Strong performance led by healthy momentum across end-user segments
The company during the quarter reported Revenue/EBITDA/PAT of Rs 733.7 cr/Rs 34.9 cr/Rs 17.6 cr respectively. Revenue/PAT increased 7.7%/58.5% YoY respectively, while EBITDA was down 1.2% YoY. The total sales volume for 4QFY25/FY25 increased by 7.7%/24.1% YoY to 0.1/0.5 MTPA; in-line with our estimates led by robust demand in the infrastructure and construction sectors.
Incremental capacities to boost production: The Sikandrabad and Sanand Unit-2 (Phase-2) facilities are currently in advanced stages of commissioning and are expected to come onstream during FY26. Trial production at the both the facilities is expected to begin in the coming month. Once commissioned, the total production capacity of the company will reach 1 MTPA from 0.75 MTPA currently.
Volume, EBITDA/t & % Share of Value-added products (VAP) outlook: For FY26E/FY27E, we have assumed sales volume of 0.6 MTPA/0.7 MTPA respectively (FY25-FY27E volume CAGR – 23.9%). We expect blended EBITDA/t to increase to Rs 3,639/Rs 3,852 per tonne in FY26E/FY27E respectively from Rs 3,297/t in FY25 on the back of an increase in % share of value-added products to 42%+ in FY26 on a blended basis.
New capex lined up: For FY27, the company aims to increase its capacity by another 25%-30%, for which the ground work at the Sri City project in Chennai and Phase-3 of the Sanand unit-2 is already in progress. HITECH’s long-term vision is to attain 2 MTPA of production capacity by FY29.
Maintain BUY with REVISED Price Target Rs 138.0/-
We believe, Hi-Tech pipes has strong growth prospects in the structural steel tubes space given its (a) Capacity expansion from 0.6 MTPA in FY23, 0.8 MTPA in FY24 to 1 MTPA in FY26E, (b) Transition from generic products to value added products, (c) Product portfolio enhancement on back of Solar torque tubes, color coated roofing sheets and (d) Healthy demand for structural steel tube over medium and long term. At the CMP of Rs 95.7, the stock is currently trading at a P/E of 18.1x/12.5x of its FY26E/FY27E EPS of Rs 5.3/Rs 7.6 respectively. We value the stock at P/E of 18x on FY27E EPS of Rs 7.6 to arrive at our TP of Rs 138.0, thus providing an upside potential of 44.2%.