Bullish View On Maharashtara Seamless Maharashtra Seamless Ltd
About
Incorporated in 1988, Maharashtra Seamless Ltd manufactures seamless pipes & tubes, ERW pipes. It is also in the business of renewable power generation and rig operations
Key Points
Business Overview:
MSL is a part of the D. P. Jindal Group. It manufactures Seamless and Electric Resistance Welded (ERW) pipes. It has also developed a renewable power portfolio
Product Categories:
a) Electrical Resistance Welding Pipes:
Company manufactures MS Black ERW
pipes and Galvanized ERW pipes in various sizes, grades and specifications. ERW pipes have various applications like fencing, line pipe, scaffolding etc.
b) Seamless Pipe:
It is a pipe without a seam or a weld-joint
in contrast to Seam or Welded pipe. MSL
is also the only manufacturer in India to
offer the maximum size range upto 20”
catering to customers across all sectors.
It exports to US, Canada, Latin America,
Europe, Africa & Asia
c) Coated Pipes:
Pipeline coating protects ERW /Seamless pipes from corrosion, from moisture, other harmful chemicals. Types of coatings available are 3 LPE (External 3 Layer Polyethylene)-link, 3LPP (External 3 Layer Polypropylene)-link,
FBE (External Fusion Bonded Epoxy (Single / Dual Layer))-link, Internal Epoxy Coating-link
Production Facility:
a) Seamless Pipes:
Maharashtra ~4.50 Lac MT/Annum, Telangana ~2 Lac MT/Annum
b) ERW Pipes:
1.25 MT/Annum
c) Renewable Energy:
Solar ~52.50 MW AC at Maharashtra & Rajasthan, Wind ~7 MW at Maharashtra
d) Rig:
New generation offshore jack up rig operating at 98% efficiency on 3 yearcontract with ONGC at ODR of USD 38,790 from May 2022
Market Share:
a) ~55% in seamless pipes segment with manufacturing facilities at Nagothane & Mangaon in Maharashtra and Narketpally in Telangana
b) ~18% in API certified, high frequency ERW pipes with manufacturing facility
at Nagothane in Maharashtra
User Industries:
Agriculture, Automotive, Bearing, Chemical, Drinking Water, Engineering, Fertilizers, Irrigation, Mechanical, Oil and Gas, Petrochemical, Power
Clientele:
BPCL, British Gas, CAIRN, CPCL, Adani, BHEL, DLF, GMR, Grasim, HAL, NTPC, Samsung
Production, Sales and Profit Volume - FY24:
a) Seamless:
Production ~394 kMT, Sales ~399 kMT, EBITDA/tonne ~Rs. 25793
b) ERW:
Production ~100 kMT, Sales ~103 kMT, EBITDA/tonne ~Rs. 7315
Capex:
Company is doing capex of ~Rs. 852 Cr (through internal accruals), distributed in Narketpally (USTPL) ~Rs. 264 Cr, Mangaon (MSL) ~Rs. 195 Cr, Nago
thane (MSL) ~Rs. 393 Cr. There will be additional working capital requirement of Rs. 300 Cr in USTPL and Rs. 250 crores in MSL which would be funded from internal accruals
Prepayment of Loans:
Company has prepaid its long term loans taken for Telangana plant and rig acquisitions in October 2022 and June 2023 and is now a Zero debt company. Also, there are no ICDs or corporate guarantees outstanding as on 31st March 2024.
Order Book:
Company has a total order book of ~Rs. 1754 Crore which includes:
a) Order of Rs. 1053 Crore from ONGC (~Rs. 674 Cr to be executed in 44 weeks) and OIL (~Rs. 379 Cr), which includes drill pipes orders of Rs. 129 Cr and ERW of ~
Rs. 5 Crore.
b) Orders from other companies of Rs. 701 Cr which includes cylinder pipes orders of Rs. 84 Cr and ERW of Rs. 140 Cr
Amalgamation:
United Seamless Tubulaar Pvt. Ltd. (USTPL) was amalgamated with Maharashtra Seamless Ltd. (MSL) vide order of NCLT, Mumbai on 3rd March 2023
Change in Capital Structure - FY23:
a) Company issued and allotted 6,69,99,626 Bonus Equity Shares in the proportion of 1:1
b) Company increased its Authorized Share Capital from Rs. 60 Cr to Rs. 70 Cr and then to Rs.1070 Cr
Promoter Holding:
Company's promoters are continuously increasing their stake for the past 7 years
Revenue Breakup - FY23:
Manufacturing ~97%, Scrap ~2%, Export Incentives and Income from Services ~1%
Segment Revenue - FY23:
Steel Pipes & Tubes ~97%, Power - Electricity ~1%, RIG ~1%, Others ~1%
Geographical Revenue Split - FY23:
Company exports to 9 countries with an exports contribution of ~20% of the total turnover
Future Outlook:
Company has reduced its exposure in non-core businesses and intends to focus on its core pipes and renewable energy businesses
Resignation of KMP:
Mr.Danish resigned as CFO and was replaced by Mr. Sarat on 17th Oct, 2022 who resigned and was replaced by Mr. Anuj on 1st June, 2023. Finally, Mr Anuj also resigned on 31st Jan, 2024
