupees, and we are fully committed that In full year of FY27, guidance of 4,600 to 4,700 per ton EBITDA will be achieved. We remain confident that our current global supply chain present a structural long-term opportunity for efficient Indian manufacturers with integrated capabilities. Exceptionally doing well positioned to capture that upside across both our businesses. Now, I would like to request Mr. Bibi Singhal to share his view.

Thank you, Mr. Inspector and Mr. And a very good afternoon to all the participants on the call. For the quarter, the revenue was 2046 growth as compared to 1605 growth, a growth of 28% year-on-year basis. Beta and Pats stood at Rs.128 crore and Rs.60 crore as compared to Rs.83 crore and Rs.32 crore in Q1 FY26, a growth of 46% and 77% year-on-year basis respectively. In Lighting and Consumer Durable, revenue for the quarter school at Rs. 456 crore as against Rs. 397 crore. Thank you. Last year, a growth of 37% Y1YB, a beta and PBT. Thank you. With this, I conclude the presentation and we can now open the floor for further questions and answers.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hand-tests while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

We have a first question from the line

of Viraj Bhehta from Eringma Investment Partners. Please go ahead.

Yeah, hello, sir. Congratulations, Rajuji, for our performance. Sir, my first question was, you said we will do 47 to 4800 rupees of EBITDA per time. But if I look at the first quarter, it's not 4,000 rupees EBITDA per time. So, 47-4800, we will have to turn 5,000 to 5,000 to 5,000 to 5,000. So, what does that mean?

Good morning, everyone, and welcome to the call. Bay sales availability of 7,000 ton of materials is not available in the port. Good morning, everyone, and welcome to the call. Good morning, everyone. Good morning, everyone. Thank you. Similarly, some input costs have increased, mainly in the coating material, gas and ORM, and it has approximately 200 rupees per button. But, I also want to say that the ocean freight impact was particularly much in this quarter. Mainly, we had the first order of booking because of that. Now, almost all the orders are coming in the hands of us, we are taking the new freight. Thank you. I was concerned about the cost of $4,600 to $4,700, and the cost of $4,600 to $4,700, and the cost of $4,600 to $4,700. I mean, it will be a whole year. And as much profitability as we have received from the last call, we will achieve that. We are fully confident.

Sure, sir. Thank you so much. You have explained in a lot of detail. Sir, the second question is regarding your May and June, April and June, the price of the steel is correct. So, how much inventory loss has happened in this quarter, roughly?

Thank you. So overall, in the whole quarter, there is no impact in Q1. More or less, I think it's stable price. The price, 1000 rupiah up and down, this level is going to be the price. And in the quarter, there will be a benefit of approximately 25,000 tons of vessels already in port, and in the next quarter, there will also be a positive impact on our balance sheet. Because the important material is coming, the price will reasonably fit as compared to Domestika.

Right, sir. Sure, sir. I don't have any more questions. I'll come back in a minute.

Thank you. We have our next question from the line of Kiran from Tabletree Capital. Please go ahead.

Thank you for the opportunity. A couple of questions. First thing on order book within the steel segment, we had an order book in March ending 1,000 crores as given in the presentation. Now, in this quarter, we are saying in spite of all these increase in exports and everything else, our order book is 800 crores. So there's an order book decrease of 200 crores. I mean, should I assume that this 800 crore has a higher proportion of exports? I have a high proportion of exports, and therefore, we continue to do better margins, because order book is so much, 20 percent, it's clear, it's clear, it's clear, it's clear, it's clear, it's clear, it's clear, it's clear, it's clear.

Good morning, everyone, and welcome to the call. And similarly, because of the Middle East, we used to do a quarter of 15-20, so almost one-third of the material is going to be possible. Thank you. Otherwise, more or less, you will see. Thank you. Call rolling segment is small, so it's about 10% of our business, and the government and the actual user is about 15% of our business, so more or less, almost 75% to 80% of our business is fixed, like distribution type of segment. Thank you.

Good morning, everyone, and welcome to the call. The reason why I'm asking, sir, is because APA spiral pipe, which was our highest average dollar per ton, it was quite high in FI26. So I'm going to ask that our export, which we're talking about in the US, 78,000 ton and everything, is it GI pipes or APA and spiral pipes?

No, this is an ERW API pipe. This is a new market that has been added in our market and in this market, the EBITDA button is good. This quarter was about 70 to 100, mainly on account of freight. But long-term, break-ball tie-up, particularly for the U.S. market, where there is a large volume, so in the quarter, there will be improvement in the Ebitra.

