Surya Roshni soars 18% in two days post December quarter results

Shares of Surya Roshni surged 14 per cent to Rs 504.85 on the BSE in Wednesday’s intra-day trade, and has rallied 18 per cent in the past two trading days, after the company reported a healthy 29 per cent year-on-year (YoY) growth in consolidated revenue at Rs 2,030 crore in December quarter.

The stock has corrected 51 per cent from its record high of Rs 868.40 touched on October 4, 2021 to close at Rs 428 on Monday, February 14, 2022. At 10:51 am; it traded 11 per cent higher at Rs 494, as compared to 0.19 per cent decline in the S&P BSE Sensex. A combined 461,000 equity shares changed hands on the NSE and BSE.

The company is the largest exporter of ERW pipes, largest producer of ERW GI pipes and one of the largest lighting companies in India.

In Q3FY22, the company’s consolidated earnings before interest, taxes, depreciation, and amortization (Ebitda) margin contracted 250 bps at 4.9 per cent. Profit after tax declined 27 per cent YoY at Rs 40 crore.

The higher growth in revenue was due to strong growth in value-added product categories in both the businesses and higher steel prices. The margins remained under pressure due to higher raw material prices and other input costs, which were partially offset by price increases.

Surya Roshni said the company proactively undertook multiple price hikes and will continue further to mitigate higher input costs. With strong brand recall and customer preference for the “Surya” brand, these price hikes were well accepted by the market.

The management said the impact of lesser than anticipated volume growth due to volatile steel prices had effected the profitability to some extent. The strong orderbook for exports, API coated pipes and spiral pipes are expected to drive the growth in the upcoming quarters. This will be further supported by the commissioning of a Large-dia section pipe facility with Direct Forming Technology (DFT) at Gwalior.

The company is witnessing multiple growth levers internally through premiumization across business segments, strengthened balance sheet, cost optimization initiatives and diversified value-proposition. This is further supported by external levers such as PLI, pick-up in economic activities and the country’s growing exports in 3LPE and GI pipes, the management said.