Small cap piping player reveals visionary expansion; Aiming for 1 million tonnes capacity by 2025!

These initiatives will propel the company's total capacity to 1 million tonnes by the end of FY25.

Hi-Tech Pipes Ltd, a leading steel processing company in India, has recently taken a significant stride towards achieving its ambitious goal of reaching a 1 million-tonne production capacity with the successful commissioning and trial production of the greenfield project at Sanand Unit-ll (Phase 1) in Gujarat. This move adds 170,000 tonnes to the Sanand Unit-ll's capacity.

Not stopping there, the company is set to embark on two additional greenfield projects at Sikandrabad (U.P.) Unit-lll and Sanand Unit-l| (Phase 2), contributing 150,000 tonnes (expected by Q3FY25) and 110,000 tonnes (expected by Q4FY25), respectively. These initiatives will propel the company's total capacity to 1 million tonnes by the end of FY25. These new facilities will not only boost capacity but also open up avenues for tapping into domestic and international markets for both small and large diameter pipes.

Proximity to raw material suppliers like Arcelor Mittal and Nippon Steel ensures consistent supply and efficient service to customers. The company is committed to increasing the share of value-added products in its portfolio to over 50 per cent by 2026. This includes products like galvanized, colour-coated, and coated pipes, which offer higher margins and cater to niche segments.

Strong Q3 FY24 Performance:

Hi-Tech Pipes delivered a robust performance in Q3 FY24, showcasing year-on-year growth across key metrics:

• Revenue: Up 11 per cent to Rs 630.09 crore.
• PAT: Up 10.10 per cent to Rs 14.33 crore.
• Sales Volume: Up 8 per cent to 98,512 tonnes.
• EBIDTA: Up 12.5 per cent to Rs 31.57 crore.

Concall Highlights:

• The company's vision is not just about reaching 1 million tonnes in capacity but also about increasing the share of value-added products to drive profitability.
• Hi-Tech Pipes has supplied its products to prestigious projects like Sardar Vallabhbhai Olympics Sports Enclave, Surat Diamond Bourse, and the High-Speed Rail Corridor.
• The company expects Q4 FY24 to be its best quarter ever, driven by stabilizing steel prices and increased demand from dealers and distributors.
• Sanand Unit-II, Phase-1, is nearing completion and will cater to high-end pipes for solar trackers and the oil and gas sector.
• An investment of Rs 100 crore is planned for FY25 to further expand capacity and focus on value-added products.

In conclusion, Hi-Tech Pipes Limited demonstrates a robust growth trajectory with strategic capacity expansion plans, positive financial performance, and a focus on value-added products. Despite challenges like volatile steel prices, the company remains optimistic, targeting significant sales volume growth, improved EBITDA, and enhanced operational efficiency.

The stock has delivered a 31 per cent return since the beginning of the new year and has provided multibagger returns of 118 per cent since its 52-week low. Considering its strong market position and future outlook, keeping Hi-Tech Pipes on your watchlist would be prudent.