Thank you, everyone, and welcome to the call. This is the US opportunity, the exports opportunity, which has opened for a new product, and previously also used to export a little, but now it's a completely new product like you just said, here, WACI. From FI27, US focused revenue or just general export revenue, how can you see the growth in FI28, especially in the API business, because the EBITDA button is much higher. So, it will be very good to paint a picture for us to say, in exports, all the growth are and all this export growth will come at a higher EBITDA button.

See, there are two things, as I mentioned earlier. Good morning, everyone, and welcome to the call. So, that is one. So, simultaneously, I have told you that our biggest thrust is now that we are focused on high value addition products. So, gradually, you can see that 40-42% increased, and now that 47% increased. Thank you.

So, it was

about 15-16%, precisely 17%. Now, the FY27, it has increased to 20%. So, gradually, it will go up to like about 25%.

We have our next question from Lino. Love Gupta from Counter-Cyclical Investments. Please, go ahead.

So, last call, you said that you will consider buying back. Is there any update on the new route?

Thank you. It's particularly in 2-3 quarters, because of the steel and steel, the working capital has increased a lot of money, but very soon, I mean, we will do some corporate actions, please tell you quickly.

And second, there is also a new merger.

So, this is also the topic of corporate action. Now, let's see, the board is made in place with respect to buyback or bemerger, but as a managing director of the company, I would say that both of the business are doing well, even the lighting consumer and the steel segment, so I think that this is the appropriate time, so I think that this is the appropriate time.

Thank you so much.

Thank you. We have our next question from the line of. Pranav from the enterprises. Please go ahead.

Hi, sir. Thanks a lot for the opportunity. Sir, in last quarter, you had said that you will come to a decision by indexed about meeting on demerger. And also, second thing is, what in macro and micro, Actually, is like, because two businesses have completely different cycles, different macro and different micro. So, why we take this reason as a reason to delay demerger or buyback, just for my clarity.

Good morning, everyone, and welcome to the call. Good morning, everyone. I've seen this all, and I feel like this is the right time, and again, I have one thing to say, we don't have a date. The bank has the same amount of service for many years. So, the company has all the shareholder's money, and the company's money is the shareholder's money, and the company's money is the shareholder's money.

Sir, that's why, because whenever I study this company, I feel that regulatory-wise or bank-wise or anything, there is no theoretical thing stopping demergers. Unless and until...

I don't think there's no logic to do demergers. I strongly believe.

Sir, another thing was that, as you said, you also got 7200 realisation for this quarter exports. But most of the EBITDA increase were eaten away by tariff increase. So going forward, you think that the tariffs have normalized or the pricing will take care of this EBITDA erosion that has happened, EBITDA erosion that has happened?

No, it's like the order book goes into the same price, but the new order, even the order in hand, the book is also included in the new freight, including the order in hand, and this is why you can see that we have a little bit more than 1,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 Thank you.

The last question from my side, you had guided that exports versus say 1.26, 1.3 lakh ton last year would be 2.4 or 2.5 lakh ton this year. So, and that will help, obviously, the EBITDA per ton for our company. So, does that outlook, volume outlook remain same? So, 10,000 ton per month, a U.S. market that had opened for us. Does this continue?

So, overall, as far as the U.S. market is concerned, we'll be doing like 1,20,000 to 1,25,000 tons of business during this entire 527.

So, total export will be upwards of 2.2, 2.2.

Yeah, the contribution of U.S. market probably will be around 10 to 11 percent. So, I think we will be doing around 3 lakh tons of export.

Okay. Thank you, sir.

Thank you. We have our next question from the line of Shantanu Basu from Smith Limited. Please go ahead.

Yes, sir. Am I audible? Yes, hi. So, sir, my first question is with regard to the Middle East situation. If you could just explain or give us some clarity with regard to how the Middle East situation is shaping up and how would we see it shaping up during the next few quarters. That is one. And the second question is when I'm looking at slide 18 of your presentation. I'm seeing that the API and Spiral 5 EBITDA per metric ton dropped very significantly in FY25-26 to 5,600 rupees, compared to 9,136 in FY22. Then, of course, it went up to 12,000, 10,000. So, what was the reason for the sharp drop, and how do you see it, and what is the figure in Q1 FY27, and how do you see the figure to improve in the coming quarter? That's all, sir.

See, let's see, the Middle East, you have told me, it's $300 to $400. That's not our hands. Thank you. How will it evolve? Precisely, it is a very difficult thing to say, not to be in our country, not to be in control of someone else. and welcome to the call.

