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Indian markets have many listed companies from the Steel tubes and pipes industry and the Lighting and Consumer Durable industry. However, there must be very few companies involved in such diverse industries at the same time and Surya Roshni is one of them.


We have been looking at Surya Roshni for some time as the company has been performing well.

While Surya is more famous for its lighting products; did you know that Steel tubes and Pipes segment accounted for 80% of its sales in FY 22 and 76% of its earnings before interest and taxes.

Overall, the numbers of the company look interesting and we therefore decided to dig deeper into the industry and have shared the details below from the Q3 FY 23 con-call transcript of the company:


Before that, few days back, we released our New Stock Recommendation for Alpha and Alpha + Members

It's a 1000 crore market cap stock, one of the largest players in its segment, has great operating performance track record, expanding aggressively and available at only ~10 times pre-tax earnings

You can get it along with other Investment recommendations, by subscribing HERE


Surya Roshni - Notes from Q3 FY 23 con-call transcript

Lighting and Consumer Durable division

  • Q3 and nine months FY '23 revenue grew by 6% and 20% YOY, driven by increased share of value-added products, along with a pickup in consumer demand during the first half of Q3 FY '23 owing to festival season
  • New age line of products such as LED Lighting continue to do well
  • Professional Lighting reported one of the best quarters in terms of revenue as well as project execution
  • In fact, LED Street Light revenue grew by 66% and 74% respectively, in Q3 and nine months FY '23
  • The company remains positive about consumer durables, considering a huge addressable domestic market
  • The gross margin has also improved due to operating leverage and premium product and stability in input costs. There is a scope to improve margins very drastically further also
  • Capex once operationalized is expected to lower the input costs as well as lower the external dependency
  • In Q4, the EBITDA margin will be more than 10%. And the overall year last year was 8%, it will be in the plus side it will not be less this is what I can tell you now
  • We believe that the lighting division segment should have a minimum EBITDA margin of 14-15% and we are working in that direction
  • There are 2-3 things. Mainly, in our case, there is a big gap between our trade and other professional luminaires. The luminaries segment is a premium segment, high value and high volume. As I said last time, the industry has a 50-50 ratio. In our case, it is 75-25
  • Second, we will have to include premium products in this
  • When I talk about competition, I will not mention anyone's name, but in Tier 1 city, you will see the visibility of other competitors is much more than ours. So, Tier 1 city, because our visibility in Tier 2 is good, we are still behind in Tier 1. To improve that very quickly, we have appointed a long arm salesman
  • I think if there is proper execution for a year or 15 months, then 12-14% is not a big deal
  • As far as lighting is concerned, there should be double volume from here in 4-5 years and as far as profitability is concerned, if the top line is Rs 2,800 crores – Rs 3,000 crores then the lighting division should have an EBITDA of around Rs400 crores. That is our target and we are trying in that direction

Steel pipe and strips division

  • the company top line was affected due to continuous fall in global steel price during the quarter
  • Our volume has increased by 9% in the quarter and in the nine months the overall volume has increased by 5%. We are assuming that the entire year should have around 7%-8% volume growth
  • Nonetheless, with a growing share of value-added product, EBITDA per ton for Q3 stood at Rs 6,733 per ton, a robust growth of 76% year-on-year. Similarly, for nine months FY '23, EBITDA per ton is now at Rs 5,200, a growth of about 22% year-on-year
  • the company is well on track to achieve 10% volume growth, along with EBITDA per ton above last time, I think I have given a number of Rs 5,000, but hopefully, we'll be doing Rs 5,500 EBITDA per ton for the whole year
  • I can say that in the regular routine business, our average was around 4,000-4,200. The change that has come in our product segment, so because of that our sustainable number will be 5,000 minimum per ton. But above that it depends on whether API is exceptionally good
  • The company continue to maintain a healthy momentum in order inflow for value-added products such as API coated, API export pipe, overall exports, GI pipe and other value-added pipes
  • Over the years, the company has diversified its manufacturing base across the country at strategic locations to reduce the turnaround time and logistic cost
  • To further strengthen this value proposition, the company is setting up expansion at Hindupur with an outlay of Rs 75 crores. This expansion is mainly aimed towards backward integration, which will help the company to reduce the cost
  • The entire capex will be funded through internal accruals, and it is expected to be complete by March 2024
  • Capacity utilization - if you see this quarter, it has been 72%


  • The company has reduced debt by Rs 71 crores in nine months of its current financial year and continues to remain long-term debt free
  • I had said that in the balance sheet of 2026, we will get debt-free. But today I am announcing that it will be 100% that when the balance sheet of FY’24 will be printed, the company will be debt-free




Disclaimer: This is not a recommendation to buy/sell Surya Roshni. These notes are as announced by the companies on exchanges and only for the purpose of information and education.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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