Manaksia Coated Metals & Industries Limited (MANAKCOAT) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Manaxia Coated Metals and Industries Limited Q1 F527 Earnings Conference Call. As a reminder, all participant lines will be in the listen only more, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being recorded. I'm now on the conference over to Ms. Sana Kapoor from Co-India Advisors. Thank you, and over to you, Ms. Kapoor.

Thank you, Ranju. Good afternoon, everyone, and welcome to Manaksia Quoted Metals and Industries Limited earnings call to discuss Q1 FY27 financial performance. Today, we are joined by Mr. Karan Agrawal, Hortla IM Director, Mr. Mahindra Bang, Chief Financial Officer, and Mr. Tushar Agrawal, Senior Vice President. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Karan Agrawal to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Sana. Good afternoon, everyone. And a warm welcome to our Q1 SR-27 audience call. Hi, Karan Agrawal, full-time director of the company. Sincerely thank all our analysts, investors, and stakeholders for taking the time today to join us. Today, we will take you through our financial and operational performance for the quarter-ended 30 June 2026. Following my opening remarks, Mr. Tushar Agrawal will provide updates on our operational progress and strategic projects, after which we will open the floor for questions. Our financial results, investor presentation, and press release have already been uploaded on the company's website and the stock list. Q1 of FY27 has been a strong quarter for us, and honestly, a rewarding one after the challenges of the second half of FY26. Those of you who were on our last call will recall that Q3 saw a planned month-long plant shutdown for the Alu-Zinc technology upgrade, and Q4 was hit by a sharp cost escalation from the Middle East conflict. Fuel freight and everything related to petrochemicals moved up very quickly, and there was very little time to adjust pricing. All of these were real headwinds. This quarter, the plant ran without any disruption, fuel supply was fully restored, and the new allusine line has settled into stable production. What's equally important, and we'll come back to this. is that all the new orders in Q1 were priced to fully cover the current cost environment with a margin buffer on top. That shift in pricing has made a significant difference to our unit economics, and you'll see that in the numbers. Performance highlights for the quarter. Revenue and realization. Consolidated revenue for the quarter was Rs. 253 crore. Up 15% quarter-on-quarter, and about 3.6% year-on-year. The more interesting number, though, is our price realization per ton, which improves to Rs.88,597 per ton from Rs.79,180 per ton in Q4.76, nearly 12% higher. That's partly mix. More prepainters and LEG, and partly better pricing on new orders. EBITDA and margins. EBITDA came in at Rs. 29.08 crore, up 86% quarter-on-quarter, with margins recovering 422 basis points to 11.06%. The number we are most pleased about is the bitta per ton, where at rupees 10,400 per ton is the highest we have ever recorded, better than last year's Q1. It tells us that when business is running normally and pricing is right, the unit economics are very healthy. What a blind? PBT was Rs. 13.93 crore, recovering 197% quarter-on-quarter. Profit after tax was Rs. 14.10 crore, up 153% quarter-on-quarter. Back margin improved 301 basis points to 5.36%, and EPS grew 102% quarter-on-quarter to Rs. 1.31 per share. Cash profit, which is fact-plus depreciation, was Rs. 17.40 crore, up 115% quarter-on-quarter, which gives us comfort on the actual cash generation side. On finance costs, we brought that down 11.8% year-on-year to Rs. 6.86 crore, a good outcome given the higher asset base from our Aluzink investments. The most notable point here is that all new orders placed during Q1 are priced to fully cover today's raw material and trade costs with a buffer margin built-in. This is not something we could do as quickly in Q4 given how suddenly the costs moved up. The fact that this is now in place gives us reliable and predictable EBITDA guidance going into Q2 and the rest of the year. Operations and exports. On the production side, Aluzinc output was 27,941 tons for the quarter, which is 8% higher quarter-on-quarter. With the new line at 62% capacity utilization and ramping up steadily, pre-painted production was 20,510 tons. And ran at 95.4% utilization, essentially full capacity, which is a strong demand signal. Total sales were 27,938 metric tons, with 74% contribution from pre-printed steel and 26% contribution from Aluzin. Our exports were a standout, 65% of the total volume, which is 18,221 metric tons. I would like to now hand over The opening remarks to Mr. Tushar Agarwal to speak about our strategic project and future outcomes. Thank you very much.

