Ladies and gentlemen, good day and welcome to the Ratnamani Metals & Tubes Limited Q2 FY 2024 earnings call hosted by Monarch Networth Capital. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital. Thank you. Over to you, sir. Yeah. Thank you, Darwin. So good afternoon to everyone. On behalf of Monarch Networth Capital, we welcome you all for the Ratnamani Q2 FY 2024 earnings call. We are delighted to host the management of Ratnamani Metals & Tubes today. And from their side, we have Mr. Prakash Sanghvi, MD and Chairman, Mr. Manoj Sanghvi, who is the Business Head for the Carbon Steel segment, and also Mr. Vimal, the Chief Financial Officer. So without taking much time, I'll hand over the call to Mr. Manoj Sanghvi for the opening remarks. Thank you, and over to you, Manoj. Yes, sir. Thank you, Sahil. Good afternoon. Good afternoon to everyone. I welcome you all to this call and hope everyone is doing good. Our results for the second quarter of FY 2024 have been uploaded in the exchanges, and I believe all of you had the chance to go through it. Just to give you a brief, our standalone Q2 revenues are INR 1,084 crores, with EBITDA of INR 252 crores and a net profit of INR 169 crores. Our quarterly revenue has increased 19.9% year-on-year and down marginally by 3.3% on sequential basis, mainly attributable to softer steel prices. EBITDA has increased from INR 155 crores to INR 253-odd crores on year-on-year basis, registering growth of 63%, and sequentially it has increased by 22%. Due to favorable product mix and few special jobs, our EBITDA margin has also expanded by 8% on year-on-year basis and 4.8% on sequential basis. On the half year basis, our revenues witnessed 16% growth to INR 2,204 crores and EBITDA of INR 460 crores as compared to INR 294 crores in H1 FY 2023. For H1 FY 2024, our net profit is INR 305 crores, compared to INR 185 crores in FY 2023. During the quarter, in spite of inflationary pressures felt on operating costs, we have been able to improve our profit margin due to better product mix. However, as we move forward in FY 2024, we may see some line pipe orders for Oil & Gas as well as water, and hence we continue to expect our annualized EBITDA margins broadly in the range of 16%-18% under normal business conditions, as guided during our FYs calls. Orders on hand as on 1 October is INR 2,979 crore. To add a new growth driver, both domestically and globally, our company has forayed into pipe spooling and auxiliary products business through a joint venture with Technoenergy AG, Switzerland. A group based out of Switzerland, having more than 100+ years of experience in manufacturing of pipe spools, hangers, support systems and other auxiliary products. As informed in the exchanges, RMTL has 51% in this JV and 49% is with Technoenergy AG. The joint company will cater to Oil & Gas, thermal and nuclear power plants and other allied industries, which will open new avenues for our company. In future, we expect to see good traction in Core Energy Segment and applications in various special segments. This will also help us deepen our customer base by expanding the product offering. We expect this entity to start commercial operation in next three to six months. That's all from our side. Now, I would like to invite questions from the participants. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, do wait for a moment while the question queue assembles. The first question is from the line of Ashutosh Tiwari from Equirus Securities. Please go ahead. Yeah, congratulations on the set of numbers. Firstly, on the export side, I think, when we had basically, commissioning this extrusion facility, one of the aspects was that we want to go into higher diameter and more valuable products, which can be supplied export market. So where are we in that journey? I mean, obviously our export order book has been increasing over last one year to your perspective. So just can you give some color on that? So, was installed last year. Ramping up of capacity and approval is going on. It's an ongoing process. So yes, we are seeing more and more traction both domestically and exports. Going forward, as we have more approvals, the utilization levels will be much better. For trial purposes, we have tested all the types, the complete size, up to 10 inches, and all grades. We have tested and successfully all the trials are successful. Yeah, and few commercial orders also we have executed for various grades. Okay. So that means that, going ahead, I think around the export side, we would receive more, orders coming, like when all these products get commercialized, do you think? Yes, yes. As informed earlier, we are seeing good amount of traction for special grades also. Okay. Special grade means, like more nickel, grades or, these are, in terms of application, they are different? Stainless steel only, but High Alloy Grade. High Alloy Grade. Okay, okay. So- These would be a competitively better margin than earlier grades that you're making? Yes, margins would definitely be better, but contracts would not be as... As high. -normal grade. Okay, okay. But I mean, lastly, I think, the margin profile or the valuation profile should improve for us in SS segment. Yes, overall, the SS, yes, our aim is to improve the margins wherever possible. For this particular, Stainless