JTL Industries (NSE:JTLIND) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the JTL INDUSTRIES Limited q two FY twenty seven results earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to mister Pallav Agarwal from Antech Stockbroken Limited. Thank you, over to you, sir. Yeah. Thank you, Shati, and good day, everyone. A very warm welcome to the second quarter FY twenty seven earnings call of JTL INDUSTRIES LIMITED. We have the senior management team of the company represented by Mr. Dhruv Singhla, the Executive Director Mr. Pranal Singhla, the Executive Director Mr. Naveen Kumar Lagoya, the Chief Financial Officer and Mr. Saurabh Jain, the CFO of JTL INDUSTRIES which is a subsidiary of JTL INDUSTRIES LIMITED.

1:04 So now I would like to hand over the call to the management team. Over to you, Mr. Lavir. Good afternoon, everyone. This is Naveen Liruya, and thank you for joining the earnings conference call of JTL INDUSTRIES Limited to discuss the performance for Q2 and H1 of financial year twenty seven. We appreciate your continued support and interest in our company. The company continued to deliver growth during the quarter with revenue from operations increasing by 43.0% year on year to INR 613.8 crores. EBITDA grew by 46.5 to INR 50.8 crores with an EBITDA margin of 8.3% compared to 8.1% in Q2 financial year twenty twenty six.

1:55 Profit after tax for the quarter was INR29 crores, reflecting growth of 30.7% year on year with a GAAP margin of 4.7%. The company reported sales volume of one lakh four eighty four metric tons during Q2 financial year twenty twenty seven, registering a growth of 23.2% year on year. EBITDA per ton improved to 5,053, an increase of 19% year on year supported by a higher contribution from value added products and an improved product mix. Coming to the half year performance, the company achieved its highest ever half year sales volume of 218,997 metric tons reflecting growth of 20.2% year on year. Revenue from operations increased by 37.2% to INR1335.4 crores.

2:50 The company also achieved its highest ever half yearly EBITDA impact during H1 financial year 2027. EBITDA increased by 88.7% year on year to INR 109.5 crores with a margin of 8.2%. EBITDA per ton improved to 5,000, registering growth of 57.0% year on year. Profit after tax grew by 66.2% to INR 4.3 crores with a margin of 4.8%. It is important to highlight that the reported part for Q2 and H1 financial year 2027 includes an additional noncash depreciation charge of INR 2.78 crores arising from the asset revaluation undertaken at JTL INDUSTRIES Limited in March 2026.

3:36 Excluding this accounting adjustment, the normalized tax for Q2 financial year 'twenty seven would have been INR 31.8 crores, while normalized tax for H1 financial year twenty seven would have been 67.1 crore. On the cash flow front, net cash flow from operating activities turned positive at 50 crore rupees in H1 financial year twenty seven compared with an outflow of INR 80.3 crore in the corresponding period last year. The company invested INR 76.5 crores towards capital expenditure to support its ongoing capacity expansion plans during the H1 ended thirty nine twenty twenty six. On a stand alone basis, an investment of INR 67 crores has been made during the H1, mostly at the company's underground facility.

4:26 Looking ahead, the company remains focused on bringing the upcoming capacities in Maharashtra on stream and gradually ramping up production with a greater emphasis on value added products such as CP pipes, color coated pipes, and roofing sheets. With this, I would now request the moderator to open the floor for questions and answers. Thank you, everyone. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 1 on their touch tone telephone. If you wish to remove yourself from your question queue, you may press 2. Participants are requested to use handsets for last name question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

5:22 The first question is from the line of Harsh Vassa from SBI Capital Securities. Please proceed. Thank you for the opportunity, and congratulations on a good set of numbers. So my first question was regarding the new capacity which is coming up. So the GA call capacity, which was expected to commission in August 26, sir, has it been commissioned? And And we color coded capacity of four lakh, which is expected to commission in December 26. So is it on track? Yes. So the GP capacity right now has will be have you done the coal trials for the pickling of the GP line and it will be up and running by the end of this quarter.

