MAHSEAMLES Q3 FY26 earnings call.
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Revenue
₹1,090 Cr
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EBITDA
Pending
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Maharashtra Seamless reported a "fairly regular quarter" with improved seamless pipe margins driven by reversal of inventory markdown, consistent with prior guidance. ERW segment margins also improved on better product mix. The standout was other income boosted by improved market sentiment and precious metals returns. Tonnage dispatched remained steady at ~1.01 lakh tons Q3 (vs 1.03 lakh in Q2), with order book replenishment achieved despite muted government capex. Management guided that EBITDA per ton should remain in the Rs 10,000-15,000 range without material decline. The Rs 90 crore Telangana finishing line will resolve the finishing capacity bottleneck (1 lakh tons currently stranded) and is partially operational this quarter. Premium connections production under royalty agreement expected to commence in 6 months, targeting a 50,000-1 lakh ton domestic market. Management reiterated its acquisition thesis on distressed assets and emphasized 35-year market leadership as validation of its conservative capital approach. Key risk: continued Chinese dumping (20-25% of domestic market) and dependence on government oil & gas expenditure for growth.
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Guidance to track
- Management stated from experience that margins will not decline materially from current levels and should remain in the Rs 10,000-15,000 per ton range.
- Royalty agreement signed with foreign partner for premium connections; production expected to commence in approximately 6 months targeting the 50,000-1 lakh ton domestic market.
- Purchase orders of Rs 90 crore issued for the Telangana finishing line; some portion expected to start in current quarter, resolving the 1 lakh ton finishing bottleneck.
- Management explicitly stated they do not provide specific guidance but expressed cautious optimism pending Union Budget impact on government oil & gas expenditure.
Risks flagged
- Chinese imports continue to account for 20-25% of domestic industry despite anti-dumping duties. Management claims to have maintained margins via product mix, but this remains a structural headwind to pricing power.
- Company's growth is directly tied to government expenditure in oil & gas sector. Management acknowledged that without increased spending, the market will not grow. Budget outcome critical for demand recovery.
- An investor directly challenged management that ~50% of market cap is backed by cash with limited growth prospects. Management deflected, emphasizing long-term value creation philosophy over shorter-term distributions.
- Drill pipe orders (high-margin, ~8-9,000 ton annual market) were absent in both Q2 and Q3 order books. Management flagged this as notable but provided no timeline for recovery.
Key quotes
- We are the only player in this industry who has consistently remained a market leader for the past 35 years. So our thought process would be different from that of our peers and it has benefited us which is why we remain aligned to the thought process which has benefited us.
- We will not buy assets at full value. We will buy only distressed assets because that makes the most sense for us in our industry which is cyclical.
- We have quadrupled the dividend which is being paid out to the shareholders in the period from FY22 to FY24 and in FY25 even with a lower profit we maintained the quadrupled level of dividend.
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