Good afternoon, everyone. I'll be taking you through the strategic projects taken up by the company. The second color coating line. This is in advanced stages of erection and commissioning, with Q2-FY27 as our target. It takes our total pre-tainted capacity from 86,000 tons to 2,36,000 tons per annum, a 174% increase. Given our existing line is at near full capacity utilization, the demand is already waiting for this capacity. This is the most significant near-term revenue catalyst for us, the 7MW captive solar power plant, also targeted for Q2FY27. Once commissioned, it offsets 50-55% of our grid power consumption at Kutch, a permanent structural reduction in energy cost per unit. It also reflects our commitment to greener manufacturing, which matters increasingly to our international customers.

Salesforce CRM.

Implementation is underway. This gives us centralized visibility of our customer base, inquiries, orders, after sales, across both domestic and export markets. As we grow in scale and geography, having this infrastructure in place is important for maintaining quality of service and customer relationships.

I'd like to take you through the outlook.

Looking ahead, there's quite a lot to be posited about. Q2 FY27 is shaping up to be a particularly significant because of two major investments that we've been building for a while, and both of them are coming online in the same quarter. The second color-coating line and the solar power plant. The color-coating capacity addition directly translates to incremental revenue from a pre-painted segment that already has waiting demand. The solar plant takes away a meaningful chunk of our energy cost on a permanent basis. Both happening together is a genuine step change in our operating profile. The AlluZinc ramp-up is another source of confidence. At 62% utilization, there is substantial headroom to grow. As volumes build, the incremental revenue comes in at strong AlluZinc realizations with very little additional fixed cost overhead. That's a favorable dynamic for margins. On exports, the trajectory is encouraging. 20% year-on-year revenue growth. And a robust order book going into Q2. We see meaningful, unpacked potential of increasing our share of business with our existing long-term customers and addition of new customers in newer geographies. And underpinning all of this is the cost-pass-through discipline we've established. With all new orders carrying full cost coverage and a margin buffer, we go into Q2 with confidence on EBITDA delivery, putting together capacity additions, AluSync ramp-up, solar savings, and export momentum. These are multiple independent drivers of earnings growth, and we're optimistic about where FY27 takes us. I would like to now hand over to Karan

for the closing remarks. Thank you, Tishkar.

Before concluding, I would like to thank our board of directors for the guidance, our employees for their dedication, our customers for their continued trust, and our investors for their unwavering confidence in the company. Q1 of SI27 represents a strong beginning to the year. While the external environment continues to remain uncertain, we believe the company is better positioned than ever. Before, we capitalize on emerging opportunities and deliver sustainable long-term value. With that, let me hand over to the moderator to open the floor for questions. Thank you very much.

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

The first question comes from the line of Jem Barivat with ES Securities.

Please go ahead.

Thank you for the opportunity. Firstly, congratulations on achieving the highest variable per turn. Can you please explain, let me know if the same is sustainable, and to what extent the same can increase once all our projects are complete?

Thank you for your question. Yes, and I accept your congratulations. Thank you very much. The EBITDA pattern that we have achieved in Q1 of FY27 was basically on the lines of our ramp-up of losing capacity utilization and strong export delivery in terms of the overall damages and the higher price utilization pattern. And I think that as and when we keep ramping up the capacity utilization of the allegiance line, with the addition of the second color-coating line and the addition of the solar power plant, essentially all of this is going to contribute to strengthening of the bidder margin profile. And if everything goes well and we execute well, I think there is potential

to strengthen the EBITDA margins even further.

Okay. Secondly, how are you planning to fund the announced CAPEX? And also, project-wise, can you please let me know how much CAPEX is done and how much is left?

Well, the announced CAPEX that we have basically planned to do is on account of the backward integration of cold rolling and capacity expansion of illusions by adding a second line. And the total CAPEX is currently estimated at 350 crore rupees. which would be funded by a mix of internal accruals, debt and equity. The other question of yours was the KPEC that we have already concluded is about 140 crore rupees, including the Alusing technology upgrade, the second color coating line, and the solar power plant, which largely today is in TWIT and will be capitalized very soon within Q2.

Okay, just to follow up on that, what level of debt does the company plan to raise to fund the KPEX, and what is the expected peak leverage?

Look, as we stand today, our debt-to-equity ratio is somewhere just a notch higher than 1, and... Basically, that means that the company's balance sheet is quite unleveraged and has the potential to accommodate more leverage to fund the CAPEX. And I feel that the debt that could be required, apart from the internal accruals and equity, should be somewhere on the lines of 100 crore, more or less. But this is again an estimate. We will need to wait and find out the exact numbers as the time of the project approaches. And even with that, we still feel confident that our leverage should not exceed more than 1.25

in terms of debt equity ratio.