6:12 There there are certain delays due to the little bit of monsoon, and we do a little delay in getting the electrical connection. So we are expected to get on with the commercial production by the end of this quarter. Okay. Sir, sir, any capacity utilization numbers like for these two facilities for this year, like any volumes, ballpark figure? So in the last quarter of the year, we would be getting the volume of about 25,000 tonnes to 30,000 tonnes from these capacities when we are up and running by end of December. Okay. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and 1 to ask a question.

7:08 To ask a question, please press star and 1. The next question is from the line of JTL Please proceed. Yes, sir. Thank you for this opportunity. Sir, the first half volumes grew by about 20% year on year. So what kind of growth should we expect in the second half? Thanks, JTLIND, for your question. So yes, our H1 closed at about 220,000 tonnes of volume. Our H2 is usually 20% higher than H1. So in a base case scenario, 260,000 tonnes something that you see showing in H2. So which will be for the volume for the entire year for about four lakh 80,000 tonnes from a current capacity. GP line will add about 30,000 tonnes, as Roop just mentioned, in Q4 and starting in Q3 as well, we can expect some bit of volume coming from that as well. And a little ramp up of DFT can be expected in Q3 as well. So altogether, we are on track to achieve our target of 25% growth for this year on on a volume of last year.

8:22 Okay. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of from. Please proceed. Mister Akshay, you may proceed with your question. Hello. Am I audible? Hello? Yes. Yes. Yeah. Good afternoon. Thank you for taking my question. My first question on volume.

9:09 So H1 came in at about two point point one nine lakh tonnes. So to reach the 5.15 lakh tonne guidance, the H2 needs roughly 2.96 lakh tonnes. That is 38% higher than h two last year. And which means I'm moving from thirty six thirty six five hundred tons a month to around 49,000 tons a month. So I wanted to know how much of that step up depends on the Maharashtra capacity starting on time. And and which month do you expect it to begin contributing volume? So as we just mentioned, we've already done a coal trial of the pickling line and the GP line. We get this awaited connection, the electricity connection though to be enhanced at the facility in Maharashtra.

10:04 So as soon as the connection comes, we'll take about 15 ways to organize everything in a proper way, and we can expect around 10,000 tons of additional volume flowing in from the VPN capacity. So this can happen as late as December, and it can happen as early as in the next fifteen days as well. So as soon as the mine starts, we'll be able to contribute significantly from the capacity. So our average run rate of our plants is about 40,000 tonnes per month from our combined capacities. So this will immediately take our 40,000 tonnes to 50,000 tonnes in the basic scenario. And as the whole complex starts, the whole CRM complex starts, which includes color coded as well, so that will further add around 50,000 tons of additional volumes every month.

10:54 So altogether from about 40,000 tons tons of run rate, we'll be touching about 65,000 tons of run rate, hopefully by this year end. Okay. Yeah. And what is the utilization level you are targeting for FY '28 and '29? For FY '28, we're targeting about 55% utilization levels because there will be a new capacity coming on board. So we won't be running like we won't be able to run the full capacity in one go in the next financial year. So we can expect 55% capacity utilization on 1,700,000 tons capacity. Okay. And on the API line, which is expected to commission on q one of FY twenty eight, so will it... Will the focus be on export or domestic?

11:45 So first of all, that line is expected to commission by h one of FY twenty eight, not in q one. And the market will be getting, yes, both the segment, export market as well and domestic market as well. As we're sitting close to the Navajo Port in Maharashtra, we have a good viability of exporting product as well. So we'll see to it as the capacity comes on board where it is more feasible to sell the produce, whether it's domestic or export. Okay. Yeah. Thank you. Yeah. That's it from my end. Thank you. Thank you. Before we take the next question, we would like to remind participants that you press star and one to ask question.

12:31 The next question is from the line of from. Please proceed. Thanks for the opportunity, and sir, congrats on a good set of. Sir, my first question is on the export volume. So what is the export volume in q two? And if possible, please throw some color on the export opportunity on the outlook for the H2 and FY 'twenty one? Yes, that's the first question from my side. If you can just come back again, your voice was muffling a little bit. Yes. Am I audible now, sir? Yes, you're audible now. Yes. Sir, my first question is on the export volume. What is the export volumes in the Q2? And if possible, please throw some color on the export opportunity and its outlook for the H2 and next year.

