Jindal Saw - Consistent Margins Backed By Improved Capacity Utilisation, VAP Mix: Systematix

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Systematix Research Report

Jindal Saw Ltd. reported Q1 FY25 revenue of Rs 49.4 billion (+12%/-9% YoY/QoQ), Ebitda of Rs 8.4 billion (+38%/-9% YoY/QoQ), and Ebitda margin of 17% (+322 basis points/+3 bps YoY/QoQ). The company produced 439kt pipes in Q1, registering 12% YoY growth and a 5% sequential decline.

Sales during the quarter at 400kt grew by 8% YoY but fell 16% sequentially. Jindal Saw achieved 36.8kt pipe sales from its UAE operations, clocking a 40% sequential growth. Pellet production and sales during the quarter were 426kt (+15%/+10% YoY/QoQ) and 413kt (+5%/+3% YoY/QoQ), respectively.

The company's current order book comprises-

1. orders valued at $1.65 billion from the Indian steel pipes business,

2. $251 million worth of orders from UAE operations, and

3. ~$15 million orders for value-added products from Jindal Hunting Energy Services Ltd. (JV between Jindal Saw and the Hunting Energy Services); Jindal Saw's consistent order book, a result of robust domestic and export demand, provides visibility on execution.

Increased order execution across margin accretive segments, robust exports, and a favorable value-added product mix have enabled margin sustenance. Jindal Saw's Q1 FY25 closing net debt stood at Rs 47.6 billion versus Rs 39.6 billion in FY24. The stock currently trades at 7.1 times trailing twelve months EV/Ebitda.

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