Well, okay. Thank you.

Thank you so much for answering my questions.

My pleasure. Thank you. A reminder to all the participants that you may press star and one to ask a question. Once again, a reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Shlok Bhatia. It's Van Investments. Please go ahead.

Good afternoon, sir, and Congress on a good set of numbers. Sir, continuing with the earlier participant questions in terms of the debt. So, as of now, we have a debt of 115 crores. Does that debt include the capex that we have spent for second color coating line and the solar power?

Yes, hi. Good afternoon, Shlok. Yes, the current debt is about 115 crores, which does include the term debt that we have availed for the Capex.

I hope I answered your question.

We have lost the line of the participant. A reminder to all the participants, that you must press star and want to ask a question. Once again, a reminder to all the participants, that you must press star and want to ask a question. Next question comes from the line of Ashwini Agarwal with CASA Capital. Please go on.

Yes, so volume in Q1 Fi27 were about 27,900 metric tons versus 29,000 tons approximately in Q1 Fi26. It's a marginal decline. So is this attributable to the Alusync line still ramping up or to a softer demand environment?

Hi, good afternoon, Ashwini. Yes, you are right that the volume of Q10527 was around 27,900 metric tons, which is a tad bit lower than the same quarter last fiscal. And this is 100% attributable to the stage of ramp-up of the Allegiant line. As you would have seen in our investor deck, that we are actually having a very strong order book. To actually execute, and we are running behind on those execution plans. So, demand or ability to sell is not a concern for us at all. It is the state of gradual ramp-up which will change and you will be able to see the visible growth of colleges quarter-on-quarter.

Uh, so, uh, Is there like any specific bottlenecks, bottlenecks which are coming in ramp-up, and also when, by when do you expect the new elusing plant to reach the optimum utilization?

I think the bottlenecks.

I would not call them bottleneck, actually. They are just teething troubles, which any new line of this nature, which is a modern, state-of-the-art, highly automated line, would naturally have in the early stages of commissioning. And this is also something that we are facing, and it is very natural and expected to have these kind of peeping troubles in the first three to four months of commissioning. And really, there is no bottleneck in terms of any other. It is a process that is happening and every month we are seeing an improvement, which is going to, I would say, probably another three months. One can expect the capacity to be upwards of anywhere between 75 to 78 percent, which we would call a healthy capacity utilization, 75 to 80 percent in that way.

Okay, thank you.

Thank you. Next question comes from the line of Shlok Bhartia with Span Investments. Please go ahead.

Sorry, sir, I got disconnected. So, continuing to be Andrea questions in terms of the current capex that you are going to do in terms of the color coding of second line and the solar power project, how much we have actually spent it and what sorts of debt that will come on the book because of that?

As I mentioned, the total research that we have done for the Alusing technology upgrade, the second colour coating line and the solar power plant is totaling to about 140 crore rupees. Quite a large portion of the capital which included equity and debt has already been, let's say, used or deployed. Only a residual portion of debt, which could be roughly in the range of between 15 to 20 crore rupees, would be remaining to be utilized or deployed. I think this would complete the entire deployment against these projects.

So is it right to assume that current debt of 115 and the existing debt of the current project will probably take a debt to 140 odd crores, right?

Well, I think we are also reducing the debt every month and every quarter because the repayments have also started. So the peak debt may not touch 140. I think potentially somewhere between 125 to 130 could be a ballpark number you can estimate.

And you also alluded that to complete the entire CAPEX along with CRF, additional debt that will be raised will be 100 CRF, right?

That is something that we are not firm about. Today, we are still in the blueprint stages of the fresh CAPEX plans that we want to execute in future. But the funding pattern and the mix of equity, debt and internal accruals are yet to be completely frozen. So, it actually depends on what kind of earnings we are seeing in this fiscal, which will determine the contributions from internal accruals. And that would also determine whether the debt requirement, the debt component would be 100, below 100 or slightly over 100. So, it was just an estimate number that I could share.

And in terms of the working capital, what is your current working capital cycle and once your CRM comes into operation, how do we see the working capital improvement in the working capital cycle?

