JINDALSAWNSEQ2 FY23November 16, 2022

Jindal Saw Limited

6,316words
71turns
7analyst exchanges
4executives
Management on call
Neeraj Kumar
GROUP CHIEF EXECUTIVE
Vinay Gupta
PRESIDENT & HEAD, TREASURY, JINDAL SAW LIMITED
Narendra Mantri
PRESIDENT, COMMERCIAL
Vikash Singh
PHILLIPCAPITAL
Key numbers — 40 extracted
rs,
finished our board meeting for the half yearly results. As all of you would have seen on the numbers, just to reiterate some of the high level numbers. Top line for the quarter was Rs.3,367 crores as
Rs.3,367 crore
en on the numbers, just to reiterate some of the high level numbers. Top line for the quarter was Rs.3,367 crores as compared to Rs.3,019 crores in the Q1 and Rs.2,571 crores in the Q2 last year, which is essen
Rs.3,019 crore
erate some of the high level numbers. Top line for the quarter was Rs.3,367 crores as compared to Rs.3,019 crores in the Q1 and Rs.2,571 crores in the Q2 last year, which is essentially a 12% growth on trailing
Rs.2,571 crore
umbers. Top line for the quarter was Rs.3,367 crores as compared to Rs.3,019 crores in the Q1 and Rs.2,571 crores in the Q2 last year, which is essentially a 12% growth on trailing and 31% growth on year-to-yea
12%
ared to Rs.3,019 crores in the Q1 and Rs.2,571 crores in the Q2 last year, which is essentially a 12% growth on trailing and 31% growth on year-to-year. EBITDA was Rs.301 crores as opposed to Rs.255
31%
the Q1 and Rs.2,571 crores in the Q2 last year, which is essentially a 12% growth on trailing and 31% growth on year-to-year. EBITDA was Rs.301 crores as opposed to Rs.255 crores for Q1 and Rs.380
Rs.301 crore
st year, which is essentially a 12% growth on trailing and 31% growth on year-to-year. EBITDA was Rs.301 crores as opposed to Rs.255 crores for Q1 and Rs.380 crores for Q2 last year. Going down, PBT was Rs.81
Rs.255 crore
y a 12% growth on trailing and 31% growth on year-to-year. EBITDA was Rs.301 crores as opposed to Rs.255 crores for Q1 and Rs.380 crores for Q2 last year. Going down, PBT was Rs.81 crores as opposed to Rs.37
Rs.380 crore
and 31% growth on year-to-year. EBITDA was Rs.301 crores as opposed to Rs.255 crores for Q1 and Rs.380 crores for Q2 last year. Going down, PBT was Rs.81 crores as opposed to Rs.37 crores which was Rs.196 c
Rs.81 crore
crores as opposed to Rs.255 crores for Q1 and Rs.380 crores for Q2 last year. Going down, PBT was Rs.81 crores as opposed to Rs.37 crores which was Rs.196 crores for Q2 last year. Let me just also give you
Rs.37 crore
crores for Q1 and Rs.380 crores for Q2 last year. Going down, PBT was Rs.81 crores as opposed to Rs.37 crores which was Rs.196 crores for Q2 last year. Let me just also give you some highlights of the con
Rs.196 crore
80 crores for Q2 last year. Going down, PBT was Rs.81 crores as opposed to Rs.37 crores which was Rs.196 crores for Q2 last year. Let me just also give you some highlights of the consolidated numbers: Q2 cons
Guidance — 20 items
Neeraj Kumar
opening
“But otherwise, going forward, we have a very healthy order book, and therefore, the consolidated results as well gives a very good trend and a good trajectory looking forward in 18-24 months.”
Neeraj Kumar
opening
“Because, going forward, we expect the raw material prices to be stable and therefore, the usage of raw material to get my top line should improve.”
Neeraj Kumar
opening
“Another important aspect is almost 40% of my order book today is exports, which is a good news from overall demand/supply perspective and in a scenario where rupee is continuously weakening, there is again something that we can expect in terms of getting some more for every dollar that we earn into our top line.”
Neeraj Kumar
opening
“Now, with the war, the entire Ukraine supply chain has been disrupted, and going forward, the way Russia has isolated itself, even if the war were to end, unlikely that any of those market would ever go to Russia anytime soon.”
Neeraj Kumar
opening
“We definitely expect that in the second half before the year end, there should be a contribution that the Sathavahana business should make to Jindal Saw in the second half, that is what our expectations are.”
