Ladies and gentlemen, we welcome you all to the Q3 and nine-month FY 2026 earnings conference call of Venus Pipes and Tubes Limited, hosted by DAM Capital. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict. Now, I hand over the conference to Mr. Aasim Bharde from DAM Capital. Thank you, and over to you, sir.
Thank you, and good evening. On behalf of DAM Capital, it's a pleasure to have you all on Venus Pipes and Tubes' Q3 FY 2026 post-earnings call. From the Venus team, we have Mr. Arun Kothari, Managing Director, Mr. Dhruv Patel, Whole-Time Director, and Mr. Kunal Bubna, the Chief Financial Officer. We'll have the opening comments from Mr. Kothari first, followed by the Q&A. Thank you.
Good afternoon, and warm welcome to everyone on the Q3 and nine-month FY 2026 earnings call for Venus Pipes and Tubes Limited. I have been joined by Mr. Dhruv Patel, our Director, Mr. Kunal Bubna, our CFO, and HDM, our investor relation advisor. We have uploaded our Q3 FY 2026 investor presentation on the stock exchanges and company's website, and I hope you had an opportunity to go through the same. I will give insight on performance of the economy, followed by performance of the company. The Honorable Finance Minister recently presented her ninth Union Budget, outlining the government's economic plan with a clear focus on growth, investment, and financial discipline. The government focus continues to remain on growth-led environment supported by a strong push towards public capital spending. Capital expenditure has been increased to INR 202 lakh crore for FY 2026 and FY 2027.
Further, the recent FTA will also help domestic manufacturing sector that underlines the government's commitment to building better infrastructure and supporting job creation and encouraging private investment. It also places a strong emphasis on the power sector and semiconductor sector, both of which lend meaningful growth opportunity for the company in the years ahead. The budget, along with recent GST rate rationalization measures, is expected to further strengthen the economy. Overall, the budget reflects a strong policy, continuity, and a steady approach towards building a resilient, stable economy. On the industry front, the stainless steel pipes and tube industry continues to gain importance compared to other type of steel pipes, driven by its superior quality, durability, and long service life. As highlighted in our earlier calls, while industry demand is growing, a significant portion of this demand has traditionally been met by the unorganized sector and import.
With tighter regulations and customers placing greater emphasis on quality and long-term reliability, we are seeing a steady shift away from unorganized players. On the import side, anti-dumping duty is also supporting domestic high-quality manufacturing. Coming to Venus Pipes and Tubes, your company has established itself as a trusted brand known for consistent quality across both domestic and international markets. Over the years, we have built meaningful scaling and today stand among the leaders in installed capacity in the country. As we scale up, we also focus on moving up the value chain. By steadily expanding our product range, we have created our presence across several critical industries and improved our ability to serve more demanding applications. This approach has helped us build deeper customer relationships and positions us well to capture long-term growth opportunities.
Our product portfolio has continued to evolve in line with changing market needs and customer expectations. With our recent capacity expansion into value-added products, we believe the company is entering a new phase of its growth journey. Going forward, growth will be driven by higher share of value-added offerings and increased participation in critical end-use sectors. These segments demand a strong technical expertise, consistent product quality, and proven execution track record, capabilities that take years to develop. Our long operating history, strong customer trust, and disciplined execution give us the confidence to scale successfully. In this area, clearly differentiating Venus Pipes and Tubes and setting the foundation for a sustainable and higher quality growth path. Coming to our Q3 and nine-month FY 2026 operational performance of the company. Our growth journey is backed by numbers.
We continue to report quarterly performance with all-time high revenue of INR 296.7 crores for Q3 FY 2026, growing by 28.3% on a year-on-year basis. On nine-month basis, as well, we have reached revenue of INR 864.7 crores in nine-month FY 2026, which is already 90% of our FY 2025 revenue. Our domestic performance improved significantly during the quarter, with revenue growing 43% year-on-year to INR 203 crores and more than 15% sequentially. The domestic demand environment improved meaningfully during the quarter, as well as export continued to perform well, contributing around 31.5% of revenues at INR 93.5 crores. On a segmented basis for nine months FY 2026, both seamless and welded pipes delivering strong performance, registering growth of over 27% and 22% respectively, reflecting sustained demand and stronger execution across the businesses. Our capacity utilization remains healthy with newly commissioned capacity ramping up well and contributing meaningfully to volumes.
Supported by a strong order book of approximately INR 470 crores, we remain confident of accelerating the ramp-up of these capacities and driving further growth in the coming quarters. On the CapEx front, our new capacity for fitting as well as seamless pipes and tubes are progressing well and remain firmly on track. These facilities are expected to come on stream over the coming months and we will further able to cater the high value and critical application segment. Overall, we are excited about the year ahead and confident that 2026 will be a year of meaningful growth and driven by the commissioning of the new capacities and our continued expansion into a more value-added product portfolio. With this, I hand over to Mr. Kunal Bubna, our CFO.