Well, as far as our working capital goes, today our working capital title is slightly long because we are having to deal with a lot of inventions in various stages of raw material and pipeline, raw material, WIP and finished goods in the shop floor, plus some other working capital elements of debtors. All in all, I think the working capital cycle is coming to about 75 days after completing the creditors, the tenure that we get from our creditors. But after the implementation of a cold rolling... It will give us the required flexibility to reduce the inventory drastically and make it close to half because today we are having to procure a lot of SKUs in hundreds of SKUs and stock it for various customized orders from export customers and domestic customers. And after the cold rolling mill is commissioned, we will be able to buy a much lesser number of HKUs and have the flexibility of rolling it ourselves at the time of execution, thereby bringing down the total inventory drastically and shortening or compressing the working capital cycle to probably in single-digit numbers in terms of number of days. It would be a very drastic reduction in working capital.

So, that's all from my side. Thanks, Karaman, all you guys.

Thank you. Thank you. Next question comes from the line of Dipesh with Marnia Finance. Please go ahead.

Hi, am I audible?

Yes, you are. Please go ahead. Yes, please go ahead.

Yeah, the company is expanding aggressively its capacity two to three times across segments. What gives you this confidence that the demand will keep pace, especially in the export market where 80% of our order book is concentrated?

Well, I think the best statement that you made,

Dipesh, that our order book is where it is today gives us the confidence that the demand will be sustainable. Today, for us to have an order book of upwards of 400 crore rupees is something of an exceptional, I would call it an exceptional situation, where we are enjoying continued orders from our long-term customers, and our pipelines are quite full, and we are running behind on execution. And the fact that gives us confidence is that we are potentially one of the smallest. You know, supply chain partners to these long-term customers of ours, who are export customers and even domestic customers. And there is a lot of headroom to grow in terms of the share of business that we can gain from these customers. And I think, overall, beyond this, the fact that we are currently operating in a segment that is 100 percent. It's directly proportionate to the growth of the economy, which is infrastructure, building material, spending by the middle class in home appliances, automotives, new homes, new warehouses, new airports, medros, bullet trains. And so the consumption and demand for steel is slated to grow for sure. And I don't think anybody can doubt this fact. And for us, we are probably one of the smaller players in the industry and have a lot of headroom to grow and contribute to this demand environment both domestically and for export.

Right. What is the order book right now and what is the timeline for these order books to be executed?

If I am not wrong, our order book currently should be somewhere around 450 crore reviews. Plus or minus 20-25 per hour in that range, and I think the timeline that we will take to execute this is potentially about four and a half to five months.

So for the next two quarters, you're having full order book. So how is the order intake going forward, like especially for FY27 and FY28?

I did not understand your question. What do you mean by order intake?

Order intake as in how many orders you expect in the next two quarters? Because right now you're having full, for the two quarters, you're having full orders. I'm saying that for how much more orders are you expecting for execution and for performance of FY27 especially?

So, Dipesh, I think what we need to understand is that we Get our orders or our revenues from most of our long-term customers, and these orders are repetitive in nature, where our customers place quarterly orders on us, which are for export or for, you know, from domestic OEMs. So they are not like standalone orders based on a project that is one time. So I think there is good visibility in terms of the demand forecasting that our customers have given us, both from the European side and the Indian market side. And we feel quite confident that we should be in a position to have an order book of anywhere between three to five months on a continuous basis going forward as well. This is the kind of visibility and demand visibility that we have received from our customers. And also we have MOUs signed with our customers to kind of give us an indication of the annual listing or the annual off-site that they will be doing. So we are quite confident of having this kind of order book. Continuously going forward for the rest of the year, anywhere between 350 to 450 crore rupees. That's a great visibility.

Now, with the shift from galvanized to alu-zinc, what is a sustainable EBITDA upside? And is this driven by pricing power or cost efficiency?

The answer is both, actually. The incremental libidda from galvanized steel to alusing steel could be anywhere in the range of... 1,000 rupees to 3,000 rupees per tonne, depending on the demand environment, cost environment, all of these things. But it is for sure that it will be contributed by both the savings in cost of production of Aluzink as well as the premiumness of the product, the Aluzink product, which demands a higher price in the market.

Right, and my last question is about LPG. Now, since LPG is a key input for galvanization process, is the company facing any supply issues due to the Hormuz closure or, you know, lower, I mean, the government policies? If yes, the company, is the company exploring any alternatives or substitutes for LPG?

