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Manaksia Coated Metals & Industries Ltd

| Q3 and 9M FY26 Results Conference Call

BULLISH SENTIMENT

Report Source

⬤6th Feb 26

Summary : Manaksia Coated Metals & Industries Limited demonstrates strong 9M growth, strategic capacity expansions, and positive demand outlook despite a Q3 shutdown, with secured funding for future projects.

Management Perspective positive : This period has been characterized by strong business momentum, disciplined execution and a focused strategic approach. We are entering an exciting phase of growth with multiple strategic initiatives progressing well and remain firmly on track. Further reinforcing our outlook, the company is supported by a robust export order book.

Concall Report Analysis & Insights

Business Overview

  1. Q3 FY'26 total income fell 9% YoY to INR190 crores due to planned plant shutdown.
  2. Q3 EBITDA increased 7% to INR19 crores, with margin expanding 144 bps to 10%.
  3. Q3 net profit surged 47% to INR7 crores, net margin 4%, EPS up 9% to INR0.73.
  4. 9M FY'26 total income rose 15% YoY to INR580 crores; EBITDA up 67% to INR77 crores.
  5. 9M net profit grew 241% to INR35 crores, net margin 5%, EPS up 151% to INR3.49.

Future Growth Prospects

  1. Aluminium-Zinc coating technology upgrade commissioned, increasing capacity by 36% to 180,000 TPA.
  2. Second color coating line expected Q1 FY'27, expanding coating capacity 174% to 236,000 TPA.
  3. 7-megawatt captive solar power plant targeted Q1 FY'27, offsetting 50-55% grid power consumption.
  4. New CRM system with Salesforce to enhance customer engagement and sales conversion.
  5. Robust export order book of INR350 crores and peak domestic demand season.

Management Insights

  1. The first 9 months of fiscal '26 showed strong business momentum and strategic approach.
  2. Q3 was a resilient quarter despite a planned plant shutdown for technology upgrade.
  3. We are entering an exciting growth phase with multiple strategic initiatives on track.
  4. The company can pass on raw material cost increases to customers almost immediately.
  5. We are very hopeful for sustained domestic demand and export momentum.

Signs of Skepticism

  1. Management claims immediate pass-through of raw material costs, which can be challenging.
  2. Full benefits of new capacity and margin expansion are not immediate, requiring gradual ramp-up.
  3. Q4 will have a bottleneck where Alu-Zinc capacity exceeds pre-painted capacity.

Risk Factors

  1. Rising metal prices (zinc, aluminum) directly impact raw material costs.
  2. Ramping up new Alu-Zinc capacity and selling new products will take time.
  3. Q4 faces a bottleneck with more Alu-Zinc capacity than pre-painted capacity.
  4. Benefits from India-EU FTA for steel products are yet to unfold.

Good To Know

  1. The 35-day plant shutdown for Alu-Zinc upgrade occurred entirely in December (Q3).
  2. Technical team successfully delivered first coil with excellent quality post-upgrade.
  3. India has a level playing field in Europe against competitors like Korea, Japan, Vietnam, Turkey.
  4. China is out of the European market due to heavy antidumping duties.
  5. Q3 galvanizing line capacity utilization dropped to 68% due to the shutdown.

Key Drivers

  1. Alu-Zinc technology upgrade commissioned.
  2. Second color coating line commissioning soon.
  3. Captive solar power plant for cost savings.
  4. Robust export order book and domestic demand.

Key Analyst Discussions

Competitive Environment

  1. India has no disadvantage against competitors like Korea, Japan, Vietnam, or Turkey in Europe.
  2. India holds advantages in export capacity compared to some competitors.
  3. China faces heavy antidumping duties, limiting its access to European markets.

Market Trends & Consumer Behavior

  1. Demand outlook from the European Union, a key export market, remains very strong.
  2. Domestic demand picked up significantly from December onwards after a dull period.
  3. High domestic demand is expected to sustain strongly until July.
  4. The company has a strong export order book and expects momentum to continue.

Financial Highlights

  1. Q3 total income fell 9% due to a 35-day plant shutdown for technology upgrade.
  2. Margin improvement in 9M FY'26 is due to better price realization and product mix.
  3. Q3 total quantity sold was 22,896 tons, down from 24,037 tons in Q2.
  4. Q3 galvanizing line production was 68%, while color-coated line was 96%.

Product Composition

  1. Rising metal prices impact raw material costs, but the company passes these on to customers.
  2. Pre-painted Alu-Zinc products achieve 13-14% higher realization per ton than plain Alu-Zinc.
  3. Migration to Alu-Zinc and pre-painted products naturally brings margin expansion.
  4. Q4 margins should technically increase due to selling more value-added products.

Strategic Considerations

  1. The company maintains a strong liquidity position with unutilized working capital facilities.
  2. Funding for the second color coating line and solar power plant is already secured.
  3. A 65-70% capacity utilization for the expanded pre-painted line is achievable for FY'27.
  4. Margin expansion from Alu-Zinc upgrade and solar power will be gradual over the coming fiscal.