Q1, FY27, Mick, it's not high, eh? Thank you. The call was 3,420 rupees per turn.

3,420 rupees?

So, it has a little bit of coating material impact on this spiral.

Okay, sir. And how do you see this figure in the rest of the three quarters?

So, this will gradually improve because we are getting new orders. I think that last year we would take 5,000 to 5,000 to 5,000 to 5,000.

For the full year? Okay.

Thank you. We have our next question from the line of Risham Jain from VVD Asset Managers. Please go ahead.

Hi, sir. Good evening. Congratulations on good set of volume growth. Sir, I have three questions. The first thing is that generally API types, India's tenders are very slow last year. But now we see that there are a lot of new candles floating on. So, there will be a few views on that for the second half.

So rest, the rest, the rest, the rest, are the rest.

The other question is that our capacity expansion is already about 16 lakh tons, I think, and we will do 2-3 lakh tons. And where do we do it? South, East, where your capacity is slightly lower, will we do it? And the third question, you have told us that the first guide was so much in Ebitda. So, last time, you had 700 crore Ebitda guidance for Ebitda. So, these are the three questions.

So, first, I have told you that the API tender, the business, You are very much correct, and we participate in it, but when it comes to the process, there is a little bit of time. So, that is one. The second thing is, we have 14,000,000 ton capacity. So, until the end of this year, the expansion of the bill will come to the commission, so, it will be 16,000,000 ton. And, in FY28-29, there will be 2 million ton capacity. This capacity will be related to the capacity. Overall, you talked about EBITDA. So, quarter one was our EBITDA. So, we are expecting that Q2 is 150 crores. So, followed by our target for the rest H2. So, almost 670 to 680 के आजपास जो है, इबिटा पूरे साल करेगा, और करीब-करीब 9400-9500 करोड के आजपास का जो है, revenue turnover रहेगा.

Okay. Sir, Khali, you understand where the capacity you will expand?

So, we have also done in Gujarat, in Wallier Plant and in South. And the next capacity we are doing in South. And already, we have 10 acres, 10 acres of additional land. We have been creating a set of 15,000 tons of extra extra. And the first mill of commissioning will be in January of 2017. I mean, this year, the first mill of commissioning will be coming. Total 4 mil ka plant rahe ga, or 60 crore ka aaspaas ka investment kar rahae ga. This is the additional name, but the addition is now, which is currently 50 in Indupur. So it's about 3 lakhs ton, our capacity increase.

Thank you, sir. All the best.

Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one on your touch tune phone. Anyone who wishes to ask a question may press star and one. Next question is from the line of Viraj Mehta from Enigma Investment Partners. Please go ahead.

Yeah. Hello, sir. Sir, just a couple of clarifications. You said 680 crore EBITDA for the full year. That means 150 crore in the second quarter. Is that correct?

Yes.

150, 160 crore in the second quarter. Hello.

Yeah, sir.

And sir, this is the issue of freight in the export. So, are any of those orders, has that continued even in the second quarter in terms of July too? I'm sure you're aware that there are 20 margin hit on this freight.

We are taking all impact of freight ratios. And we are finding other methods also, like U.S. for example, it has a nominal impact on the U.S.

Right, sir. And, sir, last question. One, sir, what is the, because we have had spillover, sir, first quarter, second quarter, maybe spillover, because you said it was 18,000 tons, so, sir, how much volume of Q2 will you do with this? July has already been. So, I'm sure there is some rough sense you have.

This is why we have increased the guidance in Q2, which will reflect the effect in Q2.

So, the amount of absolute amount will be 2.7, 2.6, 2.7, 2.8.

2.6 minimum. 2.6 to 2.6.

Okay, sir. Thank you. Thank you so much.

Thank you. A reminder to all participants, if you wish to ask any question, you may press star and one. Anyone who wishes to ask a question, may press star and one or be touched on it. Next question is from the line of Raj Mehta, from Raj Mehta, please go ahead.

Uh, but, uh... First of all, I was asked that in the last four years, our sales growth and the EPS growth is almost constant. In our company, we have also completed the CAPEX. But the competitors, they have also faced the same thing in this quarter. Hello, everyone, and welcome to the call. They have a margin of growth, and they have gained the market share. So, when you focus on the export, you have to capture the market. So, I have a view that domestically, the margin pressure that you face, and welcome to the call. If you don't get a little volume, then you have to buy a little margin and buy a lot of money on the ground.

All companies have their strengths and weaknesses, and if I talk to my peers, our volume was 32% of growth, and value terms was 32% of growth. Thank you. Thank you. Thank you.