Well, I think in the past two decades of our operation, we never faced any... Problems with respect to supplies of fuel, whether it is liquid fuel or gaseous fuels like LPG or propane, which is what we are using currently. But in this particular time of the Iran war and closure of the state of Hormuz, there was definitely a patch where there was severe disruption in terms of fuel availability. Because I think none of the PSU oil marketing companies or private traders also could forecast something like this. And the whole country was basically saw a supply side shock in terms of the availability of LPG and propane. We too were affected by this supply disruption. But I think the good news was that we had enough buffer stock to ensure that the plant ran non-stop and we also could diversify our buying strategy from only PSU company to both private and PSU. Although we had to bear a cost for it, but we could maintain non-stop operations of our plant. And going forward, I think we are definitely planning to de-risk by adding a pipeline by the state distributor in Gujarat for natural gas, which is GSPC, where we are in the process of signing the agreement for the pipeline and related infrastructure for supply of natural gas.

That's great, but in this quarter, if you face any pressure, how much of the cost increase was seen, if you can quantify it, and also with the renewal of the war, do you see any such cost pressures in this quarter or the next, especially in this quarter, let's not talk about the next.

I think, in my view, The cost impact on fuel was quite visible, not only for us, but for any kind of end user who's using liquid or gadget fuel for their processes. Where I think the prices for LPG shot up from 60 rupees. A kilo up to 200 rupees a kilo. And this is the kind of spike that had an impact on EBITDA margins during Q4, one of the contributors. But today's situation is that the prices have cooled down drastically. Like I mentioned, the price from 60 rupees has gone up to 200 rupees, has now come down to 80 rupees, more or less. So we are just about 25% higher than the pre-war level. And I think the public sector OEMCs and the players in the oil and gas industry did a good job in diversifying their buying strategies of gases. We were completely import dependent. And now India is buying gas from various sources like USA, Canada, Australia, Venezuela, Russia, sometimes on and off, etc. Which was earlier not present, and we were heavily dependent on the few countries in the Middle East. Secondly, I think the government of India's intervention during this state, where they heavily propagated the switch from LPG to natural gas, has also helped reduce the dependency on LPG, imported LPG, and a lot of domestic end users, industry end users, commercial end users have shifted. Two pipes, natural gas. Which has also led to price cooling down of imported LPG and increase in availability. So I think today, irrespective of the war being, you know, intense or let's say, you know, not intense in terms of the state of fuel availability. We have a good visibility and comfort from the supplier that there is no problem and there is ample availability of stock with prices in favor of the buyer.

Thank you. Mr. Dipesh, please rejoin the queue for more questions. A reminder to all the participants, that is my press star and want to ask a question. And also a reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Moksh with Srinam Family Office. Please go ahead.

Hello, sir. Thank you for the opportunity. Sir, I just want to ask one question regarding

According to you, which are the major decisions in, let's say, in the incoming quarters you take? Hi Mopsh, can you please elaborate more on that question?

I found it difficult to understand.

Regarding operations, I'm sorry, your question was, which decision you will need to take regarding operations?

Which major decisions, let's say, in coming quarters you take regarding operations? Well, I think our business is

quite predictable and repetitive. We don't have to deal with a lot of... It's about buying, selling, optimizing costs, building inefficiencies, ramping up capacity utilization, trying to sell the value-added and premium products to its fullest potential. These are the subjects that we keep working on and, you know, our decision-making and, you know, day-to-day tasks are all around these subjects. I don't know if you wanted to ask this question or was there something else in your mind?

Sir, please give me some guidance on them every time, I think.

The EBITDA margin, as you must have already seen in our results and our press release, we have achieved at 10,400 rupees per time, 31, and we have been quite optimistic that these margins are sustainable and also can be grown by bringing in the The capacity that you are, you know, scheduled to bring in, in Q2, which is the certain telecoating line and the solar power plant. So we are quite optimistic that these EBITDA margins are attainable and also, you know, due for further growth.

Thank you.

Thank you. A reminder to all the participants that you may press star and want to ask a question. The next question comes from the line of Nishita Central Asia. It's a fire capital. Please go ahead.

Yes. Hello. Am I audible? Hello.

Yes, you are. Please go ahead.

Yeah. So, I just wanted to understand. So, in the previous call, you mentioned that at peak utilization of around 80 to 85 percent, in the aline zinc capacity, we can have a revenue of 2,500 to 2,700 crores. So, how fast can we ramp up to that?