13:23 That is the first question. So for the export sales in the H1, total volume was about 4,000 tonnes. Going ahead, this number will be moving significantly because this whole shortage and export less exports was happening mainly because of the container non availability and the increase in freight cost. To cover up already in this month, already we have exported about 5,000 tonnes of material. So we are on a run rate to exceed our last year's export anyway, but the first quarter was a little softer because of the whole container nonavailability. So the scenario has been normalized yet or not, sir? Hello?

14:12 Hi. The scenario is quite dynamic, I would say, right now. We experience latency in export container availability on a regular basis, but, yes, we do work on that in certain months and then the next month, then there is the same situation. So it is very, say, tough to say right now that what would be the scenario going forward. But having all these things have happened over the past six to eight months, wherein the has been shut and there has been significant delays in getting containers to their destinations.

14:59 But in the next quarter, apart from the Christmas in December, we don't see any more hindrances there off. Having our fingers crossed with everything remains stable in The Gulf, So we are hoping to have a significant export volume in the H2. We open new markets of Canada, U. S, where our trial orders have hit the shelves of the customers and have been accepted widely. So we are expecting newer orders from the markets before they close for Christmas. So yes, the next quarter should be very much lower and we should be crossing about 50,000 to 55,000 tonnes of exports this year.

15:53 Okay. Okay. That's very helpful, sir. And sir, my next question is on the value added product. So what is the share in Q2 in volumes of the value added products? So we've done close to 28,000 tonnes of value products in Q2. Going ahead, we're expecting and this was a similar run rate in Q1 as well. Going ahead, we'll expect the run rate to touch about the additional sales coming from GP line and Calcutta line will be all value added. So we can expect our sales, which is currently about 30%, 35% in value added for the H1 going to about 50% for the next financial year, easily on the basis of new capacity coming in. Yes. Okay. Thank you, Sankar. And sir, my third question is on the working capital days.

16:42 In Q1, it was almost at around seventy five days. And in Q2, it again goes to eighty three days. So yes, so please elaborate more on the same, especially the payable days that has been increased. So it's a working capital cycle is something that we've been mentioning earlier as well that we are on a constant mission to these are working capital cycle. So over last year, we've improved many ways, if you compare the H1 and H1. And we are encouraging a few more towards dealer market where the payment cycle is much shorter. And our government portion, which was about 20% earlier, for the last year, was only 3%. So going ahead, our path will be to reduce our government sales going ahead as well. So all in all, this will actually bring our working capital cycle days by next year end to about sixty days.

17:33 And by FY 'twenty nine, we should be expecting our working capital cycle to be coming to thirty five days because our majority reduce will be towards dealer oriented business. And sir, I want to add to this. See, when delays happen due to delayed availability of containers, monsoons, Jampati, festivals in there, So a lot of material even produced remains on the floor. So that as to the working capital days... Day off. So now as I mentioned earlier, the... In the next quarter, there are not parts of the valley and this will not begin India. There's not any holidays. So we stay in India. So we should be having a little more stringent working capital there.

18:20 Yes. We are trying to work and having a dealer base. Also, we are trying to get a balance to get a dealer way... The base worked upon upon our vendor financing wherein our working capital days would be reduced for us. So that is something we are working on continuously and shall be improved in the next quarter cycle. That's very helpful, sir. And, also, my just last question, how much CapEx you did in h one, and what is what are you are going to spend in h two? So about INR 70 crores amount that we spend in h one this year. And you can expect anywhere close to INR 125 crores to INR 150 crores being spent on CapEx in these two quarters as well, in q three and q four.

19:11 Yeah. Okay. Thank you, sir, and all the rest for the future. Thank you. You. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Pallav Agarwal from Antech Stockbroking. Please proceed. Yeah. Hello, sir, and congratulations on a good set of numbers. So first question was on the EBITDA per tonne. So you've crashed to 5,000 level in this quarter. So with the VAP proportion going up, what sort of EBITDA per tonne are we targeting in 'twenty eight and 'twenty nine? Thanks, Pallav, for the question. So we are targeting a similar kind of a beta per tonne for next year as well. It is bound to increase in the coming years.