Good afternoon, everyone. We are pleased to share that our company has delivered a resilient performance in the third quarter and nine months, ending December 2025. On revenue front, revenue from operation for Q3 FY 2026 stood at INR 296.7 crores as compared to INR 231.3 crores during Q3 FY 2025, achieving a growth of 28.3% year-over-year basis. Revenue for nine months FY 2026 stood at INR 864.7 crores, witnessing a strong growth of 23.5%. Revenue bifurcation for the quarter was 34% from welded, 60% from seamless and 6% from others. Growth in the seamless segment was 43% year-over-year basis. Welded segment registered a growth of 13% for Q3 FY 2026 year-over-year basis in terms of revenue. Our export sales stood robust at INR 93.5 crores for the quarter compared to INR 89.1 crores during the same period last year, a growth of 5% year-over-year basis.
On the EBITDA front, our EBITDA for the quarter stood at INR 48.8 crores as compared to INR 37.2 crores in Q3 FY 2025, a growth of 31%. EBITDA margin for the quarter stood at 16.4% compared to 16.1% in the same period last year. On nine-month FY 2026 basis, EBITDA saw a growth of 12%, standing at INR 141.1 crores with margin at 16.3%. On the PAT front, PAT for Q3 FY 2026 is INR 25.6 crores compared to INR 18 crores in Q3 FY 2025, a growth of 42% year-over-year basis. PAT margin stood at 8.6% for the quarter. During the quarter and nine months, we had a one-time impact of approx INR 64.55 lakhs due to increase in gratuity and leave liability on account of changes in labor code.
As we look ahead, we are optimistic about the opportunity before us, backed by disciplined investment, consistent execution, and well-defined growth roadmap. We are focused on building a stronger Venus brand and raising the bar for the seamless steel pipes and tube industry. With this, I would like to open the floor for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Dhruv Jain from Ambit Capital. Please go ahead.
Thanks for the opportunity, sir. Just one question on the export front. We've seen a bit of a decline in momentum in terms of growth. How should we think about exports going forward? If you could also share what is the split of the order book with respect to domestic and export. Any reason why the export growth is slow? In the next year, how should, in your view, exports growth come through? That's my first question.
Primarily, on the front of order book, it's around more than 30% on the side of export and balancing domestic. If you see, we had also been exporting to U.S.A. in the last quarter. We did around more than 20%, but this quarter it was around 12% sort of number of the total export, what we exported to U.S.A. Again, the percentage had been more than 30%. It was as in the last quarter passing. Again, the order book is there from Middle East, Saudi and also good order booking also coming from Europe. We think more than 30%-35% should be export also going forward here also.
Okay.
Just to also mention, in case of U.S.A., the recent tariff which has been done. Because in case of our product, the Section 232 duty of 50% was unanimous same for every country exporting to U.S.A. There was a lot of apprehension because there was no clarity about the tariff, what would be the tariff. It can increase any time. I think that has been done in the recent two, three days back. I think as a steel and pipe perspective, we should see orders from U.S.A. also coming forward in coming quarters.
My second question is on the fittings business. Given your capacity comes on stream in the second half, I mean, it's come on stream now in the second half. How should we think about it from next year growth perspective, in the sense that what is the kind of contribution or any targeted revenue that you have in the fittings business, and how should it ramp up in FY 2028 as well? To your ramp up or plan in that regard would be very helpful.
As we said earlier, the investment is roughly in the range of INR 60 odd crore in our fitting business, and we can see an asset turn of around, you can say 3 to 3.5 times. As you rightly said, the fitting business will be coming the end of this March 2026. From the next year, we will be getting the benefit. In the first year, maybe something around near to 50% of that should be contributing. In the FY 2028, I think a substantial portion of the capacity should be utilized from the fitting business.
Okay. Thank you so much, and all the best.
Thank you. Our next question comes from the line of Romil from Electrum PMS. Please go ahead.
Yeah. Thank you, sir, for the opportunity. Sir, just wanted to understand a little bit on the value-added product. Obviously, fittings and the other products going ahead will be value-added. Can you give a percentage of the entire portfolio, how much it is now and in the next, let's say, two years, how much that can become, and hence what impact on the margins can come through at matured utilizations?
It's around, currently, if you see those value-added product, the contribution that is coming in the business is around 15%-20%. Going forward, given the expansion that we are doing on the side of fitting and also on the side of seamless and other businesses, we believe it should be at least double of that from what is currently being contributed. On the front of EBITDA, it's 16.4, 16.5 roughly for this current quarter, then we believe it can move from 16% to soon go up to 18%.
Okay. Up to 18% it can go over when this value-added.
It will come in phases, definitely.
Yeah.
FY 2027, definitely improvement will be seen, and FY 2028 should be the year where the entire improvement should come.
Okay. Just one more thing. I think U.S. was a smaller proportion right now of the overall revenue for us. With this trade deal and all, do you foresee that U.S. can become a bigger growth driver? Hence, what are the segments that we will look at in that market? Petrochemicals, power, any sense on that?
