Iron & Steel products company Surya Roshni announced Q1FY25 results:
- EBITDA increased by 36% YoY to Rs 159 crore in Q1FY25
- EBITDA per ton for the Steel Pipe and Strips segment rose by 38% YoY to Rs 6,065
- Fan business recorded a 43% volume growth in Q1FY25 due to strong market penetration
- Professional Lighting business saw a 18% growth driven by infrastructure projects
- Appliances segment witnessed a 15% volume growth in Q1FY25
Commenting on the results, Company’s Managing Director, Raju Bista, said “We are pleased to report a very healthy operating performance for Q1FY25, despite the slowdown on account of general elections. Our continuous focus on value-added products in the steel pipes segment and innovative offerings in the lighting & consumer durables division have been the key drivers of this growth.
EBITDA for Q1FY25 stood at Rs 159 crore, up by 36%, as compared to Rs 116 crore last year. The EBITDA margins improved by 217 basis points to 8.37% on account of significant improvement in operating profitability of steel pipes business and stability in the margins of lighting and consumer durable business. We registered 56% growth in PAT at Rs 92 crore in Q1FY25 versus Rs 59 crore in the same period last year.”
“In Lighting and Consumer Durables, we exhibited a steady growth of 3% in Q1FY25. This performance reflects positive outcomes across various sub-segments. The EBITDA margin for Q1FY25 was recorded at 9%.
In professional lighting, we achieved a substantial growth of 18%, driven by strong performance in street lighting, industry lighting, and façade lighting. Although the consumer lighting business faced challenges due to ongoing price erosion, there was double-digit volume growth in most sub-categories. Despite short-term price deflation, the volume growth and introduction of value-added products are expected to ensure revenue and profitability growth in the lighting business.
The appliance segment witnessed a volume growth of 15%, with significant contributions from the induction cooktops and mixer grinders, particularly in semi-urban and rural markets. Fans business registered an impressive volume growth of 43%, supported by the hot summer season and the introduction of new products in Q4FY24. Enhanced market penetration and improved margins in the fans category further contributed to this growth.
We anticipate a revenue growth of 12% to 15% for FY25, driven by aspiring consumers, government focus on infrastructure, and industrial capex. We also remain confident in achieving an EBITDA of Rs 180 crore for FY25, focusing on high-margin products, cost management, and leveraging backward integration with Production Linked Incentive (PLI) benefits.
We are focusing on expanding our presence in semi-urban and rural areas, which have shown significant growth potential. While maintaining a strong presence in Tier 2 and Tier 3 cities, we also continue to strengthen our foothold in metro markets. We have tailored strategies for different tiers to promote high-margin products in strong markets and enhance distribution in areas with lower market share
We anticipate that the lighting and consumer durables industry will maintain its growth trajectory. This growth will be fueled by the rising aspirations of consumers and increased government investment in infrastructure. Our robust presence in both B2C and B2B segments, coupled with our unwavering commitment to delivering top-notch, cutting-edge products, positions us favorably to seize these opportunities. We anticipate that our continued focus on technology and product development, as well as our strategic market expansions, will lead to consistent growth and profitability in the coming fiscal years.”
Adding further, Vinay Surya – Managing Director said, “In Lighting and Consumer Durables, we recorded a growth of 3% in Q1FY25. Almost all business segments registered double-digit volume growth. The gross margins expanded across most segments due to a better margin mix and effective cost management strategies. High-capacity utilization at our manufacturing plants, has positively impacted EBITDA through better operational efficiency.
There is a growing preference for energy-efficient, high-quality, and aesthetically pleasing products among consumers. To cater to this demand, we introduced higher wattage and more efficient Platina LED lamps, a range of downlighters(Shine Nxt), and new generation flood lights for consumer lighting applications.
We also launched energy-efficient and decorative ceiling and table pedestal wall fans, including starlabelled models. Increase in the number of distributors, particularly in the fan category, over the past year has significantly contributed to the impressive growth in this category in Q1FY25. We have also for the first time, started manufacturing of ventilation fans at our Kashipur facility. We also expanded into the induction cooktops and mixer grinders segment, with a special focus on high-performance commercial mixer grinders.
In professional lighting, we have started focusing on indoor lighting and solar lighting to capitalize on growth opportunities. We also launched higher performance streetlights, offering a smart value proposition with lower cost of ownership.
We have entered in new product segment of Mono Block Residential Pumps via launch of ‘Surya Water Pumps’ in the month of July 2024. The market size for such pumps is Rs 1,000 crore and is growing fast driven by 'Har Ghar Nal Se Jal' scheme of Government of India.
Our comprehensive go-to-market (GTM) strategy includes leveraging existing distribution channels and exploring new avenues to reach consumers. We employ multiple GTM approaches to cater to different product categories, ensuring effective reach and penetration across various market segments.
We recognize the critical role that the in-shop experience plays in influencing consumer perceptions and driving sales. Over the quarters, we have intensified our efforts to enhance the in-shop experience across our retail outlets. We see it as a crucial component of our marketing strategy, contributing to the overall performance and growth of the company. Strategic display of our products at over 2,000 retail points ensures high visibility and availability of our offerings. We also have regular engagement exercises with retailers across different parts of the country to strengthen relationships and ensure product availability. These initiatives have already shown positive results, with marked improvements in customer satisfaction and increased sales.
We have also implemented significant training programs to ensure that all team members and staff can now provide deep product insights, demonstrations, and personalized suggestions, making every client engagement more informative and engaging. Our regular interactions with electricians and other influencers also enable us to drive brand loyalty and encourage product recommendations.
We are confident in our ability to navigate the obstacles and seize the opportunities that lie ahead. Our strategic efforts are linked with client needs, ensuring that we are well-positioned to continue growing and succeed in the lighting and consumer durables industry.”
Commenting on the financial performance, Bharat Bhushan Singal – CFO said, “For the quarter, the revenue was Rs 1,893 crore as compared to Rs 1,875 crore. EBITDA and PAT stood at Rs 159 crore and Rs 92 crore as compared to Rs 116 crore and Rs 59 crore, registering a growth of 36% and 56% YoY respectively
In Lighting & Consumer Durables, for the quarter, the revenue stood at Rs 385 crore as against Rs 374 crore. EBITDA and PBT stood at Rs 35 crore and Rs 26 crore, registering a growth of 5% and 1% YoY respectively.
In the Steel Pipes and Strips, during Q1FY25, the revenue was Rs 1,509 crore as compared to Rs 1,503 crore. Similarly, EBITDA/MT stood at Rs 6,065 compared to Rs 4,388, registering a growth of 38% YoY. EBITDA and PBT stood at Rs 124 crore and Rs 97 crore as against Rs 83 crore and Rs 55 crore, registering a growth of 49% and 76% YoY respectively.
Improved capacity utilization, working capital optimization and cost rationalization enabled us to become a zero-debt company, and having cash surplus of Rs 156 crore in Q1FY25.
As on 30th June 2024, ROCE stood at 22.93% and ROE stood at 16.71%.
As on 30th June 2024, the net working capital days stood at 67 days, inventory days stood at 51 days, debtor days stood at 38 days and creditor days stood at 23 days.”