Steel, where you are doing high grade, of course, the margin is going to be high. Okay. I, I remember that even in the LSA segment, we had got an approval from Saudi Aramco earlier, right? Yes. So even LSA segment, which are mainly catering to maybe domestic market earlier, more than any products, and also with this new mill, I think, we are now venturing into more productive areas. So, for LSA, Saudi Aramco, we have got the approval. However, we have not yet executed any orders for them. Okay. Going forward, yes, we are going to receive orders from them, so it might help us in future. Okay, okay. But domestic side, we have got approval for everyone for LSA plants. Sorry? On the domestic side, domestic customer base, we have received approval. Yes, yes, we've received approval from almost everyone now. Okay. And, in terms of, the current order book, which we have around INR 28 crore you mentioned, what proportion would you get from water-related orders? Water, roughly I can say about 30%. 30% of this INR 28 crore? Definitely. Close to 30% would be water-related. Okay. Somewhere lower, a year back, right? Yes. Okay. Is the water order margin particularly different from Oil & Gas related orders, or is there also some moderation over here also? In the normal course, the margins for Water segment are less than Oil & Gas Okay. But some orders, better margins, if like we, like we are executing one order in Rajasthan, where we are, we have moved the whole setup at site. Okay. The margins are a little bit better than the normal course order. Okay. Okay. Okay. And generally, lastly, how is the, I mean, the order that you're waiting for, how is that pipeline looking like? Is basically new order, the tenders are coming up are lower now or still you see buoyancy in the tenders coming up? So if I break it between Carbon Steel and Stainless Steel- Yeah. -carbon steel for Oil & Gas, we are seeing less number of, tenders, coming up. But water demand is booming, so that segment, is going to remain for next months to nine months, that segment, we will have a good amount of orders. Okay. Stainless steel, regularly, our pipeline remains still the same, close to between INR 100 crore-INR 150 crore order booking per month. Okay. So there is a... Okay. Okay, this is pretty good. Okay. Okay, I think we put you off from site. Thank you. Thank you. Thank you. The next question is from the line of Yash Goenka, from Awriga Capital Advisors. You can go ahead. Hi, am I audible? Yes. Uh, okay. Sorry, the line for you is not very clear. Better? May I request you to please use the handset while you're speaking. Is it better? Yes, this is much better. Please go ahead. Okay. So there are talks of setting up a Stainless Steel plant for backward integration. If higher water business, which has lower margin, higher working capital, what shall be the ROC for the company, and what ROC level does the company intend to operate at? I missed the first part of the question, so- The talk of you setting up a Stainless Steel plant. Stainless Steel plant. Yeah. Okay. With you having a higher proportion of sales to water-based businesses, which has lower margin, higher working capital requirements. So what does it get to, the ROCE and what it shall be going forward, and what does the company intend to operate at? See, at a company level, because we are expanding both in Stainless Steel and Carbon Steel, right? So at a company level, and some products would go to water, some for Oil & Gas, some for other segments. So broadly at a company level, between 25%-30% is what we aim for. Oh, okay. That's all. Thank you. Yeah. The next question is from the line of Vikash Singh from Phillip Capital. Please go ahead. Good afternoon, sir, and congratulations on very good set of numbers. Sir, I just wanted to understand about the impact. You have always been conservative and into every% energy, every margin. Given that this first half was pretty good, so would you like to keep anything, and how do you see this for, in the end? Because, basically, as we have been having a 16%-18% range is a longer-term sustainable range. It is based on the product mix and everything. In a particular reporting period, it may be quarter, half year, or a year, it may move towards more positive towards 18%. Or in case of adverse market situation, it may move towards 16% sort of thing. So ± 1% we have in this year, entire year, we should be in that 19%-18% range, sort of thing. This is our expectation going forward. As Manoj has already said, a few more orders in water segment are expected, and landed, we should be nearer to that range only. Positive surprises are possible. We'll definitely try our best, but to be practical, that 18%-19% range should be there. Yeah. Understood, sir. Then my second question pertains to the market and the order book. In Q2, you were talking about the market a little bit dull, but we have seen a very good order book addition. So how should we read this situation or what will be, you know, best pipeline going forward if you could give us some insight? Well, as stated previously, we are seeing good demand for water types in the Carbon Steel segment. Stainless Steel also our order book remains strong. We are almost booking close to INR 125 crores-INR 150 crores every month. The Carbon Steel, one big order