Event Participants
Executives
1 Kaushal Bengani
Analysts
7 Amit Guruh Sachdeva, Ankur Savaria, Gaurav Khanna, Jyoti Singh, Saket Kapoor, Shriram, Vikas Singh
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Dispatches | 96,000 tons | Below usual run-rate of 1,05,000–1,10,000 tons due to April gas supply disruption at Telangana plant; now resolved |
| Revenue | ₹1,266 crores | Up 3% QoQ from Q4 FY26 |
| EBITDA | ₹184 crores | Down 23% QoQ on lower production volumes |
| EBITDA per Tonne | ₹15,600 | Within guided range despite lower volumes; improvement driven by product mix, not inventory mark-to-market |
| Other Income | ₹175 crores | vs ~₹97 crores per quarter average in FY26; driven by equity market gains |
| PAT | ₹271 crores | Up 150% QoQ, primarily on higher other income |
| EPS | ₹20 per share | Q1 FY27 |
| Order Book | ₹1,709 crores | Up 31% from ₹1,303 crores last reported; 63–64% comprises high-margin orders |
| Exports as % of Dispatches | 22% | vs <10% in FY26; FY23 was 25%, FY24/FY25 <5% |
| Capacity Utilization | 70–75% | Active capacity 5,50,000 tons; FY27 dispatch guidance 4,10,000–4,30,000 tons |
Geographic & Segment Commentary
Oil & Gas Sector (Domestic): Order book revival is the quarter's standout — 42% of total orders (≈₹714 crores) from ONGC and Oil India, the highest in several years. These are higher-margin orders expected to execute largely in Q2–Q3 FY27. Government's deep-sea exploration push (Samudra Manthan) is seen as a positive tailwind given the company's maximum size range and value-added product basket among Indian seamless pipe makers.
Exports (North America): Export book at 20% of total order book (≈₹340 crores), primarily US and Canada. Q1 dispatches were 22% of total vs <10% in FY26, reflecting improved drilling activity. Management confirmed customers fully absorb US tariff burden — selling prices are simply higher — and the company bears no cost incidence.
ERW Pipes: Small segment contributing <7% of total EBITDA. Margins vary sharply quarter-to-quarter based on product mix between higher-margin API-certified (oil sector) and lower-margin IS-certified (water sector) pipes; quarterly swings are mix-driven, not structural.
Premium Connections (JV with JFE): Operations commenced through wholly owned subsidiary Jindal Premium Connections; few orders already dispatched. Capacity of 8,000–10,000 tons per year; mill booked till April next year. Contribution is small but improves the value-added product basket.
Company-Specific & Strategic Commentary
Order Book Recovery: Book improved 31% QoQ to ₹1,709 crores with 63–64% high-margin composition — oil sector (42%), exports (20%), and special cylinder orders (₹100 crores). Management believes the oil & gas revival they were waiting for is finally underway.
Capex Acceleration — Telangana Finishing Line: Orders placed of ₹107 crores, payments of ₹89 crores. Project was deliberately de-prioritized over the last 1.5 years due to weak market conditions; now being fast-tracked given demand revival. Definitive completion update expected next call. Nagothane hot mill upgrade not yet started — Telangana is the immediate priority.
Demerger Scheme Withdrawn: The proposed scheme has been formally withdrawn with no alternative capital allocation plan communicated to shareholders.
Anti-Dumping Duty: Duty extended on an interim basis from October 2026 to January 2027 pending final review. Duty has become "less prohibitive" but still better than no duty; company will petition as needed but final decision rests with the government.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Dispatches (FY27) | 4,10,000–4,30,000 tons | Q2 run-rate of 1,05,000–1,10,000 tons implied; April gas disruption resolved; slightly above FY26's ~4,19,000 tons |
| EBITDA Margin | Maintained if not improved | Supported by 63–64% high-margin order book (oil + export + special orders) executing over Q2–Q3 |
| Premium Connections | Growth in FY27 | Mill booked till April next year; 8,000–10,000 tons capacity; value-addition strategy |
| Finishing Line (Telangana) | Definitive update next call | ₹107 crores ordered, ₹89 crores paid; completion being accelerated with demand revival |
| Exports (FY27) | 15–20% of sales trajectory | Based on current order book and Q1 run-rate of 22% |
Risks & Constraints
| Risk | Context |
|---|---|
| Anti-Dumping Duty Non-Renewal | Duty currently on interim extension from Oct 2026 to Jan 2027. Non-renewal would expose domestic market to Chinese/imported seamless pipes. Interim extension is encouraging, but final outcome remains uncertain. |
| US Tariff Sustainability | US steel import duties remain high, yet exports to North America are among the highest-margin orders. Management claims customers absorb the tariff burden fully, but sustainability of this pricing depends on continued US drilling strength and competitive dynamics. |
| Capex Commissioning Delays | Finishing line has been delayed ~1.5 years, and Nagothane hot mill upgrade hasn't started. Execution timeline remains uncertain; management commitments tied to "demand revival" visibility. |
| Cash Utilization / Capital Allocation | Demerger scheme withdrawn with no alternative plan communicated. Shareholder pressure on deploying surplus cash is building; management offered no timeline for a decision. |
