Manaksia Coated Metals & Industries Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

3 Karan Agrawal, Mahendra Bang, Tushar Agrawal

Analysts

11 Ajit Sethi, Ankit Shah, Ashwani Agarwal, Avinash Nahata, Bhavya Shah, Deepesh, Jayam Birawat, Moksh, Nishita Shanklesha, Prateek Shrivastava, Shlok Bhartiya

Financials & KPIs

Geographic & Segment Commentary

• Pre-Painted Steel: 74% of sales volume; production of 20,510 tons at 95.4% utilization (essentially full capacity), signalling strong demand. Pre-Painted export volume grew 25% YoY. The second color coating line will expand capacity 174% to 236,000 tons per annum.
• Alu-Zinc: 26% of sales volume; production of 27,941 tons (+8% QoQ) at 62% utilization with steady ramp-up. The company has fully transitioned from galvanized product - zero galvanized steel sold in Q1. Incremental EBITDA of ₹1,000-3,000 per ton vs galvanized steel.
• Exports: 65% of total volume (18,221 MT); export revenue +20% YoY. Entered 4 new international markets (Latvia, Brazil, Jamaica, Somalia) during Q1, broadening the global base. Robust order book going into Q2 with meaningful untapped potential from existing long-term customers.
• Domestic: Remaining ~35% of volume served via domestic OEM customers; demand tied to infrastructure, building materials, home appliances, automotive, new homes and warehouses.

Company-Specific & Strategic Commentary

• Second Color Coating Line (CCL2): In advanced stages of commissioning with Q2 FY27 target; takes total Pre-Painted capacity from 86,000 to 236,000 tons per annum (+174%). Existing line at near-full utilization means demand is already waiting for this capacity - the most significant near-term revenue catalyst.
• 7-MW Captive Solar Power Plant: Q2 FY27 commissioning target; offsets 50-55% of grid power consumption at Kutch, delivering a permanent structural reduction in energy cost per unit and supporting greener manufacturing for international customers.
• Cost Pass-Through & Back-to-Back Model: All new Q1 orders priced to fully cover current raw material and freight costs with a margin buffer; quarterly price resets with export customers cover raw material, freight and energy changes; back-to-back model insulates from commodity cycles.
• Phase 2 Capex (₹350 crores): Backward integration via cold rolling plus second Alu-Zinc line; funded through internal accruals, debt and equity; peak D/E capped at ~1.25x. Cold rolling expected to halve inventory (from hundreds of SKUs) and compress working capital cycle from ~75 days to single-digit days.
• Salesforce CRM: Implementation underway; provides centralized visibility of customer base, inquiries, orders and after-sales across domestic and export markets as the company scales geographically.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

EBITDA per Ton Sustainability & Margin Headroom

• Question: Is the record ₹10,400 EBITDA per ton sustainable, and how much can it increase once the solar project is complete? (Jayam Birawat, Yes Securities)
• Answer: Sustainability rests on Alu-Zinc capacity ramp-up, strong export tonnage and higher realization per ton; CCL2 and solar will strengthen the EBITDA margin profile further. (Karan Agrawal)
• Question: Is this the peak EBITDA per ton? (Avinash Nahata, Parami Financial)
• Answer: Not the peak - the new Alu-Zinc technology improves the EBITDA profile vs galvanized steel; further headroom from renewable energy and a higher Pre-Painted revenue share; galvanized sales are now zero. (Karan Agrawal)

Capex Funding, Debt & Leverage

• Question: How will the ₹350 crore capex be funded? What is spent and remaining project-wise, and what will peak leverage be? (Jayam Birawat; Shlok Bhartiya, Svan Investments)
• Answer: Mix of internal accruals, debt and equity; ₹140 crores already deployed (Alu-Zinc upgrade, CCL2, solar - in CWIP, capitalised in Q2); residual debt deployment of ₹15-20 crores; current debt ₹115 crores includes capex term debt; peak debt likely ₹125-130 crores; incremental debt for Phase 2 ~₹100 crores with D/E capped at ~1.25x. (Karan Agrawal)

Volume Decline & Alu-Zinc Ramp-Up

• Question: Q1 volume (27,900 MT) was marginally below Q1 FY26 (29,000 MT) - is it the Alu-Zinc line ramping up or softer demand? Any bottlenecks? (Ashwani Agarwal, CASA Capital)
• Answer: 100% attributable to Alu-Zinc ramp-up pace; strong order book confirms demand is not a concern; teething troubles are natural for a new highly automated line in the first 3-4 months of commissioning; expect 75-80% utilization within ~3 months. (Karan Agrawal)