in Water segment or Oil & Gas segment can change the order book. Although Oil & Gas seems to be well at the moment, but still, there are good, good amount of water projects in Gujarat itself. Yeah, and a few export projects also we are bidding, so... Understood. Sir, is this possible for us to further improve our export percentage in order book? We are currently at 20%. Yes, yes. So what is the peak level you are expecting? Because from other companies' perspective, what I learned that the export market is pretty good at this point in time. Yeah, right now, for Oil & Gas, export market, especially in Middle East, is very good. So, we are also hoping to receive, and we are already receiving some orders, and we are hopeful that we will be going forward, and so we are going to receive, a few more. I understand, sir. Sir, just one question on Ravi Technoforge. These are due to high, the more stake, depending on the milestone. Given the performance doesn't seem to be improving at this point of time- Mm. What happens to the valuation part of this? Or is, or there would be a delay in the time that it is taking, or will it be valued at a much lower price, depending on the milestone? So just want some clarity. In case if we don't see the milestone, then what happens? Second tranche is a fixed buyout at a multiple of EBITDA, which is at the end of FY 2024 results. Understood, sir. Understood. All my questions. Thank you, and back... All the best for center. Thank you. Thank you. The next question is from the line of Manish Kotwal, from Nirmal Bang Securities. Please go ahead. Yes, yes, sir. Thank you for the opportunity. Thank you. I have, I have only one question on the geopolitical tension in the Middle East. So how you are- Sorry to interrupt, Manish. I think you are a little too close to the mic. Okay. Am I better...? Now it is better? This is slightly better. Yeah. Yes. Yeah. So my question on the Middle East, geopolitical crisis, so how are you seeing the demand situation from- ... export market. No, see, in Middle East, especially everybody is expanding, be it Saudi Arabia, be it Abu Dhabi, be it Qatar. So these markets, in spite of geopolitical situations, are going very strong. Europe at the moment is a little slow, and U.S. also a little slow, but still for stainless we are finding good demand from there. Okay, sir. Thank you. Thank you. Yeah. Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. The next question is from the line of Noel Vaz from Union Asset Management. Please go ahead. Yes, yes. Yeah, I just want to just confirm one thing. If you're looking at the overall growth prospects for the company, how should we look at it, and what is the current utilization? Thank you. On an average, this year we would be anywhere between INR 4,500 crore-INR 5,000 crore. So on an average, 10%-15% growth can be expected. In terms of current utilization levels, where are we at right now? So current utilization for different segment, it is a different percentage, but on an average, you can consider 60% utilization. Okay, then. Thanks so much. That's all from my side. Thank you. The next question is from the line of Dheeraj Dave, from Samvad Financial Services. Please go ahead. Thank you for providing me opportunity, and congratulations on the set of numbers. My one question is more on about basically this, Ravi Technoforge. What is the kind of expected ROCE or return which we expect? And what is the management thought? Because we see we are getting into related lines through acquisition or promoting subsidiary or acquisition or JV. So how should... Rather than specifically talk quarters, how do you see your things get shaped out in next three to five years? And what would be kind of CapEx, and what is typical, your thought process basically here from [uncertain] So, this particular product, which goes to the bearing industry, our idea is to scale up from here. In next two to three years, we want to do INR 500+ crores of bearing rings and other auto products, which is from the forging industry. We have already... We are investing from Ravi Techno balance sheet only. Okay. Except for the initial investment, what Ratnamani did, everything is being managed from RTL's cash flow. Okay. Yeah. Basically, what would be kind of CapEx we should be looking at? Is there an overall, as well, suggestion ultimately 60, 60- Ongoing CapEx is between INR 30 crores-INR 50 crores. This would be for Ravi Technoforge? Yes. For Ratnamani as a group total, we are also talking of that this JV. So we would be setting up a new capacity or is it a carrying- Close to INR 250 crore-INR 300 crore, where we have two major projects, one for Carbon Steel, one for Stainless Steel, which are ongoing. Okay. When this project will get over? This is normal capacity expansion. By June of 2024. Okay. Carbon steel, where we are setting up a new plant by September of 2024. September 24. Okay. Basically, any thought on capital allocation, since this year particularly, we may see at least whatever, six months and fingers crossed, same thing happens. What is your plan for capital allocation or distribution of cash? Can you repeat, please? Yes. So basically, what would be your dividend distribution? Would we- should we expect some improvement in dividend payoff for a year, or we like to manage the