Thank you for your question. This was probably not

the question that I was asked. I think the question would have been the potential peak revenue after the commissioning of phase one of the complete APEX plan. I think the phase one, sorry, phase two of the complete KPEX plan, which is the backward integration and the second allusion plan. So, as I have been talking to other participants that we are currently drawing the blueprint of the phase 2 expansion plan with the capital outlay being projected at 350 crores plus the sources of capital are being discussed and being narrowed down upon. So once this... A phase two project of the backward integration plus the second housing line is complete and we achieve the capacity utilization at an optimal level, we should be able to see damages which are close to 3 lakh ton or slightly above 3 lakh ton resulting in the revenue that you are mentioning. So, this is definitely forward-looking numbers and outlook post the completion of phase 2.

Okay, okay, understood. So, our second color-coding line will be commissioned in Q2 of 527. How fast can we ramp up that and like at around 26,000 metric tons per annum of capacity, what will be the peak revenue or peak utilization in just the color coating line?

Yes, you're right. I think the color-coating line is due to be commissioned in Q2 FFI-27, which is sometime very soon. And this line is not as complex as the Alluzinq line, hence, you know, it is fair to assume that the ramp-up of capacity utilization would be faster as compared to the Alluzinq line's capacity ramp-up. So, one can assume that sometime during H2 of this fiscal, maybe two or three months after the commissioning, one can see a very healthy capacity utilization. And at peak utilization, once again, I think hypothetically, if we are doing peak utilization, the revenues could be somewhere around 16 to 1700 crore rupees.

Okay, so like in H2FI-27, can we expect the utilization to reach 50%?

H2 of F527 would be having two stages. One stage would be of initial commissioning, ramp up of capacity, and then there would be a stage of stable capacity utilization and, you know, coming to peak capacity utilization. So I think overall, if you talk about H2, it is fair to assume that we can do somewhere around 50 to 60% capacity utilization.

No, no, no. Okay, understood.

And if you could just give some sense on how much revenue growth can we expect in FI 27 and FI 28?

I think I've already answered that question, Madhu.

Okay, if you could reiterate that, maybe I missed it.

On the basis of the increased capacity that are coming on screen during Q2, and assuming that we are doing 60% capacity utilization of the new capacity, we should be in a position to touch a number of about 1,50,000 tons for SR-27. And with that, potentially, as for the product pricing, one can assume that the potential revenue could be somewhere around 1300, 1350 crore rupees for F527. So 28 is a different story altogether because you would have access to the higher abusing capacity, the full capacity of the second color coating line. And hence, I think a tonnage of close to 1,80,000 to 2,00,000 ton in that range can be forecasted. For, or targeted, let's say, for FY28, which has the potential of giving somewhere between 1,700 to 1,750 crores of revenue.

Okay, understood. Thank you so much, friends, and the questions are now the best. Thank you.

My pleasure. Thank you. Next question comes from the line of Bhavya Shah with 3A Capital Services Ltd. Please go ahead.

Congratulations on the great set of results. So my question is, how should you look at normalizing EBITDA across the steel cycle? What should be your strategy to normalize EBITDA per turn across the cycle? Thank you for your question, Bhavya.

See, the steel cycle or the commodity cycle is something that cannot be predicted. Therefore, we have tried to build a business model where we are insulated as much as possible from the external. We are trying to achieve a back-to-back business model, where we are selling our finished product in advance with an advance order book, followed by procurement of raw material. And most of the raw material that we have in stocks or in pipeline are already booked with orders in hand, which are pricing. So this eliminates the commodity price risk. And I think the more and more we can capture in this session and increase the percentage of back-to-back business, the more we can, you know, predict and insulate ourselves from the steel commodity price risk.

And about the export orders, all orders have passed through, commodity price passed through. Is it under its contract or is it not?

Every quarter we negotiate fresh orders with fresh prices with our customers and the changes in the prices of raw materials or freight or energy will be recalculated and passed through whenever the new orders for the next quarter are being negotiated and finalized. So, yes, there is a pass-through mechanism that happens with our export customers, which is basically resetting every quarter.

Okay, got it.

Thank you so much, sir. Thank you. A reminder to all the participants that we may press star and want to ask a question. Next question comes from the line of Avinash Nahata with Parami Financial Services. Please go ahead.

Yeah, thanks for the opportunity. So, a couple of questions starting with, can you give me on tonnage galvanized aluzinc and coating? Production for both Q4 and Q1-FI27, Q4-FI26 and Q1-FI27.

Hi, Avinash. Okay, I can give you those numbers. I think in terms of our Aluzink production, for Q4 of FY26, we had done a production of 25,870 milligrams. And in terms of our pre-painted steel, we had done a production of 19,730 milligrams. Whereas in Q1 of F527 for Alu-Zinc, we have done a production of 27,941 times, and for pre-painted steel, we have done a production of 20,510 times, respectively.

