Steel pipes manufacturer announces robust 72 per cent profit growth & 58 per cent EBITDA improvement in Q2FY25 and incorporates new subsidiary for further expand its business operations

The stock is up by 88.9 per cent from its 52-week low of Rs 97.60 per share and gave multibagger returns of over 1,000 per cent in 5 years.

Hi-Tech Pipes Limited (NSE: HITECH and BSE Scrip Code: 5434711), one of the leading manufacturer in the Indian Steel piping industry, reported its financial results for the quarter and Half Year ended September 30, 2024.

Quarterly Results Update

In Q2 FY25, the company experienced a significant boost in total sales volume, rising by 22.50 per cent to 1.23 lakh tonnes compared to the previous year's 1 lakh tonnes. This growth was primarily driven by increased demand for steel tubes, structural steel products, and value-added products. Despite this positive trend, revenue from operations declined by 5.3 per cent to Rs 705.89 crore due to a steep decrease in raw material prices. However, the company's profitability improved significantly, with PAT increasing by 72 per cent to Rs 18.11 crore and EBITDA surging by 57.66 per cent to Rs 42.19 crore. This improvement was attributed to a focus on value-added products and efficient cost management activities, resulting in an EBITDA/ton of Rs 3,429 in Q2FY25, a 28.66 per cent YoY increase from Rs 2,665 in Q2FY24.

Half-Yearly Update

In the first half of FY25, the company witnessed significant growth across various key financial metrics. Revenue from operations surged by 13.31 per cent to Rs. 1572.88 crore, primarily driven by higher sales volumes. This growth was accompanied by a substantial increase in profitability, with PAT rising by 95 per cent to Rs 36.16 crore. Total sales volumes also experienced a remarkable 32.55 per cent increase to 2.45 lakh tonnes, fuelled by robust demand for steel tubes and structural steel products. EBITDA grew by 77 per cent to Rs 84.87 crore, and EBITDA/ton improved by 33.51 per cent to Rs 3,462. Additionally, the company's financial health strengthened, with a decline in Net Working Capital Days, improvement in Debt Equity Ratio and Current Ratio, and a significant increase in Return on Capital Employed from 10 per cent in FY24 to 14.53 per cent in H1FY25.

Successful Closure of Rs 500 Crore QIP

Successful Closure of Rs 500 crore QIP Following the Quarter ended September 30,2024, on October 11,2024 the Company has issued and allotted 2,69,96,734 Equity Shares at Rs 185.50 each to eligible Qualified Institutional Buyers (QIBs) under Qualified Institutional Placement (QIP) of Hi-Tech Pipes Limited. The QIP, which was opened on October 7, 2024 (post market hours) and was closed on October 11, 2024 received an overwhelming response from Marquee Qualified Institutional Investors demonstrates strong confidence on the Company's growth prospects.

Subsidiary Updates

Hi-Tech Global Steels Private Limited is a newly incorporated private company based in New Delhi, India. With an authorized and paid-up share capital of Rs. 1,00,000, the company is yet to commence commercial operations. It operates in the manufacturing and trading of steel products, including pipes, tubes, fittings and hardware items. The company is a related party to Hi-Tech Pipes Limited, with shared promoters. The acquisition of Hi-Tech Global Steels by Hi-Tech Pipes is a cash deal, valuing each share at Rs 10, and aims to expand Hi-Tech Pipes' business operations.

About Hi-Tech Pipes Limited.:

One of India’s leading steel processing companies, providing world-class innovative products for nearly four decades with a strong presence in steel pipes, hollow sections, tubes, Solar Torque Tubes, cold rolled coils & strips, road crash barriers, solar mounting structures, GP/GC Sheets, Colour Coated Coils and a variety of other galvanised products. The Company operates Six (6) state-of-the-art integrated manufacturing facilities located at Sikandrabad (UP), Sanand (Gujarat), Hindupur (AP) - near Bangalore, and Khopoli (Maharashtra), with an installed capacity of 7,50,000 MTPA, on a consolidated basis and is on its way to reaching 1million Tones Capacity in FY25. The company has a direct marketing presence in over 20 states with more than 450+ Dealers & distributors across India

The company has a market cap of over Rs 3,700 crore. In October 2024, FIIs bought 99,77,902 shares and increased their stake to 12.98 per cent compared to 9.31 per cent in September 2024. The stock is up by 88.9 per cent from its 52-week low of Rs 97.60 per share and gave multibagger returns of over 1,000 per cent in 5 years. Investors should keep an eye on this small-cap stock.

Disclaimer: The article is for informational purposes only and not investment advice.