schedule? Basically, they were looking closer to 20% of profit. That should continue. Where company has a lot of growth plans, because we are not going to rest. With existing capacities, we should be in a position to reach closer to INR 6,000 crore, and we have to look beyond that. So, our team is working on business growth opportunity, and at some point, we'll be sharing good details, details also. So part of CapEx and incremental working capital requirements will be met from internal efforts only. So, you can look forward to closer to 20% of profit being distributed. Yeah. Fair enough. Thanks a lot, and wish you all the best. Thank you. Thank you. The next question is on the line of Radha from B&K Securities. Please go ahead. Hi, sir. Good afternoon. Many congratulations on good results, and thank you for this opportunity. So my first question was, in first half, what was the total mix from Auto segment? Well, it's very difficult to the size number, but you can, I can work on that and then get back to you. One second. Okay, sir. INR 150 crores. Sorry, 150 crores. INR 150 crores -INR 160 crores. So between INR 150 crores-INR 200 crores. From the volume perspective? Volume, volume, volume, normally we don't share. Value-wise, this figure of roughly INR 150 crore-INR 100 crore for the six months. Actually, why I asked that because you said 30% of order book from water segment, so just wanted to understand it in first half, based on the execution, whether it would be lower than 30%? No, no. So of the order book... Yeah, first half it has been lower. Of the order book we have 30%, but some of it is going to go for the next financial year also. So secondly, so L&T has won multiple orders with Saudi Aramco and also some hydrocarbon projects with multiple Middle East companies. So could you please elaborate on the business opportunities with L&T? Yeah. So two or three EPC contractors, they have got big jobs in Aramco as well as in ADNOC, which is Abu Dhabi National Oil Company. So most of it has just been awarded. So the design part... So we will see inquiries coming from later part of this year or early next year. Currently, out of the total order book, how much of the orders are from L&T? That customer-wide breakup, we do not have, and we would not like to share. Okay. Sir, thirdly, my third question was that, could you please, share some insight on this JV with Technoenergy? How much, would you, expect to invest, and what kind of margin can be made? What would be the source of, funding the CapEx, if any, for this and margin, and margin profiles and how will be the profile? So, this company is recently formed with 51% being RMTL and 49% Technoenergy. The total investment plan is INR 50- INR50 crores in next 6-12 months. And so part of the capital what Ratnamani will bring in, and another part will be brought in by the other partner. And balance we will have to see whether we will go for an IPO or any other instrument. So for us, it would be INR 20 crore? INR 25 crore-INR 30 crore for us. Mm-hmm. Okay. And sir, just, thirdly, have you done any bill discounting this quarter? No. No, no. See, in case, in respect of one of the orders being executed by Ratnamani, it is under RPA arrangement, so those invoices have been discounted and payment has been received by the company. And that is the reason the finance cost can be a little higher. So, I asked because the receivable days have come down, so on that basis, I'd ask that you have done- No, it is here. So both things are, if you look at the figure, receivables have come down and there has been an increase in finance cost, which is related to this discounting in respect of one of the orders. It is an arrangement under this order. It's where interest cost, as we included in our pricing and, documents are discounted by the customer itself under discounting facility, suppliers discounting facility. Okay, sir. So I wanted to understand, will you continue with this kind of receivable days? See, it's difficult to say, because order to order based on the arrangement, it may be, because it is in respect of one of the order only. And because company has been cash surplus, usually we don't go for [uncertain] because there is a negative carry. Whatever returns we get from our investors are much lower than the discounting cost. So that is the reason we on any reporting period, and one may see higher receivables also, but for just one order. Sir, could you quantify the amount of bill discounting that we have done in first half? That will be roughly 140 we have got. Okay, sir. Just, my last question was in, on the Ravi Technoforge front. So actually there is a YoY decline in first half in Ravi Technoforge, so both in the revenue and EBITDA front. So previously we had guided that we wanted to achieve INR 300 crore revenue in Ravi Technoforge. So are we still on track with this, guiding, or, or is there any revision? If we see with corresponding last year, right, there is no decline, but there is no growth. Against INR 120 crore, we did the sales of INR 124 crore and EBITDA of INR 12.2 crore, against that we did INR 12.6 crore.... Yes, because the major reason here is the exports have shrunk and our share in the domestic industry has increased because of the current geopolitical situation. But going forward in the second half, things