Sir, this is because of your growth. Because last year, when you were in June, when you were in SAP implementation or accounting, you faced a few months, because of your base effect is less. Thank you. So, if you look at the steel division, then you see the quarter-on-quarter impact, so it's more than when you compare to the competitors. So, your ROE, ROC, mid-teens, so we can create value-creative, Thank you.

Thank you, everyone, and welcome to the call. Good morning, everyone, and welcome to the call.

Sir, my second question was that we are increasing our mix in value-added products in our mix. So, as I said, 42-43% to 47% of the value-added products are mixed. So, when you get to 50% of the products, the impact of the steel pricing is the fluctuation. So, in the fluctuation, we have 50% of our products. Thank you. Constantly fluctuation, these numbers based on the pricing of this thing. So, our motive is because if you can see the competitors, all of them are going to shift to value-added products, because they are going to be more than the value-added products. ཁསླ ས�ིབས� ཆཡོད� ཆོད� ས�ིབ�ད� ཆའོ ཚོརུརང གཇ� ཆོགས� ཆོམས�ས ཆེན� ས�བ�ག� ཆཐགས ཆབྲོ ས�ིབ�ས�བ � Good morning, everyone, and welcome to the call.

Look, our most important impact is that we are working on our manpower curtain, and we will reduce the cost of 20% in the next year. That is one. Number two, look, how much the fluctuation of steel is not in our control. And for now, for 50 years, this is what we have done for 50 years. Thank you. So, again, the steel price is in our control, I don't think it's a good idea, but what do we do, as I have told you segment-wise, our volume, so, 75% plus 80% of our business is fixed, so, sometimes it grows, sometimes it grows, sometimes it grows, so, overall, in the average, there's no negative impact in this case of sureroshni. So, we try this because we have 24 hours of work, and we have to pay for it. Like investors, we have to pay for it. So, we have to pay for it. So, we think 24 hours of work, and we have to pay for it.

Okay. And sir, the other thing I asked was that, going forward, the next capacity expansion is now happening in the future outlook, the next five years of your vision, as you were talking about, you are focusing on growth in the current year, and the volume growth is all on the ground. So, next five years, how do you have 10-15% CAGR, according to which you want to grow, that you will accelerate 20-25% CAGR, so that you will gain the market share with other competitors. And one thing is that the APL Apollo is the base commodity. Steel pipe का जो है, वो उसको degrowth कर रहा है, और वो focus कर रहा है value added production में, तो क्या ये अपने लिए भी एक opportunity बन सकती है, कि हम उदर से भी एक market share gain कर सकें, और हमारा EBITDA का जो spread है, वो थोड़ा बढ़ा पाए, general section में भी.

Good morning, everyone, and welcome to the call.

Sorry to interrupt, Mr. Raj.

May we please request you to rejoin the queue as there are several participants waiting for the time.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to only one per participant. Should you have follow-up questions, we request you to rejoin the queue. I repeat, please limit yourself to only one question per part second. Should you have a follow-up question, we request you to rejoin the team. We have our next question from the line of Saket Kapoor from Kapoor ko. Please go ahead.

Good morning, everyone, and welcome to the call.

You said capacity, it's about 100 crore investment. Thank you. and welcome to the call. Good morning, everyone, and welcome to the call. The company as a whole will stay in the future.

Sir, we know that the lighting business in the lighting business... Sorry to interrupt you, Mr. Sake.

May you please request you to rejoin the queue?

Yes, sir. This point was clear to you. Yes, I understand. Sir, one thing is, in the lighting business, how much percentage of our contract manufacturing is in-house and how much in-house is in-house?

Sir, sir, our specialties are in-house. and welcome to the call. There are some products that are in-house, which are in-house, so make and buy, we are looking at about 20% of our outsource, and 80% of our outsource is in-house. The outsource is also in-house, and we control the quality control of the production. And 80% of the material is also in-house. So basically, they are also our extended platform.

Thank you. Thank you. Ladies and gentlemen, we will take that as a last question for today. I now hand the conference over to Mr. B.B. Singal for closing comments. Thank you and over to you, sir.

Thank you, S.G.1, for joining us today on this other call. We appreciate your interest in Sura Roshni, your trade. I sincerely once again thank our MDF and the CEO for sparing their valuable time and addressing queries based by participants who attended the call. For any further queries, if any, you can contact SGA versus Investor Relations and Advisor. Thank you. Good evening to you once again. Thank you.

Thank you. On behalf of Surya Roshni Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line.