Surya Roshni Q4 Results Review - The Lighting Segment Partially Offsets Steel Margin Pressure: Systematix

Systematix Research Report

Surya Roshni Ltd. reported Q4 FY24 revenue of Rs 20.8 billion (-3%/+7% YoY/QoQ), 4% below our estimate due to lower realizations. Ebitda for the quarter was reported at Rs 1.7 billion (-32%/+9% YoY/QoQ), 11% below estimate, majorly impacted by-

1. lower realisations, and

2. a fall in API spiral pipes deliveries, partially offset by better margins at the lighting and consumer durables segment.

The steel pipes and tubes segment recorded Q4 FY24 sales of 236 kt (+10%/+20% YoY/QoQ). Ebitda/tonne was reported at Rs 5,877/tonne, falling by 40% YoY and 5% QoQ impacted by lower steel prices and subdued sales of value-added products, especially the high margin API spiral pipes (32% YoY decline).

The segment’s current order book stands at Rs 8 billion comprising oil and gas and water segment, and export deliveries. The lighting and consumer durables segment Ebitda was reported at Rs 0.5 billion (+7%/+18% YoY/QoQ) with a +102 bps/+134 bps YoY/QoQ improvement in Ebitda margin at 10.8%.

Surya Roshni repaid Rs 4 billion debt in FY24 attaining a debt-free status with closing cash position of Rs 0.6 billion. The company has announced a fresh capex plan towards steel pipe capacity expansion from 1.2 mt to 2 mt, and enhancing the professional and valueadded product portfolio in the lighting segment.

The capex plan would span over two years at an estimated outlay of Rs 5 billion.

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