Okay. And is it possible to share energy cost on an absolute basis or on absorbed in the production during Q4 and Q1?

Well, I think the energy cost during Q4 and Q1 underwent a lot of changes where, you know, it was stable during first 45 days of Q4 and then underwent a large spike due to the war. And again, in Q1, it was at its peak level during the beginning of the quarter and then underwent a normalization or cooling down. Okay, I'll do it.

Okay, my second question is, When we met last, you had said that 6,000 to 7,000 on the galvanized size, and on the coating side, from 10,000 to 11,000 EBITDA per tonne, so on a blended basis, it would be a ballpark between 9,500 and a half on a steady-state basis. So, this quarter, we have done 10.5, closer to 10,400 per ton. So... Is this the peak EBITDA?

I think, from what I recall, those numbers that you're talking about could have been with our previous product, which was the galvanized steel and pre-painted galvanized steel. But when we are talking about the newly upgraded technology where we are producing allusion steel and pre-pinted allusion steel, the Vidya margin profile improves considerably, which is, and, you know, shade of which you are experiencing and see in Q1 of Appai 27. I'm answering the second question. We would like to believe that this is not the peak EBITDA margin profile that we can achieve. With the increased capacities that are coming in, with the impact of the renewable energy coming in, and with the ability to sell a higher tonnage of the pre-painted steel in terms of the percentage of revenue, we feel that there is further headroom to grow the EBITDA margin profile.

And how much did we did only, how much we sold only galvanized till during the quarter, Q1, FY27?

So, galvanized field was zero. It was all aluzinc during Q1 because we had already shifted to aluzinc during Q4.

So, incrementally, we would be doing only aluzinc. There is not going to be any galvanized TK.

No. Correct. Correct.

So, thanks and all the very best.

Thank you.

Thank you. A reminder to all the participants that you map as star and want to ask a question. Next question comes from the line of Ankit Shah with Fusion Capital. Please go ahead.

Yeah, hi. So, my question was regarding, like, for the previous call, there was a guidance of about 10 to 12% for consolidated F527 with a H1 recovery in place, and which we saw on the result like in Q1, our repeat time margin is close to 10.8. So, like, can we assume that it would be, like, improving from here and it could be more on the 12% side on the call, so it should be at 5.27?

Hi, I'm good. Thank you for your question.

Hello. The numbers that we have delivered in Q1 of SL27 are definitely reflecting the recovery that we had earlier spoken about in the previous call. You are right about that. And like I said before, and I would like to reiterate that we definitely are very optimistic for further improvement in the Dubai margin profile on account of the upcoming capacities and the renewable energy. Plus, the ability to sell more value as a product in the market would definitely give us headroom to improve the margin profile from the levels that we have seen in Q1.

Matlab, to note it, like, can we assume it

would be, like, around 12% in FY27, considerate, should be it?

It would be very difficult for me to put a very, you know, precise number to it, Ankit. But, you know, I think, as you have seen, like, our margins have grown from... 8-9% to now close to 11%. And the improvements that we are currently doing should help us build further EBITDA growth, which could be anywhere in the range of 1-2% in that range. How soon we are going to achieve it and whether it will fully reflect in FY27 or not is something that we need to wait and find out.

Got it, got it. Yeah. That's from my side. Thank you and all the best. A pleasure.

Thank you. A reminder to all the participants that I'm a best star and want to ask a question. Next question comes from the line of Pratik Sivastava with Nibesh Wisdom. Please go ahead.

Thank you, sir. First of all, congratulations on a great set of numbers. So what I'm hearing in the call, I just have a few follow-up questions to the earlier questions which were asked by the panelists. Sir, I see that you do have multiple different levers for the improvement in the margin, right? So you are guiding at least the top line. What I see, you are guiding around 45-50% growth in the top line for FI 27. Now, one of the, of course, levers which I see is your color-coating line too. Um, which is going to come up. It's not just capacity you are adding, what I understand, it's also some sort of a premiumization coating segment, right? So if that is right, my question is that, am I, because this is still going to be a ramp up, say, am I going to see some sort of a temporary margin dip before it starts accelerating or you, you're saying that you will be able to maintain the margin even in Q2 as the ramping up of CCL2 starts? And then if that happens, then what are your other levers to maintain or improve the margin in the Q2, Q3, 10, 10? First question.