Neeraj Kumar
opening
“With all of these happening, we expect that the margins that we had pre-COVID and pre this economic turmoil and all of those, I think we should be returning to that by last quarter of this year or definitely in first quarter of next year, the margins should go back to those old days prior to all of these, and maybe even higher because now we would be entering a lot more value added segments.”
Neeraj Kumar
opening
“And again, we are very clear that going forward, this is not what our business model would include, and therefore, ,we have sold it and we have booked the loss which is a one-time loss of Rs.25 crores is showing in that account.”
Neeraj Kumar
opening
“We have got water project contract for the new city that the prince of Saudi Arabia is building.”
Neeraj Kumar
opening
“It's a very large project which will be more than $300 million.”
Neeraj Kumar
qa
“As I told you, is largely because of the Saudi Arabia project, we will executive it over the next 18-24-months.”
Risks & concerns — 8 flagged
Out of this Rs.126 crores, the contribution of the foreign exchange fluctuation, as you know, of late, the rupee has become very volatile and at one point of time, it even touched Rs.83 to a dollar.
— Neeraj Kumar
Let's now look at the other important factor which has been a concern for many, for many years, our debt position.
— Neeraj Kumar
As we have always been saying we had deliberately kept it down in a very volatile raw material price market.
— Neeraj Kumar
The impact of that is the sharp fall we have seen in shipping prices that would stabilize don't take that benefit as a huge benefit for a company like Jindal Saw.
— Neeraj Kumar
I would not have the exact breakup in front of me, but even if the raw materials are there, the high-cost raw material which we had purchased during those very volatile, coke and iron ore prices, they have mostly been consumed.
— Neeraj Kumar
So, to fund an acquisition like this, is not very difficult just mere on the basis of Jindal Saw balance sheet.
— Neeraj Kumar
Very difficult to give you a precise quarter or a month on it, but, it should happen soon.
— Neeraj Kumar
So now, for the next 18-24-months, we will get the traction of a good market and we believe that we would transition into a different era for Jindal Saw in terms of all of those or a combined positive impact of all the other activities that we have just listed.
— Neeraj Kumar
Q&A — 7 exchanges
Q
My first question is regarding the order book. If you could give us the visibility in terms of execution period for each of the segments?
Neeraj Kumar
As I told you, is largely because of the Saudi Arabia project, we will executive it over the next 18-24-months. Seamless pipes typically 12-weeks to 16-weeks. Ductile iron pipes typically 9- months to 12-months. Pellets is always on cash basis, means, hardly 15-days. How do we see the profitability going ahead in the DI segment considering that we have no incremental supply coming in from either west and east region, how do we expect the margins going ahead and also volume growth? DI margin should improve because the raw material prices are becoming very stable in terms of coal, in terms of ir
Q
What is the intake of this big order in the GCC region of $335 million… what is corresponding to this order of $335million?
Neeraj Kumar
You want tonnage? Yes, the big order which we have got…and this would be shipped entirely from the Saudi Arabian unit only? Is it is Saudi what? Will this whole order be executed from Saudi? This contract from Saudi Arabia which will execute HSAW India Samaghogha. It is over 2 lakh tons. Sir, we have also seen that there is a significant fall in the ocean freight prices. So, how is that going to impact us? I think earlier that had a negative impact. So, the margins would be boosted because of this, how is that going to shape up? No, the ocean freight has fallen, but again it is likely to stabi
Q
What is your sense you are getting from the Indian government’s point of view given that our product portfolio caters to the pipes which are very much focused towards Nal se Jal, the pet project of the government, any color on that front, is there any traction you are seeing?
Neeraj Kumar
See, Jal Jeevan Mission is now running for this term of the government in the last two years. There is a major emphasis. So, on the demand side, we are very bullish. With hopefully, Sathavahana now, we are just one step away coming to our fold. We would enhance our supply side both in terms of capacity, it will significantly go up and our reach. Because now we would have a very strong foothold in South India where there is very little competition and there is very large demand. So, DI business, in fact, in the next six-to-24-months should be a major contributor to us in terms of top line, prof
Q
Sir, you said, your inventory cost would be coming down. As on 30th September 2022, we still have inventory holding of Rs.3,759-odd crores. So, how much of this would be the raw material cost and other things, if you could give a break up for that?
