MAHSEAMLES - Maharashtra Seamless Ltd. Share Price

The management provided a positive outlook, emphasizing strong demand in the oil and gas sector driving growth for seamless pipes. Key points include:

1. Operational Performance: Improved dispatches (16% QoQ in seamless pipes) and product mix boosted EBITDA (21% QoQ to Rs.280 crore). Margins recovered due to inventory markdown reversals from Q1.

2. Order Book: Healthy at Rs.1,674 crore (as of Jan 2025), with demand remaining robust. The order pipeline is stable, supported by oil & gas capex and infrastructure spending.

3. Growth Initiatives:

   • New Facility: A finishing line in Telangana (Rs.852 crore capex) is set for Dec 2025 commissioning, enabling incremental volume growth from Q4 FY26.
   • Market Expansion: Premium threading partnerships (ongoing discussions) and domestic market focus amid reduced exports (now <10% of orders).

4. Treasury & Returns: Treasury stood at Rs.2,417 crore (Dec 2024), generating higher YoY other income (Rs.157 crore in 9M FY25 vs. Rs.97 crore in 9M FY24). Dividends quadrupled since FY22.

5. Credit Rating: Upgraded to ICRA AA+ (Dec 2024), reflecting financial strength.

6. Industry Outlook:

   • Seamless pipe demand in India (~900K tons/year) expected to grow at ~4% CAGR.
   • Advocacy for anti-dumping measures against Chinese imports to protect margins.

7. Margins: Target Rs.15,000/ton EBITDA for FY25; Q3 FY25 saw Rs.20,000/ton, though lumpy treasury returns caused PAT volatility.

Management reiterated confidence in sustainable growth, prioritizing shareholder value via dividends, prudent capex, and operational efficiency.

Question: My question is regarding the volume guidance for FY for the current year and 26. Can you please share what is the outlook and what guidance would you like to give on the volume front?
Answer: For seamless pipes, guidance is 430,000"“435,000 tons for FY25. ERW segment is expected to reach ~90,000 tons. Post December 2025, Telangana's finishing line facility will boost FY26 volumes, with an estimated 15,000 tons per quarter initially.

Question: So, I had a question regarding the impairment of investments in the subsidiaries. So, it was to the extent of 800 crores. So, right now our capital employed in the big business is around 650 crores. So, do we plan to distribute the proceeds or sale to shareholders or what?
Answer: The impairment is historical and addressed in prior calls. Current focus is on growth, including the Telangana facility commissioning in December 2025, which will drive future revenue.

Question: And any revenue guidance that you can give for FY '26?
Answer: FY26 revenue will depend on Telangana facility's commissioning (post-December 2025). Current FY25 performance (tonnage/revenue) serves as a baseline.

Question: So, what is the, you mentioned about the guidance for the ERW for the current year. So, in ERW, we have done around 64,000 tons.
Answer: ERW dispatch guidance for FY25 is ~90,000 tons. Post-Telangana facility ramp-up, incremental 15,000 tons per quarter is expected from Q4 FY26. Margins may improve with higher utilization.

Question: Now, we have been hearing about the U.S. we want to increase the production. So, what would be the indicators and the parameters we should be seeing out where the actual activity happens and we start getting orders?
Answer: Track U.S./Canada drilling activity via weekly rig counts on American Oil & Gas Reporter (aogr.com). Increased drilling boosts demand for seamless pipes.

Question: And just one more on this Treasury front, so 2,400 crore was as of January. And now, so are we shifting money from equity to debt funds? Have we done anything of that sort given the sharp correction what we have seen in the markets?
Answer: Treasury management focuses on maximizing returns: FY25 other income averaged Rs.52 crore/quarter vs. Rs.32 crore/quarter in FY24. Strategy details remain confidential.

Question: With the India's seamless pipe demand currently at 900,000 tons annually and Maharashtra Seamless holding over 50% market share, where do we see the annual demand growing over the next three years and at what CAGR? Additionally, what protects domestic manufacturers from Chinese dumping?
Answer: Demand grows ~4% CAGR, driven by oil/gas capex. Domestic industry still faces Chinese dumping risks; anti-dumping measures are being petitioned for higher margin protection.

Question: With the cash reserve approximately 2,400 crores and only 800 crores allocated for CAPEX, what are the plans for the remaining 1,600 crores? Any shareholder rewards (buybacks/dividends)?
Answer: Dividends quadrupled since FY22. Cash conserved for inorganic growth, CAPEX, and future needs. Market cap rose from Rs.2,000 crore (2021) to Rs.8,000 crore, reflecting value creation.

Question: Can we see the premium thread segment product becoming a part of our manufacturing capability in the next three months as anticipated? Where are we in the agreement with Tenaris? And what about the Telangana solar plant approval?
Answer: Premium thread discussions ongoing with a foreign partner (not Tenaris). Telangana solar plant approval pending; no alternate plans disclosed yet.

Question: Out of the 9 lakh tons of seamless pipe demand, currently how much is being imported in India?
Answer: Imports account for 10"“20% of demand. Exports now <10% of order book vs. 30% in FY23, offset by strong domestic demand.

Question: When you have back-to-back arrangements with suppliers/customers, why is there EBITDA/ton volatility? Why are CAPEX projects sequenced?
Answer: Q1 FY25 EBITDA dip (Rs.9,000/ton) was temporary; 9M FY25 blended EBITDA is Rs.16,500/ton. CAPEX sequencing due to shared team resources; cold-drawn pipes facility follows Telangana's completion.

Question: What is the future of the rig business?
Answer: Rig contract ends May 2025/post-monsoon. Board decision pending, but focus remains on core seamless pipes business.

Question: After Telangana's expansion, will seamless capacity utilization stay above 85%? Why is ERW utilization low?
Answer: Seamless utilization to average historical levels (~85%). ERW's lower tonnage reflects product mix (e.g., smaller pipes), not operational inefficiency.

Question: How do global jackup rig trends affect demand?
Answer: No slowdown in seamless demand; order books remain robust. Competitors' results align with strong oil/gas-driven demand outlook.