| Raw Material Price Volatility | Inventory mark-to-market on steel billets can distort quarterly EBITDA per tonne (as seen in Q4 FY26). Q1 FY27 was not impacted, but rapid price swings remain a recurring risk. |
| Competitive Dynamics | Benefits from Competitor A's API certification cancellation and INR depreciation may be temporary if the competitor regains certification or currency moves reverse. |
Q&A Highlights
Order Book & Margin Trajectory
- Question: Can you elaborate on EBITDA margin trajectory based on the closing order book and improved mix? (Saket Kapoor)
- Answer: 63–64% of the order book comprises high-margin orders — ₹714 crores from ONGC/Oil India, 20% exports, ₹100 crores cylinder pipes. Most dispatches scheduled in Q2 with some spillover to Q3. Margin "should be maintained if not improved" in coming quarters. (Kaushal Bengani)
Volume Guidance
- Question: What should be the volume trajectory for the year and ensuing quarters? (Saket Kapoor)
- Answer: Q2 should see 1,05,000–1,10,000 tons; FY27 average of 4,10,000–4,30,000 tons is "reasonably possible." Q1 shortfall was entirely due to April gas supply disruption at Telangana, now resolved. (Kaushal Bengani)
Capex — Finishing Line & Nagothane
- Question: Why the inordinate delays in commissioning the finishing line, and what's the sequence for the Nagothane hot mill upgrade? (Saket Kapoor)
- Answer: Orders placed of ₹107 crores, payments of ₹89 crores. Project was not pushed aggressively for 1.5 years because the market was not buoyant; revival in orders will push completion sooner. Definitive update next call. Nagothane project has not started — Telangana is the current priority. (Kaushal Bengani)
Export Revival & US Tariffs
- Question: How can export margins be higher with steep US steel tariffs — does that gel together? What's the sustainability? (Amit Guruh Sachdeva)
- Answer: Export share was 25% of dispatches in FY23, <5% in FY24/FY25, <10% in FY26, and 22% in Q1 FY27. Revival driven by improved drilling in North America. "The only logical explanation is that the selling price is even higher" — tariffs are entirely absorbed by customers. (Kaushal Bengani)
- Question: Are we still cost competitive in the US market under the current tariff regime? (Jyoti Singh)
- Answer: 20% of order book (~₹340 crores) is to North America, secured despite tariff disruptions. Company will not absorb any tariff cost incidence. (Kaushal Bengani)
Anti-Dumping Duty
- Question: Is the anti-dumping duty benefiting us, and will it continue beyond January 2027? (Shriram)
- Answer: Duty extended on interim basis from Oct 2026 to Jan 2027, signalling the review found reasonable cause. It's "less prohibitive than before but better than no duty." Renewal is not within company control; company will petition as needed. (Kaushal Bengani)
Strategic — Demerger Withdrawal & Premium Connections
- Question: Where does the demerger scheme stand? What should investors expect on cash utilization? (Gaurav Khanna, Saket Kapoor)
- Answer: Scheme has been formally withdrawn; no update on capital allocation or a new scheme. (Kaushal Bengani)
- Question: What is the status of the Premium Connections JV and its financial contribution? (Saket Kapoor)
- Answer: Operations commenced; few orders dispatched. Capacity 8,000–10,000 tons/year; mill booked till April next year. Line-wise consolidation into standalone financials; small but adds to value-added product profitability. ICD to subsidiary increased from ₹10 to ₹14 crores for equipment and initial funds. (Kaushal Bengani)
Competitive Intensity
- Question: How do you view competitive intensity given a competitor's API certification cancellation and INR depreciation? (Vikas Singh)
- Answer: INR depreciation has made the company more competitive; has benefited from competitor's API license disruption and captured orders. Sales team feedback suggests a good order book can be maintained going forward. (Kaushal Bengani)
Deep-Sea Exploration
- Question: Will the government's deep-sea oil exploration (Samudra Manthan) contribute to the order book? (Ankur Savaria)
- Answer: Should positively impact as an oil & gas sector supplier. Company holds maximum size range, broadest value-added product basket, and largest capacity to supply the oil & gas sector in India. (Kaushal Bengani)
Key Takeaway
Maharashtra Seamless reported a mixed Q1 FY27: dispatches fell to 96,000 tons owing to the April gas supply disruption at Telangana, dragging EBITDA down 23% QoQ to ₹184 crores; however, PAT surged 150% to ₹271 crores on ₹175 crores of other income from equity market gains. The quarter's key positive was order book revival — up 31% to ₹1,709 crores, with 63–64% comprising high-margin oil sector (42%), export (20%, North America), and special orders, positioning the company for margin maintenance or improvement in Q2–Q3. Management guides FY27 dispatches of 4,10,000–4,30,000 tons (up modestly from ~4,19,000 tons in FY26) and is accelerating the ₹107-crore Telangana finishing line in response to demand. The demerger scheme was withdrawn with no capital allocation alternative communicated. Key watch items include the anti-dumping duty review (interim extension to Jan 2027), sustained US export pricing with customers absorbing tariffs, and completion of the long-delayed finishing line — management has committed to a definitive update next quarter.