20:01 But as next year, a new chunk of capacity is coming on board, which will not be obviously utilized to the full level it is supposed to be in the next financial year. So we can expect that the surge in EBITDA per ton will not be that much, but we'll be holding it around INR 5,000 mark for the next year as well. So the INR 5,000 EBITDA per ton this year also includes about INR 200 tonne being added from mutual defense as well. So we can expect that excluding defense, our EBITDA per tonne can touch INR 5,000 per tonne JTL INDUSTRIES itself as well. And defense EBITDA per tonne will add something or the other more than INR 200 in the coming quarters itself. So we can expect that we'll be moving around this EBITDA of about 5,000 to about INR 5,000 to 150 for the next financial year.

20:48 Sure, sir. Also, in terms of could you also just give us some more details on JTL Defense? What is the performance this quarter? And what are we targeting going ahead? So JTL Defense, we have in January when we started the company, we were doing the sales volume was 40 tonnes in that 40 tonnes a month in the company. Coming to now, we have almost structured under about 140 tonnes in the last month. So October was closer 140 tonnes of production. And we're expecting that by December, we'll be at a good rate run rate of about two, three tonnes a month in Detailed Defense. So for entire Q2, we were about 63 tonnes, which can touch in q four about $1,700.

21:34 So the headroom to grow there is much more as well. The capacity of the month is to make about 1,000 tons a month. So we are nowhere close to the actual capacity pricing level right now. And the actual price levels of thousand times a month, we get close to that by the twenty ninth. We are innovating influx over there. We are entering into segment of coin blanks and bullet cups and defense as well. So that sort of capability is already being partly done and party heating will be done in the next coming quarters as well. So the current raw material for making bullet cups and coins is something that we already make. So it's a value addition that we'll be doing with these machines coming on board by end of the financial year.

22:21 Sure, sir. Also, sir, in terms of the CapEx outlook for the next '28 and '29, given that I think we probably spend most of the amount required for the 2,000,000 tonnes. So going in, would we have some more maintenance CapEx or some investment in JTL defense? What were the CapEx requirements? So we can expect maintenance CapEx of INR40, INR50 crores happening in the overall company, including industries and defense overall next year itself anyway. And over and beyond that, there will be an CapEx of API type happening as well. We've done a part CapEx of... That is usually coming in, and the remaining will be incurred in the h one next year. So that can be close to around 70 eight roll of CapEx as well for the PPA over and beyond the maintenance CapEx.

23:15 So lastly, if we just help us out with how is the demand looking in the market? And given that your HRC prices are at pretty high levels. So what is the differential between primary and secondary pipes and how that is shaping the demand dynamics in the pipe space? Jipanuj. I'm Bhubarshad. So firstly, to answer your question about what is the price difference between the primary and secondary at the moment. So secondary, is around 64,000 rupees with 600 to $7.50 rupees increase this month again. Yes. Having been said that, are at a very high level of prices of at the starting of this month.

24:08 But there are maintenance maintenance happening in plants of Tata and say that even in and so there is some contraction in supply in the market. So according to the channel, the prices don't seem to budge at different levels. There is certainly a level of demand latency at the moment because of the value that is approaching. And after the first week of the value of the November 8, after that, we expect the demand to pick up in good quantities for this month and the rest of the quarter. We've had a good October as well, so that was not a problem there.

25:00 But there is a gap to answer your second question, the gap between the primary and secondary remains between 12 rupees to 20 rupees depending upon the gauge differences available in from say 2,500,000 to 1,200,000. So there is a of demand in the secondary market against just some latency because of Diwali. After that, we expect that market also to have good demand. So H2 remains on a positive side, and we expect a good H2 on demand terms. Sure, sir. Yeah. Thank you so much. Thank you. Participants who wishes to ask a question, please press star and 1 at this time.

25:54 To ask a question, please press star and 1 now. Participants who wishes to ask a question, please press star and 1 now. As there are no further questions from the participant, I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

26:40 Thank you, everybody, for taking the time out and joining the call. Hope to connect with you all again and answering the questions at the end of q three as well. Thank you. On behalf of Antics Drug Broking Limited, that concludes this call. Thank you for joining us, and you may now disconnect your line.