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IDBI Capital Report
Surya Roshni Ltd.’s Q1 FY23 profitability was weaker than expected as steel pipes division profitability was marred down due to inventory losses (as witnessed in other steel pipe companies).
Its steel segment Ebitda/tonne fell to Rs 3,103 (down 38% YoY). Nevertheless, lighting and consumer durables segment reported strong sales growth of 56% YoY to Rs 3 billion and segment Ebitda also increased 33% YoY to Rs 220 million.
Surya Roshni took multiple price hikes to mitigate inflationary pressure during the quarter. On a positive note, its net debt fell by Rs 1 billion QoQ.
We cut our FY23 steel pipes division profitability estimate by 12% to factor inventory losses. Also, we lower our FY24 Ebitda estimates by 12% to factor rising prices of key inputs.
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