Thank you for the in-depth analysis and the question. I appreciate that you have gone through our deck quite well. And so, like you explained, The addition of the second color-coating line capacity is not just a capacity addition, but a premiumization of our products, which enables us to sell more of the highest value-added products in our export and domestic market. And this ability will surely help us to elevate the EBITDA margin profile that we are optimistic about. The question about whether there will be a dip before a surge, I don't see any immediate reasons or, you know, I can't forecast any immediate reasons which could bring in a dip because as soon as the second CPL, like the CPL2 starts, We will be able to consume more of the captive values in produce and sell more in the value added form. So there does not seem to be any reason for a dip in Ipeta because Q2 order book is quite visible, quite clear, and I don't see any such reason to validate that.

Got it. My second question again is on the follow-up from the previous questions on the order book. So currently you said you are around 450 order book, but I think what we want to know is the rate of change, the growth rate of order book. So sir, can you highlight what has been the growth rate of order book from the past in this quarter?

Sure. I think basically, you know, the growth of order book or the growth rate of order book comes gradually as we are able to communicate to the market, to the customers that we have built in higher capacities and we are capable of delivering higher volumes and executing larger orders in a shorter time span. And this does not come overnight. So in the last couple of years, we have seen improvement of order books from lows of 100, 120 crores to now highs of between 400 to 450 crores. And this was a process and a gradual process where we were able to deliver and prove to our customers that we have the ability to service larger orders. And thus, gradually, we were beneficiaries of those larger orders. And going forward as well, I think one can expect that a healthy order book can be defined as something anywhere between a quarter's order book to one and a half,

which I would define as quite healthy.

And this is what we feel that we can achieve even going forward.

Got it, sir. Got it, sir.

And so, my last question, again, is on the cash flows. So, with the inventory and receivables built up further in this Q1Q. So, given we are also looking at, again, you know, scaling our revenues to around 1350 for FI27, how do you see this playing out in, you know, in coming quarters?

I think that the cash flows have definitely been directed mostly towards, number one, capex, and number two, towards the working capital that is required for, you know, this scaling up of revenues and capacity utilization. And this would continue till the time we are achieving a stable state of capacity utilization. And, but we are fully geared up for that with our internal accruals contributing to the required capital and the, you know, the bank facilities or working capital that we have where, by the way, you have the access to our financials and we are using a very low percentage of the working capital limits from the bankers. So, we have enough room to basically or firepower to address the needs of working capital for the ramp up of capacity.

And that includes the cold rolling facility, and I think that's coming up in FY28, if I'm right.

No, no. Cold rolling facility is part of a completely new CAPEX phase, which is phase 2, which would be started in FY28, and it would take, you know, its required time for the installation, commissioning, etc. So, whatever I am talking about is for the current capacity, not for the cold rolling.

Thank you. Mr. Sreevastwa, please rejoin the queue for more questions. Next question comes from the line of Ajit Sethi with EcoQuantum Solutions. Please come back.

Yeah, thank you for the opportunities. I just need some clarification. You said you will be doing 1,80,000 to 2,10,000 volumes in FY28. This is from the new color-coded line, right? And this can generate 1,700 to 1,800 code revenue.

You're right.

Okay, so how can we see the new capacity which is going to come in at FY28 for Phase 2 Alusing? How can we see the capacity ramp up in the year 1?

You are talking about the second Alusing climb in Phase 2?

Yeah, yeah, Phase 2 capacity, yeah.

See, Ajit, I think it's a little... Far to be estimated at this point of time, because once we finalize the nitty-gritties and the capital tie-up, And the project really begins with money in the ground. At that point would be the right time to estimate the time of commissioning and the timeline for capacity utilization. But I think right now it would be premature for me to, you know, estimate these far-fetched numbers.

Okay.

So, and at peak utilization, the allosing capacity can alone generate 2,400 core revenue, right? Both phase one and phase two.

You are about right. I mean, peak revenue could be somewhere around anywhere between 2500 to 2700 crore rupees at your absolute peak capacity utilization after commissioning of phase 2.

Okay. And for the existing capacity of analyzing phase one, you said that you aim to reach 75 to 80% utilization in the next three months, right?

Correct.

Okay. Thank you.

Thank you.

Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.

Thank you, everyone.

I would like to thank the analyst community, investors, and all the stakeholders for taking the time to join us. And I hope you were able to answer all the questions and queries that were posted to us. And please feel free to reach out to our IR consultants to post any other queries. We'll be happy to answer them for you. And we look forward to having you on the next earnings call for Q2. Good day, and thank you very much.

Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us. You may now disconnect your lines.