# 1. Financial Performance ## A. Key Figures * Revenue (9M): INR1,159.7 Cr (+21% YoY) * **Q3 Revenue:** **INR362.9 Cr** (+21% YoY) * EBITDA (9M): INR145.5 Cr (12.55% margin) · EBITDA per ton: INR7,039 * Q3 EBITDA: INR45.2 Cr (12.47% margin) · EBITDA per ton: INR6,613 * PBT (9M): INR62 Cr · PAT (9M): INR45.6 Cr * **Q3 PBT & PAT:** **INR15.6 Cr** and **INR11.6 Cr** respectively ## B. Revenue Growth * **Sustained Top-Line Momentum:** Revenue grew at a strong double-digit pace in both 9M and Q3, reflecting resilient demand and effective market positioning. ## C. EBITDA Margin * **High-Margin Product Focus:** Robust EBITDA margins supported by favorable value-added product mix, with per-ton profitability remaining strong despite quarterly fluctuations. * **Structural Margin Protection:** Trading activities are ring-fenced in a subsidiary to preserve clarity and integrity of core manufacturing margins, which have consistently exceeded **5% EBITDA**. * **Stable Cost Outlook:** Employee expenses expected to have minimal impact on consolidated margins due to disciplined staffing and resource integration. ## D. Profit After Tax * **PAT Lagging Revenue & EBITDA Growth:** Despite strong top-line and EBITDA expansion (20–25%), PAT growth remains in single digits due to elevated **finance costs** (7–9%) and **depreciation**, limiting bottom-line leverage. * **Non-Cash Finance Cost Impact:** Approximately **13% of Q3 finance costs** relate to EIR adjustments under IndAS, representing non-cash charges that do not affect cash flow. * **PAT Margin Guidance:** Margins expected to remain around **5% over the next two years**, with meaningful expansion anticipated thereafter as cost pressures stabilize. ## E. Depreciation Impact * **Sequential Depreciation Rise Explained:** Increase from INR14 Cr to INR18 Cr QoQ driven by full-quarter depreciation of ROU assets from Ultra Pipes lease, following partial-month charge in Q2. * **ROU Asset Ramp Complete:** Q3 additions (INR22 Cr) more than double Q2 (INR64 Cr), with total ROU assets reaching INR202 Cr by December; depreciation expected to stabilize going forward. * **Depreciation as Cash Accrual:** Treated as internal accrual, supporting near-term breakeven outlook for renewable energy plant despite high accounting charges. --- # 2. Volume & Utilization ## A. Key Figures * Sales Volume: **2.07 lakh tons** (9M, +21% YoY) * **Production Volume:** **122,046 tons** (9M: 77,230 tons GP pipes + 51,000 tons related products) * **Total Installed Capacity:** **3 lakh tons** (GP pipes & coils) * **Capacity Utilization:** ~**40%** (current), guided to **50%** by year-end ## B. Production Volume * **Robust Volume Growth:** Sales volume achieved strong double-digit growth, reflecting increased market penetration and demand momentum. * **Strategic Output Shift:** Management is optimizing production mix by shifting focus from pipes to coils to improve **operational efficiency** and unlock higher effective output. ## C. Capacity Utilization * **Stable Operations:** Integrated steel plant in Telangana is operating at near-optimal levels, supporting consistent production quality and reliability. * **Utilization Ramp-Up:** Current utilization is significantly below capacity, but a clear path exists to increase to **50% by year-end**, indicating underutilized potential and room for margin expansion. --- # 3. Product & Mix ## A. Key Figures * **Value-Added Revenue Mix:** **96%–97%** of total revenue ## B. Value-Added Products * **Premium Product Dominance:** Near-total revenue derived from value-added offerings, highlighting successful positioning in higher-margin segments. * **Strategic Expansion Path:** Growth in GP and value-added lines to be driven by **acquisitions or add-ons**, with **no major CapEx-led capacity expansion before FY30**. * **Production Capabilities:** Full in-house production of key value-added products including CR coils, CRFH coils, galvanized products, and coil galvanizing. ## C. GP & MS Tubes * **Margin Divergence:** GP product margins constrained by **external sourcing of HR coils**, limiting cost control despite high realization. * **MS Tube Advantage:** MS tubes deliver **higher margins**, with per-ton profitability improving on volume scale due to favorable fixed cost absorption. ## D. Realization Trends * **Realization Upside:** GP product realization remains strong, with further gains expected as value-added output scales. * **Brand Equity Driver:** **Hariom's brand strength** supports pricing and demand, underpinned by quality, reliability, and compliance with **ISI standards**. --- # 4. Manufacturing & Projects ## A. Key Figures * **Solar Project Capacity:** **60 MW** (35 MW by Apr 2026 · 25 MW by Aug 2026) * Breakeven Timing: Near breakeven from April '26 (Q4 FY26) post-commissioning, despite initial non-cash depreciation impact ## B. Telangana Plant * **Stable Expansion Execution:** Focus on steady implementation of growth plans, leveraging prior ISP production maximization for margin improvement through scaled manufacturing. * **Strategic Separation & De-risking:** A dedicated trading subsidiary has been established to isolate trading performance and serve as a **testbed for demand validation** ahead of potential multi-thousand-crore capex decisions. * **Future Capacity Considerations:** Potential development of a **small to mid-size pipe mill near Anantapur** is under evaluation, contingent on regional infrastructure and market dynamics. * **No DFT Technology Upgrade:** Current ultra facility uses an earlier DFT version; no plans to adopt newer DFT iterations. ## C. Gadchiroli Project * **Project on Hold Pending Land:** Gadchiroli steel plant remains in early stages with **land allocation expected by year-end**; no material progress anticipated within 1.5–2 years. * **Next Steps Post-Land