Vibhor Steel Tubes Ltd Q1 FY2024-25 Earnings Conference Call

Summary

In the VRO Steel Tubes Limited Q1 FY25 conference call, Mr. Vijay Kik, the Managing Director, addressed the company's performance and future plans. Despite a 40% stock price drop, attributed to market surveillance, the company remains optimistic, citing ongoing projects like a new plant in Jhura and a galvite plant in Hyderabad. The IPO funds were primarily utilized for working capital, with a focus on raw material procurement, and the company aims to manage debt levels and reduce finance costs. The management expressed confidence in meeting the promised developments and maintaining investor trust.

Takeaways

• 🏭 Vro Steel Tubes Limited is a manufacturer and exporter of mild steel carbon steel ERW black and galvanized pipes, oval steel pipes, cold rolled steel strips, and crash barriers.
• 📈 Incorporated in 2003, the company has seen significant growth under the leadership of Mr. Vijay Kik, who joined in 2006 and expanded the company's capacity by 90 times.
• 👥 The company is supported by a highly skilled and experienced team of over 600 people.
• 📍 VST has two manufacturing units in Telangana and Maharashtra, with a total installed capacity of 221,000 metric tons per annum.
• 📈 The company's product profile is diverse, including electric resistance welded pipes, high dip galvanized pipes, hollow section tubes, and crash barriers, which are used across multiple sectors such as agriculture, oil and gas, automobile, and telecommunications.
• 💼 In February 2014, VST made a successful debut on BSE and NSE, raising ₹72.7 crores from the IPO.
• 📉 The company's stock has experienced volatility and a significant drop of approximately 40% since the IPO, attributed to market surveillance and initial high demand followed by a correction to the grey market price.
• 🔑 Mr. Vijay Kik reassures investors that the company is following through on its IPO roadmap, including the establishment of a new plant in Jhura with an installed capacity similar to their western region plant.
• 🛠️ The company has installed an additional galvanizing line in Hyderabad to meet the demand for their new Highway guard rail product, achieving a dispatch target of 12,200 tons.
• 💼 The proceeds from the IPO have been utilized mainly for working capital and procurement of raw materials, with a portion placed in fixed deposits due to the unutilized funds.
• 💡 The company aims to manage its debt levels and finance costs effectively, with the IPO funds helping to reduce interest payments and positively impact profits.
• 🌟 Vro Steel Tubes Limited is committed to maintaining investor confidence through transparent communication and executing promised developments within the given timelines.

Q & A

What is the purpose of the conference call with Vbro Steel Tubes Limited?

The purpose of the conference call is to discuss the company's Q1, F25 financial performance and to address any questions from investors and analysts.

What is the primary business of Vbro Steel Tubes Limited?

Vbro Steel Tubes Limited is a manufacturer and exporter of mild steel carbon steel ERW black and galvanized pipes, oval steel pipes, cold rolled steel strips, and crash barriers, which are widely used in medians, shoulders, and high embankments.

How long has Mr. Vijay Kik been associated with the company?

Mr. Vijay Kik joined the company in 2006 and has been leading it since then, expanding its capacity significantly under his leadership.

What is the total installed capacity of Vbro Steel Tubes Limited's manufacturing units?

The total installed capacity of Vbro Steel Tubes Limited's manufacturing units, located in Telangana and Maharashtra, is 221,000 metric tons per annum.

What was the purpose of Vbro Steel Tubes Limited's IPO in February 2024?

The IPO was conducted to raise funds, which were intended to be used for working capital and the procurement of raw materials.

How has the stock price of Vbro Steel Tubes Limited performed since the IPO?

The stock price opened at a high level but has since fallen by approximately 40% due to market phenomena and regulatory surveillance.

What is the current status of the new plant promised during the IPO?

The new plant is underway in Jhura, with land purchased and construction in progress. The company aims to start its trial run or production by the second quarter.

What developments have taken place in Hyderabad related to the company's operations?

In Hyderabad, an additional galvanizing plant has been installed to cater to the increased demand for a new product, the Highway guard rail, which has seen significant growth in production and sales.

How has the company managed its debt levels and finance costs post-IPO?

The company has managed its debt levels effectively, with the IPO funds being used for working capital and reducing reliance on bank loans for machinery, which in turn has helped control finance costs.

What are the future plans for product diversification as mentioned during the IPO?

The company plans to introduce other products such as octagon poles and high mast poles, with orders for the necessary machinery already placed and expected to be installed in the Jhura location.

How does the company intend to maintain and grow investor trust?

The company intends to maintain and grow investor trust by executing the developments promised during the IPO within the given timeline, showcasing continuous growth and commitment to investor expectations.