MIDHANI - Mishra Dhatu Nigam Limited Share Price

The management of Mishra Dhatu Nigam (Midhani) provided a positive outlook, emphasizing strong order inflows, margin improvement, and strategic growth initiatives. Key highlights include:

Order Book & Growth:

• Current Order Book: Executable orders stand at Rs.1,906 crores (45% aerospace, 30% naval).
• FY25 Target: Order inflow of Rs.1,700 crores (already booked Rs.1,115 crores), including Rs.200 crores expected from ISRO and defense/aerospace sectors.
• Exports: Aim to expand global presence with orders from Boeing, GE, Pratt & Whitney, and Airbus.

Margin Drivers:

• EBITDA Growth: Improved to 25% in Q3 FY25 (vs. 17% YoY) due to lower nickel prices, higher scrap utilization, and operational efficiency. Management targets sustaining 20"“22% margins.
• Raw Material Advantage: Saved Rs.29 crores from price reductions (nickel) and Rs.19 crores from scrap/revert optimization.

Strategic Initiatives:

• New Alloys: Developing advanced ultra-supercritical alloys for BHEL's thermal plants and materials for defense (e.g., gun barrels, armor plates).
• Titanium Plant: Fully operational; targeting aerospace/defense sectors. Potential to scale capacity.
• Rohtak Facility: Supplying armor for vehicles (police/army) and helicopters; expects growth in body armor orders.

Capex & JVs:

• Capex: Rs.60 crores planned for FY25 (Rs.40 crores spent).
• NALCO JV: Under review due to low viability; minimal investment (Rs.40 crores total).

Future Outlook:

• Revenue Growth: Anticipates 20%+ growth in FY26, driven by order execution and new product commercialization.
• Key Sectors: Defense, aerospace (SUFA engine components, ISRO), and energy (BHEL's power projects) remain focus areas.

Challenges include raw material volatility and delayed JV decisions, but management expressed confidence in leveraging existing infrastructure and R&D for sustained growth.

Question: Congratulations on a good set of numbers. Does developing supercritical alloys refer to ultra-high megawatt thermal power plants? What is the tentative industry size and government's ambition for these alloys?
Answer: The supercritical alloys are for advanced power plants, developed in collaboration with BHEL and IGCAR. The government is in the early stages, targeting a 5 MW prototype. Exact industry size is unclear, but Midhani expects significant demand once approved. These alloys aim to replace imports, with delivery possible within 6 months post-order.

Question: What is Midhani's outlook on nuclear energy's growth (100 GW by 2047) and its role in supplying titanium alloys?
Answer: Midhani's new titanium plant is operational, meeting stringent specifications for strategic and commercial needs. While not directly involved in nuclear-specific titanium yet, it is prepared to scale production if demand arises. Titanium sponge sourcing remains import-dependent, but indigenization efforts are ongoing.

Question: Provide details on the expected INR 200 crore ISRO order.
Answer: Midhani anticipates an INR 200 crore ISRO order by FY25 end, supplementing prior completed orders. Existing facilities like the Wide Plate Mill enable quick execution. Deliveries for such orders typically take a year post-confirmation.

Question: Why did raw material prices decrease, and what is the current inventory status?
Answer: Nickel price declines drove raw material cost savings (INR 29 crore), partially offset by higher titanium and moly costs. Inventory reduced from INR 194 crore to INR 73 crore YoY, focusing on efficiency over stockpiling.

Question: Is the JV with NALCO progressing? How much has been invested?
Answer: The JV (Utkarsha) faces viability challenges due to low defense demand and cheaper imports. Only INR 40 crore (land, studies) has been spent. A consultant's report is under review; a final decision on continuation is pending.

Question: Are exports (e.g., Pratt & Whitney, Boeing) for critical aero components? How will MRO growth impact Midhani?
Answer: Exports (INR 60 crore YTD) include raw materials for critical aero parts. Orders from Pratt & Whitney (~INR 10 crore) are for rods/rings, with potential growth post-qualification. MRO expansion could boost demand for specialized alloys.

Question: Can Midhani sustain 22% EBITDA margins?
Answer: Margins are sustainable via raw material optimization (55% virgin vs. 34% scrap usage), yield improvements, and operational efficiency. Volatile nickel prices and product mix may cause minor fluctuations, but 20%+ is achievable.

Question: What is the order book split by sector?
Answer: Order book stands at INR 1,906 crore: ~45% aerospace (INR 800 crore), 30% naval (INR 500 crore), 10% defense/space (INR 150 crore each), and 5% exports/energy. Expect aerospace and naval to dominate near-term execution.

Question: What is the status of the titanium wire facility?
Answer: The titanium wire plant is fully operational, with stabilized production. Master alloy shortages briefly affected output but are now resolved. Utilization is at 100%, supporting future titanium demand.

Question: What growth guidance can be expected for FY25/26?
Answer: Midhani targets 20%+ revenue growth in FY26, driven by INR 1,906 crore order book execution, new alloys, and capacity expansion (INR 100 crore capex planned). Defense, aerospace, and titanium demand are key growth drivers.