Allotment:** Following land receipt via MSDCL, focus will shift to securing **environmental clearance and regulatory approvals** to define the project timeline. ## D. Renewable Energy Plant * **On-Schedule Solar Ramp-Up:** 60 MW solar project advancing with substantial land secured, including government land to **lower development costs**. * **Phased Commissioning Confirmed:** First 35 MW to be operational by April 2026, remainder (25 MW) by August 2026, with near-breakeven expected from inception despite early accounting depreciation. --- # 5. Distribution & Channels ## A. Key Figures * **B2B Sales Mix:** Increased to **21%** from 15% in 9M ## B. Dealer Network * **Channel-Led Growth:** Dealer network expansion is driving volume growth, market reach, and brand strength, with high demand for Hariom Pipes. * **Strategic Subsidiary Launch:** Formation of **Metal Mart Private Limited** (70% owned) enables trading of non-manufactured steel products, enhancing **corporate governance** and **financial transparency**. * **Insight-Driven Expansion:** Metal Mart will generate strategic demand intelligence to guide future product and business line decisions, improving investor clarity on earnings composition. * **Regional Revenue Leadership:** **Karnataka** leads state-wise revenue, followed by **Kerala** and **Andhra Pradesh**. * **Lean Go-to-Market:** New trading operations in **Gujarat and Maharashtra** will operate with minimal team expansion, leveraging existing and recently hired staff. ## C. B2B & OEM Sales * **Shift Toward Value-Added Channels:** B2B sales rise reflects strategic pivot to **OEMs and corporate clients**, supported by new product lines and coil supplies, enhancing value addition. * **OEM & Government Projects as Growth Levers:** Successful execution in **OEM supply and government tenders** could materially improve profitability and reshape financial trajectory. * **Import Flexibility:** Trading arm imports diverse steel products—electronics, auto, oil & gas, transformers—based on OEM demand and partnerships, allowing dynamic response to market needs. * **Trading Launch Timeline:** New activities to commence by **end-March or early April**, starting small due to governance setup, with scale expected within one quarter. ## D. Regional Expansion * **Western & Northern India Focus:** Metal Mart targets underpenetrated **western and northern regions** as a market-testing platform to build presence beyond current strongholds. * **Andhra Pradesh Growth Catalyst:** Identified as key expansion region due to **land availability, government support, industrial growth, and strong consumption outlook**. * **Core Expansion States:** **Karnataka, Kerala, and Andhra Pradesh** remain focal points for ongoing operational and strategic discussions. --- # 6. Risks & Market Factors ## A. Raw Material & Cost Environment * **Margin Resilience:** Maintained consistent margins and profitability despite volatility in steel, coal, and iron ore prices, supported by disciplined working capital and stable operations. * **Positive Duty Impact:** Anti-dumping duties on imported HR coils seen as favorable for domestic producers, with management expressing strong support for government measures. * **Logistical Headwind:** **Anantapur Sponge Iron plant’s 300–400 km distance** from pipe mills imposes high transportation costs due to product weight and distance. ## B. Demand Outlook & Market Dynamics * **Regional Demand Strength:** No near-term oversupply risk for ERW/black pipes, underpinned by **strong demand in southern states**—Telangana, Andhra Pradesh, and Karnataka. * **Macro Resilience:** Overall demand remains robust despite limited budget support and seasonal monsoon impacts, with geopolitical factors and policy shifts only causing temporary market fluctuations. --- # 7. Guidance & Outlook ## A. Key Figures * **Q4 Realization:** **₹54,500–55,000/ton** (up from ~₹53,000) * **Revenue Growth Guidance:** **20–25%** over next two years * **PAT Growth Guidance:** **~20–25%** aligned with revenue * **EBITDA per Ton:** **₹7,000–8,000** maintained as baseline ## B. Revenue Projection * **Strong Seasonal Close Expected:** Confidence in robust Q4 performance underpinned by historical seasonality and market-accepted price increases. * **Multi-Year Growth Trajectory:** Revenue and profit growth set to sustain at **strong double-digit rates** over the medium term, driven by volume scale and operational leverage. * **Demand & Stability:** Healthy demand visibility and stable business conditions support **disciplined execution** and **steady growth** outlook. ## C. Long-Term Volume Target * **Path to 30% Volume Growth:** FY30 target remains intact, with **optimum capacity utilization expected at 70–75% by FY27**, supported by value-added chain expansion. * **Near-Term Volume Momentum:** Q4 volume target of **90,000–95,000 units** reflects **robust year-on-year ramp**, building on **21% YTD volume growth**. * **Growth Strategy Clarified:** Despite limited traction in new-market dealer expansion, management sees **achievable growth from core southern markets** and ongoing operational improvements. * **Post-FY27 Expansion Plans:** Strategic add-on opportunities will be evaluated for integration, enabling scalable capacity growth beyond incremental annual increases. ## D. Margin Expectations * **Margins Anchored by Manufacturing Core:** Standalone profitability remains unaltered by trading segment; **consolidated margins protected** despite lower-margin Metal Mart contribution. * **EBITDA per Ton Resilient:** Guided range maintained despite import pressures, with **anti-dumping duties supporting domestic price stability**. * **Future Margin Expansion:** Core manufacturing margin expected to **increase upon launch of new product line**, enhancing shareholder value post-consolidation.