# 1. Financial Performance ## A. Key Figures * Revenue from Operations: ₹460.96 Cr (+34% YoY, +15% QoQ) * **EBITDA (ex. other income):** **₹58 Cr** (+29% YoY, +18% QoQ) · **49% margin** * PAT: ₹23.61 Cr (+35% YoY, +37% QoQ) · 5.11% margin · EPS: ₹7.63 * **EBITDA per Ton (Blended Q1 FY26):** **₹7,362** · **MS Tubes: ₹8,200+** · **Galvanized: ₹7,200+** * **Inventory Holding Days:** **89 days** (down from 128 days) · **Net Working Capital: 89 days** * **Total Borrowing:** **₹363.70 Cr** (declining to negligible over next 2 years) ## B. Revenue Growth * **Strong Momentum:** Revenue growth accelerated both year-on-year and sequentially, driven by a strategic shift toward **value-added products** representing **98% of sales**. * **Product Focus:** Turnover in MS tubes and scaffolding accounted for the majority of sales, with galvanized and other steel products contributing a smaller but growing share. ## C. Margin Trends * **Sustained High Margins:** EBITDA margin held firm at **49%** despite input cost stability, underpinned by **backward integration**, **operational efficiency**, and favorable **product mix**. * **Pricing Power:** **9% year-on-year increase in sales realization** with stable raw material costs expanded margins, signaling strong pricing control in value-added segments. * **Segment Divergence:** MS tubes significantly exceeded margin guidance, while galvanized products fell short due to higher costs from the integrated HRC-based process. * **Solar Margin Outlook:** Solar power project expected to deliver **75% EBITDA margin** post-commissioning, driven by minimal operating costs. ## D. Profitability * **Robust Bottom-Line Growth:** PAT outpaced revenue growth, reflecting operating leverage and margin discipline, with EPS rising to **₹63**. * **Integrated Model Paying Off:** Shift from billet sales to fully integrated pipe and tube production has locked in higher per-ton economics, with **sustainable EBITDA per ton above ₹7,000**. * **Strong Cash Conversion:** Declining inventory days and improving working capital cycle reflect enhanced operational execution and demand visibility. ## E. Cash Flow * **Inventory Efficiency:** Inventory holding days reduced sharply to **89 days**, driven by ERP-enabled planning, order-aligned production, and supply chain discipline—part of a multi-year improvement trend. * **Debt Trajectory:** Despite **₹70 Cr** in borrowings, the company maintains a strong cash flow profile with a clear path to near-zero long-term debt within two years. * **Self-Sustaining Model:** Strong operating cash flows fully support capital allocation, including debt repayment, without need for external financing. --- # 2. Volume & Capacity ## A. Key Figures * **Q1 FY26 Sales Volume:** **78,221 MT** (+35% YoY, +5% QoQ) * **Net Production Capacity:** **72,000 MT** (Q1 FY26) ## B. Sales Volume * **Outperformance vs Target:** Volume growth significantly exceeded the 30% YoY target, reflecting strong execution and demand resilience despite weak market conditions. * **Product Mix Clarity:** MS Tubes and Scaffolding dominate sales, with over **52,000 tons** sold in Q1, while other steel products remain marginal. * **Ultra Pipes Contribution:** Integration adds scale, with **~12,600 units** sold in Q1, supporting overall volume momentum. * **Emerging Demand Signal:** Trial orders for new products at **200 tons/month** indicate early traction and potential for meaningful future revenue stream expansion. ## C. Capacity Utilization * **Revised Utilization Higher:** Corrected capacity utilization now stands at **66%**, with guidance pointing to a sustainable range of **70–80%** as optimization continues. * **Segment-Level Efficiency:** Pipe operations align with historical efficiency bands, while Ultra Pipes runs at **70–75%** of its capacity, indicating room for internal leverage. * **Capacity Headroom Confirmed:** Management affirms current infrastructure can support **30% volume growth** without immediate capex, targeting optimal utilization. --- # 3. Product & Mix ## A. Key Figures * **Value-Added Revenue Mix:** **98%** of total revenue · **90%** of sales from value-added products * **ASP:** **₹58,931/MT** (+9% QoQ) * **Production Classification:** **98%** of total production as value-added ## B. Value-Added Product Strategy * **Strategic Mix Discipline:** Sustained focus on value-added products drives superior realizations and profitability, with near-total revenue derived from secondary-processed offerings. * **Margin Optimization:** Business reallocation from low-margin segments to value-added products continues, supported by diversified OEM demand and **higher-margin profile** of processed steel. * **Product Differentiation:** Broad supplier base combined with a **differentiated portfolio** strengthens competitive positioning and customer stickiness. ## C. Product Segments & Applications * **Pricing Momentum:** ASP expansion driven by favorable mix, quality premiums, and customer trust in value-added offerings. * **Core Market Position:** MS tubes serve high-volume commercial and industrial applications—**not large infrastructure**—with product breadth enhancing dealer penetration. * **Industry Scale:** MS tubes and pipes represent **60–61%** of total Indian consumption, anchoring the company’s addressable market. ## D. Solar Structures Innovation * **Technology Shift:** Transition to **high-strength pre-galvanized tubular sections** replaces traditional channels, reducing weight and cost while improving solar project durability and efficiency. * **Sustainability Edge:** New design breaks conventional limitations, enhancing project viability and supporting long-term green energy demand trends. --- # 4. Customer & Channel ## A. Key Figures * **B2B Sales:** **₹75 Cr** (of ₹96 Cr total quarterly turnover) * **Direct B2B