Neeraj Kumar
I would not have the exact breakup in front of me, but even if the raw materials are there, the high-cost raw material which we had purchased during those very volatile, coke and iron ore prices, they have mostly been consumed. So, we would have raw material but they would be moderately valued and therefore going forward my EBITDA margin would get restored. If you can please quantify in terms of price movements for coking coal? See, Rajeev is here. Since I don't have the exact number in front of me, I would not like to second guess. Rajeev is taking notes. He will reach out to you and will giv
Q
My question was actually on debt profile of the company. Whatever I see the long-term debt is roughly Rs.1,600 crores as on September 30. The total consolidated debt relative to the scale of the operation, how is the management intend to bring this down? So, this number is now close to Rs.4,836 crores. Is there any reasonable scope to bring the consolidated debt number of the company down? Second is how much portion of this is foreign currency debt? Because as long as you have foreign currency debt, these quarterly fluctuations on gain or loss on foreign currency loan will keep continuing, som
Neeraj Kumar
Let's look at now the total debt that you talked about is Rs.1,639 crores. Out of which, Rs.1,195 crores is the net debt on Jindal Saw balance sheet. This has got zero foreign currency debt. The balance Rs.445 crores, again, if you go to the respective countries and currencies, then all of them are domestic. But, if you look at Rs.1,639 crores and look at how much is Indian rupee denominated and foreign currency denominated, then Rs.445 crores would be the foreign currency denominated debt. But please note in their respective countries like US or UAE, they are all domestic currency debt. So, i
Q
Sir, since we are a pipe maker and the whole world is going towards green energy, especially the hydrogen energy, is there any scope for us to come up with some value added products which would both benefit us as a product maker and also where will be participating in this green energy revolution?
Neeraj Kumar
Two things. Value added product, as I told you, that is our constant endeavor. In every business segment, we want to. To answer your specific question on hydrogen, we are working on making sure that our seamless pipes or stainless pipes are capable of transporting hydrogen so that in the short-term, it can be used on those hydrogen containers, for the ships and long-term it can actually be used for transportation of hydrogen. So, hydrogen is one, transportation is one thing that is very much in our radar and we are working to develop that product in our portfolio asap. Given that there are a l
Q
Thanks, everyone. On behalf of PhillipCapital, I would like to thank Jindal Saw management for giving us the opportunity to host them for the concall. Over to you, sir, for any closing comment.
Neeraj Kumar
I need to thank the investors. As we have been saying on the last few quarterly calls that please be patient, our time is likely to come, it looks like now we are on the cusp and from here on we have a visibility where the next 18-24-months for us should be good and it should put us into a different pedestal because by then there are other activities which are taking place in terms of corporate reorganization, M&A activity, capacity expansion, product developments, value addition. So now, for the next 18-24-months, we will get the traction of a good market and we believe that we would transiti
Speaking time
Neeraj Kumar
31
Saket Kapoor
11
Moderator
9
Pratiksha Daftari
6
Neha Jain
4
Nikhil Chandak
4
Vikash Singh
2
Anand
2
Pankaj Bobade
2
Opening remarks
Vikash Singh
Good evening, everyone. I welcome you on behalf of PhillipCapital for Jindal Saw's Q2 FY'23 Conference Call. From management side, today, we have with us Mr. Neeraj Kumar – Group CEO & Whole- Time Director; Mr. Vinay Gupta – President & Head, Treasury; and Mr. Narendra Mantri – President, Commercial & CFO. Without taking any much time, I would hand over the call to Mr. Neeraj Kumar for Opening Remarks. Over to you, sir.
Neeraj Kumar
Good afternoon, friends. On Friday, we have finished our board meeting for the half yearly results. As all of you would have seen on the numbers, just to reiterate some of the high level numbers. Top line for the quarter was Rs.3,367 crores as compared to Rs.3,019 crores in the Q1 and Rs.2,571 crores in the Q2 last year, which is essentially a 12% growth on trailing and 31% growth on year-to-year. EBITDA was Rs.301 crores as opposed to Rs.255 crores for Q1 and Rs.380 crores for Q2 last year. Going down, PBT was Rs.81 crores as opposed to Rs.37 crores which was Rs.196 crores for Q2 last year. Let me just also give you some highlights of the consolidated numbers: Q2 consolidated numbers was Rs.4,067 crores as compared to Rs.3,510 crores in Q1, Rs.3,005 crores in last year Q2. EBITDA was Rs.355 crores as compared to Rs.271 crores as compared to Rs.410 crores for Q2 last year. PBT was Rs.89 crores as compared to Rs.1 crore for Q1 and Rs.179 crores for Q2. Now, if you just look at just thes
← All transcriptsJINDALSAW stock page →