look to be better. And from here on, from the last year number, we see that there'll be 10%-15% of growth. But one more impact has been there, that of commodity prices coming down compared to what they were last year. So, some impact of that thing is also there, because realizations are directly linked to the commodity prices. Yeah, and if we see the production per se, then it has grown 0.6% in the first half. Right, right. First half versus first half of 2023. So actually, sir, actually, on previous call, you mentioned that the revenue from Ravi Technoforge was INR 250 crore in FY 2023, and so that's... And we have the 340 numbers, so that implies that, first half, FY 2023 revenue must have been INR 130 crore. So based on that, there is a 10% degrowth. So you are saying volumes have grown at 3% YoY, so realizations would be down 15% YoY? Yes. Yes, we are understanding. So this is entirely due to commodity? Yes. Yes, ma'am. Entirely due to commodity steel price, which has come down. Plus some impact of reduction the growth in export as Manoj has already shared, and it is mainly because of geopolitical issues, whatever is happening in Europe, there is demand from European manufacturing. So by when do we expect to go back to FY 2022 margin levels in 2024, the 13%-14% EBITDA margin that we had done? We will be close to that by the end of this year. By fourth quarter FY 2024? Yes. Okay, sir. Thanks, and all the best. Thank you. Thank you. The next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead. Hi, firstly, congrats on a good set of numbers. My question was, you know, many steel players are getting into steel pipes and other downstream products. So what are the differentiating factors for the company? Yes, a lot of players are investing in manufacturing of Stainless Steel as well as Carbon Steel pipes. But the kind of approval, the kind of range, the kind of facilities what we have, it will take time for them to create and catch up. Because the number of approvals what we have is also very wide. The geography what we have covered- What do you mean by number of approvals, sorry? Number of approvals from Oil & Gas, for chemical companies, nuclear power plants, and defense, aerospace. Those approvals, those are all 6 months, 12 months, 2 years process. Oh, okay. The kind of capital investment required to have maybe capacities like capacities and the range like us at this point in one go would not justify it. Hmm, makes sense. Okay. Vinamra, does that answer your question? Yeah. Thank you. Participants who wish to ask question, please press star and one. The next question is from the line of Poojan Shah from PS Ventures. Please go ahead. Initially, I missed the order book of our industry specific. Can you just give us a broad idea of the- Can you please speak a little loud? I'm unable- Yeah. Yeah. Am I audible now? Yeah. Yeah. Can you just provide me with the order book size and the sector-wise order book, because I missed the initial call? So, our order book stands currently at INR 2,975 crores, of which domestic is INR 2,370 crores, and balance is export. Sector-wise, Oil & Gas and- Sector-wise, breakup, we are not giving anything. Okay, cool. Major, major will be Oil & Gas. Right now also you can see almost 30% should be Oil & Gas and related to it, power sector and process industry. Roughly 30% might be from Water application. Okay. So, so in the initial stages, as we have witnessed, from the last few quarters, we have been witnessing the Oil & Gas which been booming and as well as the water segment. So are you seeing any upcoming new sector which been getting into traction, like we are getting new, newly into engaging into new sectors specific to that, or we are being, the order book is growing on, on already on the, this, you know, existing sectors? ...As of now, no new sectors have been added. But yes, the sector that can be plus and minus. Water, of course, as I informed you here, is one area which is booming at the moment in various states. So that is one area. Oil & Gas is a little slow on the line pipes side, but on the process side it is, it is still okay. Okay. Got you. Thank you, sir, for the useful information. All the best. Thank you. To ask a question, ladies and gentlemen, please press star and one. The next question is from the line of Radha from B&K Securities. Please go ahead. Sir, could you tell me the export sales mix from Ravi Technoforge in first half? One second. Exports are 30% in first half. It was. How much was it in first half of 2023? 38%-40%. Okay, thank you. Thank you. Ladies and gentlemen, to ask a question, may please press star and one. We have no further questions. I would now like to hand the conference over to Mr. Sahil Sanghvi for closing comments. Over to you, sir. Yeah. Thank you. Thank you. I would just like to thank all the participants for attending the call and having patience of hearing me out. Just thank the management also for answering all the questions patiently. Manoj, sir, would you like to give any closing comments? Yes, Sahil. So we thank you all for participate, participating in the earnings call and hearing us patiently. I would also like to wish everyone a great festival time ahead. Thank you. Thank you. On behalf of Monarch Networth Capital, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.