Working Capital, Cash Flows & Cold Rolling

• Question: What is the current working capital cycle, and how will it improve? With inventory/receivables build-up, how do cash flows play out as revenue scales to ₹1,350 crores? (Shlok Bhartiya; Prateek Shrivastava, Nivesh Wisdom)
• Answer: Cycle is ~75 days including creditor tenor; hundreds of SKUs are stocked for customized orders; cold rolling mill will halve inventory and compress the cycle to single-digit days. Cash flows are currently directed to capex and working capital until stable utilization; internal accruals plus low utilization of bank working capital limits provide sufficient firepower. (Karan Agrawal)

Demand Visibility, Order Book & Growth Trajectory

• Question: What gives confidence demand will keep pace with aggressive 2-3x capacity expansion? Current order book and expected intake? (Deepesh, Maanya Finance)
• Answer: Order book ~₹450 crores (+/- ₹20-25 crores), executable in 4.5-5 months; orders are repetitive quarterly placements from long-term export and domestic OEM customers; MoUs provide annual offtake indications; sustainable order book of ₹350-450 crores expected; order book has grown from ₹100-120 crores to ₹400-450 crores over two years as customers validated larger-order execution capability. (Karan Agrawal)

Alu-Zinc EBITDA Premium

• Question: With the shift from galvanized to Alu-Zinc, what is the sustainable EBITDA upside - pricing power or cost efficiency? (Deepesh)
• Answer: Both - incremental EBITDA of ₹1,000-3,000 per ton vs galvanized depending on demand and cost environment, driven by production cost savings and Alu-Zinc's premium market pricing. (Karan Agrawal)

LPG Supply Disruption & Fuel Derisking

• Question: Any LPG supply issues from the Hormuz closure? Alternatives/substitutes? How much cost increase was seen? (Deepesh)
• Answer: India-wide supply disruption affected the company too, but buffer stock kept the plant running nonstop; diversified buying to private + PSU suppliers; LPG prices spiked from ₹60 to ₹200/kg, now cooled to ₹80/kg (25% above pre-war); India diversified gas sourcing (US, Canada, Australia, Venezuela, Russia); company is signing a GSPC natural gas pipeline agreement for long-term derisking. (Karan Agrawal)

FY27-28 Revenue & Capacity Guidance

• Question: How fast can we reach the ₹2,500-2,700 crore peak revenue? How fast will CCL2 ramp up? What revenue growth for FY27 and FY28? (Nishita Shanklesha, Sapphire Capital)
• Answer: Peak revenue is only post-Phase 2 (₹350 crore capex); CCL2 will ramp faster than Alu-Zinc (less complex line), reaching 50-60% utilization in H2 FY27; FY27 ~150,000 tons → ₹1,300-1,350 crores; FY28 180,000-200,000 tons → ₹1,700-1,750 crores; peak revenue of ₹2,500-2,700 crores at ~3 lakh tons. (Karan Agrawal)

EBITDA Normalization & Commodity Cycle Insulation

• Question: How should normalized EBITDA look across the steel cycle? Are export orders under pass-through/hedged contracts? (Bhavya Shah, 3A Capital)
• Answer: Back-to-back business model - finished products sold in advance against the order book before raw material procurement; stock/pipeline raw material is priced in against orders; quarterly price resets with export customers cover raw material, freight and energy changes. (Karan Agrawal)

FY27 Margin Trajectory & CCL2 Ramp-Up Risk

• Question: Can consolidated FY27 EBITDA margin reach ~12%? Will there be a temporary margin dip during CCL2 ramp-up? (Ankit Shah, Fusion Capital; Prateek Shrivastava, Nivesh Wisdom)
• Answer: Q1 reflects the earlier indicated recovery; a further 1-2% EBITDA improvement is possible from new capacities, solar and value-added mix, but whether it fully reflects in FY27 is not committed; no immediate reason for a margin dip - CCL2 will consume captive Alu-Zinc and sell more value-added product, and the Q2 order book is visible and clear. (Karan Agrawal)

Key Takeaway

Manaksia Coated Metals delivered a sharp Q1 FY27 recovery: revenue rose 15% QoQ to ₹263 crores, EBITDA jumped 86% QoQ to ₹29.08 crores (11.06% margin), and EBITDA per ton hit a record ₹10,400 on full cost pass-through pricing and the completed shift to Alu-Zinc. Exports drove 65% of volume (18,221 MT, +20% YoY revenue) with four new markets added. Catalysts converge in Q2 FY27: a second color coating line lifts Pre-Painted capacity 174% to 236,000 tpa, a 7-MW captive solar plant offsets 50-55% of Kutch grid power, and Alu-Zinc utilization ramps toward 75-80%. Management guided FY27 revenue of ₹1,300-1,350 crores (~150,000 tons) and FY28 revenue of ₹1,700-1,750 crores (180,000-200,000 tons), with 1-2% further EBITDA margin upside (timing not committed). Key watch items: LPG costs remain ~25% above pre-war levels and execution of the ₹350 crore Phase 2 capex within a 1.25x debt-to-equity ceiling.