Sales:** **15%** of total sales * **Volume Growth:** **30%** (broad-based across sectors) ## B. B2B & OEM Sales * **Strategic OEM Momentum:** Expansion in customer footprint driven by new OEM partnerships, particularly in renewable energy, with new additions expected monthly post 6–8 month compliance cycle. * **High-Value B2B Model:** Direct B2B transactions, though currently a minority share, are viewed as more lucrative long-term due to stronger relationships and **one-stop-shop advantages** enhancing customer retention. * **Execution Pipeline:** B2B contribution reflects advanced engagement stages—sample testing, approvals—with **ongoing demand from contracted OEMs** signaling strong satisfaction and renewal potential. ## C. Dealer Distribution * **Dominant Indirect Channel:** The vast majority of sales (85%) flow through distributors and dealers, with inventory levels actively managed to ensure supply continuity. * **Channel Stability Over Stocking Trends:** Management emphasized consistent dealer inventory policies despite past price volatility, though no qualitative update was provided on current destocking or buildup trends. ## D. Customer Expansion * **Gradual Geographic Rollout:** Southern states remain core markets; northern expansion is constrained by logistics but under active review to unlock incremental share. * **Phased Customer Onboarding:** New customer supply has commenced post-trial production, with scaling prioritized behind **operational stability**, reflecting a disciplined growth approach. --- # 5. Capital & Projects ## A. Key Figures * **Solar PPA Capacity:** **60 MW** (25-year term) · **115 acres** secured (supports 32 MW) * Solar Tariff: ₹2.96/unit base rate + ₹0.25/unit incentive for first 3 years * Solar CapEx: **< ₹240 Cr** (likely near **₹180 Cr** guided range low end) * **CapEx per MW:** **~₹3 Cr/MW** (implies ~₹180 Cr for 60 MW) ## B. Solar Project Development * **Fixed-Structure Solar Deployment:** Project uses **fixed solar modules** with **no trackers**, supported by a secured partnership for solar structures. * **Value Capture Model:** Shareholders benefit via **25-year predictable revenue stream** and **high-margin solar steel structure sales** from existing plants, irrespective of subsidiary ownership. * **Project Independence:** The 60 MW solar initiative is **fully separate from core pipe manufacturing**, with no impact on current capacity utilization. * **Land & Execution Model:** Land acquired via **28–29 year lease**, eliminating purchase costs and contributing to lower CapEx; 8 of 13 locations confirmed. ## C. Funding & Subsidy Framework * **Subsidy-Driven Capital Efficiency:** Project funded through **debt and PM Kusum Scheme Component C equity subsidy**, drastically reducing cash outflow. * **Accelerated Payback:** Subsidy enables **equity payback within 18 months** of commissioning, enhancing cash flow visibility. * **No External Fundraising:** **No equity raise planned** for the solar project—fully financed internally and via scheme-backed debt. ## D. Maintenance & Forward-Looking CapEx * **Minimal Ongoing CapEx:** Beyond the solar project, only **routine operational and maintenance CapEx** expected; **no major expansions** planned for next 2–3 years. * **Maintenance Outlook:** FY26 maintenance CapEx expected in **line with prior year levels**, with Q2 shutdown at Mahbubnagar not impacting performance. * **Green Steel Scoping:** Committee evaluating **green steel technologies** and potential partners, signaling long-term decarbonization intent. --- # 6. Risks & Execution ## A. Capacity Constraints * **Strategic Alignment with Green Steel Mandate:** Company has established a dedicated green steel committee to align with the Indian government’s sustainability push. * **Procurement-Driven Incentive:** Future government contracts will require a **hefty percentage of green steel**, elevating it to a top strategic priority. --- # 7. Guidance & Outlook ## A. Key Figures * **Volume Growth Guidance:** **30%** YoY for FY26 · **30–35% CAGR** expected over next two years * **Market Growth Comparison:** **30%** company guidance vs. **8%** market growth rate * **Price Spread:** **₹9,000/ton** between primary and secondary steel * **Incentive:** **₹25/unit** for 3 years if project completed by **2nd September 2026** ## B. Volume Growth * **Outperformance vs. Market:** Volume growth guidance of 30% significantly exceeds 8% market average, reflecting strong execution and competitive gains. * **Sustained Momentum:** Management reaffirms 30% growth trajectory for FY26, with confidence in multi-year **30–35% CAGR** driven by renewable energy tailwinds and product innovation. * **Market Share Catalyst:** Widening price spread of ₹9,000/ton enhances competitiveness, supporting expectations of volume gains from primary steel producers. * **Growth Philosophy:** While open to opportunities, strategy prioritizes **quality and stability** over sheer scale, with current high growth not expected to dilute focus. ## C. Margin Expectations * **Margin Resilience:** Gross margins per ton expected to hold despite raw material stabilization, with fluctuations treated as normal business variance. * **Profitability Expansion:** EBITDA per ton projected to improve through higher-value **OEM and engineering product mix**, signaling structural margin enhancement. ## D. Project Timeline * **Strategic Expansion Readiness:** Hariom is poised for execution within 2–3 years, contingent on opportunity fit and timing. * **Green Steel as Core Priority:** Initiative now top-down and strategic, with **majority of future output** expected to shift toward green steel production. * **Time-Bound Incentive Capture:** Project completion by **2nd September 2026** is critical to secure ₹25/unit incentive, implying disciplined timeline management.