Jindal Saw: Q3-25 Earnings Call Highlights
Temporary plateau in revenue due to capacity limits. Positioned for significant growth through higher margins, expansion projects, and new ventures, supported by a strong financial position.
jindalsaw.com | NSE: JINDALSAW
1. Financial Performance
Top-Line Dip: Slight dip in top-line revenue in Q3-25, at ₹4,521 cr, compared to ₹4,790 cr Q2-25 and ₹4,785 cr in Q3-24. This is due to shipping delays and the end-of-year logistics, not a fundamental decline.
"this quarter is not a matter of concern because sometimes a few shipments which are large shipments just cross the 31st 31st December boundary line it gets booked into the next quarter and therefore that would catch up."
Improved Profitability: Despite the dip in revenue, the company's profitability margins have improved. EBITDA reached ₹882 cr, slightly higher Q2-25 (₹875 cr) and almost in line with Q3-24 (₹889 cr). This shows that "profitability margin has improved".
PBT & PAT: Profit Before Tax (PBT) was ₹626 crores, and Profit After Tax (PAT) was consistent with the preceding quarter. Both PBT and PAT show significant growth when compared to the 9 months of last year. Specifically, PBT showed a "25% growth" and PAT had "29% growth".
Nine-Month Performance: The 9-month figures show a flattish to mild growth on top-line, mild growth in EBITDA, and significant growth in PBT and PAT, which is "a 25% growth on the PBT, PAT again similar 29% growth."
2. Drivers of Improved Profitability:
Product Mix Shift: The improved profitability is driven by a strategic shift towards higher-margin products, including seamless pipes with premium connections, stainless steel, double chamber pipes, and DI pipes.
"the reason for profitability to improve is is a our product mix as we have been always saying in the sales portfolio is shifting towards higher margin business".
EBITDA Margin Guidance: The company expects EBITDA margins to remain within the 17-20% range for the next few quarters due to this product mix, despite a slightly higher 19.5% margin for the reporting quarter.
3. Capacity Utilisation & Expansion:
High Capacity Utilisation: Jindal Saw is operating at 70-75%+ capacity utilisation which is contributing to the plateauing revenue.
Completed Capex: A new coke oven battery has been commissioned. This will reduce coke costs, improve coke supply, and increase captive power generation.
Seamless Unit Expansion: Capacity of the seamless unit is being doubled and is expected to be commissioned within the next 3-5 months. This expansion should help boost the top-line significantly.
"the seamless unit ... we are almost doubling the capacity. The plant is nearing completion."
4. Capital Structure & Debt Management:
Strong Capital Position: Long-term debt has decreased to below ₹930 crores, while the net worth is close to ₹10,000 crores. Annual EBITDA is around ₹3,000 crores.
Debt Reduction: The company is planning to further reduce its long-term debt before March 31st.
"we are also looking at further bringing our debt down before 31st March. We have the liquidity. We are approaching the banks to permit us to bring down our long-term debt even further before 31st March."
5. Forex Management:
Natural Hedge: Exports constitute 25-28% of revenue, providing a natural hedge against currency fluctuations, as foreign exchange inflows exceed the outgo for raw materials. The company doesn’t have long-term foreign currency borrowings, further reducing risk related to exchange rate fluctuations.
"our earning in foreign exchange is more than per quarter what we spend on buying raw materials".
Reduced Financial Charges: Financial charges have decreased significantly year-on-year due to efficient management and natural hedging.
6. Order Book & Market Dynamics:
Plateauing Order Book: The order book is showing a plateau, reflecting current implementation capabilities. There was a small dip in the current quarter, again due to end-of-year logistics.
Increased Export Orders: The export order book has improved to 22% of the total, up from 12% in September 2024. These are largely from the Middle East region.
Domestic Infrastructure Slowdown: There appears to be a slowdown in central government spending on infrastructure, with more state governments initiating their own projects. However, they expect a renewed push in the upcoming budget.
there appears to be a slowing down of the center government's spent on the infrastructure, the emphasis on the infrastructure".
Oil & Gas Sector: Expect increased activity in the oil and gas sector in the Middle East due to recent US government announcements. There is also growth potential on the East Coast of India.
"on a global basis our assessment is that that would rub on and increase the oil and gas activity in this part of the world".
7. Future Projects & Growth:
New Projects: The company is examining new projects in both India and the Middle East region, with a focus on both the oil and gas and the water sectors. These projects are expected to propel the company to the next growth level.
Value Addition: The company is looking at projects to improve value addition within the group, which may involve backward or forward integration.
Timeline: Announcements on new projects are expected within the next 6 months, possibly by the first quarter of the next financial year.
8. Specific Segment Details:
Stainless Steel: Production currently is around 5,000 tons per quarter, with an expectation to increase to 15,000 tons by the end of the financial year and 20,000-25,000 tons in the coming year.
Ductile Iron (DI) Pipes: Production is approximately 175,000 tons in the last quarter with over 80% capacity utilization. Demand remains healthy and they do not see significant pricing moderation.
Seamless Pipes: Current capacity of 60,000 tons per quarter, expected to rise to 80,000-90,000+ after expansion.
Water Sector: Domestic market revenue is over 50% from the water sector.
Oil & Gas: Around 30-40% of domestic revenue.
Industrial: The remainder of the domestic sector revenue.
9. US Subsidiary:
The US subsidiary primarily acts as a coating facility for pipes used in the oil and gas sector. It has a locational advantage being in Baytown, near Houston. The improved environment for oil drilling in the USA should translate to more business for them.
10. Key Takeaways:
Jindal Saw experienced a temporary dip in top-line revenue this quarter but improved profitability, driven by a shift towards high-margin products.
The company is operating at a high capacity utilisation and is nearing completion of significant capex projects which will support the next level of growth.
Strong financials, a healthy order book, a commitment to debt management, and effective forex hedging strategies position the company well for future expansion.
New projects are being planned to support further growth in the Middle East and domestically, with a focus on both oil and gas and water infrastructure.
The company is optimistic about the long-term growth potential and is poised to take on the next phase of their growth plans.
They expect that the current plateau in revenue will be broken by the expansion projects and new projects planned for the next year.
The management believes there will be an increased infrastructure spend from both central and state government, driven by the upcoming central government budget.
The company believes that a focus on oil & gas by the US government will also drive demand in the Middle East.