Maharashtra Seamless (500265) Q4 05/06 earnings summary

Executive summary

• FY06 delivered record turnover and profits, with gross turnover up 25% YoY and PBT up 64% YoY; market capitalization crossed Rs. 2,000 crore.

• Higher demand, economies of scale and a stronger seamless-pipe business supported results; exports, capacity expansion and higher-value products were strategic priorities.

Financial highlights

• Gross turnover was Rs. 1,095.18 crore vs Rs. 879.28 crore in FY05; net sales and operating income were Rs. 966.18 crore vs Rs. 769.41 crore.

• PBT rose to Rs. 206.85 crore from Rs. 126.24 crore; PAT after adjustments was Rs. 139.09 crore vs Rs. 85.15 crore.

• EBITDA was Rs. 208.01 crore vs Rs. 128.51 crore; profit before depreciation was Rs. 221.40 crore vs Rs. 136.74 crore.

• Basic EPS increased to Rs. 48.26 from Rs. 29.54; diluted EPS was Rs. 42.69 vs Rs. 29.54.

• Proposed dividend rose to 70%, or Rs. 3.50/share on Rs. 5 face value, from 50% in FY05; dividend plus tax would absorb Rs. 24.31 crore.

Outlook and guidance

• A 50,000 MT coating facility for larger-diameter pipes, with Rs. 25 crore envisaged cost, was expected to be commissioned in FY07; civil works were advanced and equipment was being imported from Korea.

• Larger-diameter seamless production had commenced; debottlenecking and process automation were planned to raise capacity utilization.

• A planned 500,000 TPA billet project in Orissa remained stalled over rehabilitation and land issues; alternative-site discussions and legal action were underway.

• R&D priorities included 13-chrome pipes, new sizes and quality upgrades; exports were targeted for growth through Middle East vendor approvals and higher-value sales.