Yeah, absolutely. With this ease of tariff for definitely U.S., because we have been exporting to U.S.A., first quarter of FY 2026 was a good portion of our supply to U.S.A. Post that Q2 and Q3 number had been definitely.
Okay.
With this ease, we definitely believe U.S. should be increasing. The sector of this segment, we are not selling to the end customer there. As you rightly said, it will be mix of chemical and engineering and other sectors.
Okay. Basically, this quarter, the export growth was lower because U.S. contributions came down in the last two quarters.
Yes.
Okay. Lastly, can you share some order book details for this quarter?
It's around 470. Out of that, more than 30% is export and balancing domestic.
Okay, 30% is export. Okay. Domestic is picking up, right?
Yes.
Any sense on domestic? How do you look at it in the next two, three years?
It's very good from the perspective the orders are being received and power sector, oil and gas, engineering, PPG sector.
Okay. Got it. Okay, thank you so much. I'll get back in the queue for follow-up. Thanks.
Thank you. Participants who wish to ask a question may press star and one on the touchtone telephone. Our next question comes from the line of Pritesh from Lucky Investment. Please go ahead.
Sir, can you give the order inflow numbers for nine months versus nine months last year?
Orders?
Inflow.
No, as such, not a specific breakup we are giving right now.
Okay. Total order, you only give order backlog.
Yes.
How does this stack up versus last year? This INR 470 crores versus last year, what should be your number?
It was INR 1,150 crores.
Okay. My second question is, in your capacities, which is to be commenced operation, it is fitting seamless pipe and condenser pipe, or condenser pipe has started operations?
Condenser pipe has started operations. It will be fitting and seamless only.
What is the status on fitting order for the condenser pipe capacity?
On a capacity perspective, we are running around 25%-30% currently.
Okay.
Few of the approvals had been received from power sector for condenser tube, and few more approvals we are working on, and we believe those approval as and when it is being received, it should expand the capacities utilization for condenser tube also.
Pritesh ji, further to this condenser section, is not able to produce only condenser tube. We also supply some grade in food processing industry, as well as in pharma industry also. For some of the good tenders in the coming months is floated by some of the power sector in India. We are hopeful the condenser section.
Sorry to interrupt you, sir, there seems to be some echo in the background.
Okay. Sorry. Yeah, we are anticipating the. Sorry. One second. One minute. Hello. Now is okay?
Now it's better.
Okay. We are expecting some new tender, which is floated from the India power sector. Which will be open in next two to three months. We are hopeful the condenser tube capacity will improve in the coming quarter.
Okay. What is the peak utilization number, revenue number possible out of the condenser capacity that you have put and the fittings capacity that you have put?
Yeah. We are anticipating.
Okay.
See, for condenser, if I take a full capacity runner for fitting and value-added welded, the better name would be rather than condenser, it should be running around INR 350 odd crore.
This is for the value-added pipes and fitting.
Welded and fittings taken together.
Okay. Fittings and the new pipes. Okay. How much of this INR 350 crore do you think can come in FY 2027?
In FY 2027, on the side of seamless, we believe more than 80% of it. Seamless would be roughly between INR 220-250 crores. Which we believe it should be 80%. On the side of value-added welded tube, which is 120, 140-ish, in between that. Therein, we believe it should be around 70% of it.
Basically, out of INR 350 crore, you will be able to do INR 250-270. That's how we should interpret?
Yes.
You have a base product growth rate plus these two new product areas that are going to start larger operations next year. Is it fair to assume that the revenue growth will be much higher than what you would have achieved in the last years?
Absolutely.
What kind of revenue growth should we look at in FY 2027?
again, on an overall basis, what we are currently guiding is at least more than 20% compared to FY 2026.
20%, is this number only, right?
Sir, again, this number, 80% and 70 are some assumptions. Definitely it should be higher than that, what we are currently guiding is more than 20%.
Okay. My last question is, why is it that welded tubes is growing slightly slower? Second, what is the status of capacities or competition in the seamless tube side? Two different questions.
On the side of welded, last quarter it was fine, again, in this quarter there has been certain detrimental, it is majorly because of the decrease in the sale to U.S.A. What we see, going forward, there should be an order from Saudi and Middle East on the side of welded and power sector also. We will be able to ramp up that. From the perspective of competition, seamless, there has been a competition, but keeping backward integration and also tubing business and also we are coming up with this value-added tube and value-added tubing business, which will cater to hydraulic instrumentation heat exchangers. We are slightly better placed as compared to the new capacity or new competition coming in forward.
Seamless, again, along with requisite approval and again presence in Europe and many part of the world, we should not be that much affected by this competition.
Okay. I'll come back with one more question.
Yes.
Thank you. Anyone who wishes to ask a question may press star and one on their touchtone telephone. Our next question comes from the line of Bhargav from Ambit Asset Management. Please go ahead.
Yeah. Good afternoon, team, and congrats on a good performance. Sir, my first question is that, is it fair to say that the order which BHEL is likely to announce in our sort of addressable market is closer to INR 3,000-4,000 crore, and of that, just about INR 700 crore have been ordered so far?
Hello. No. For the pipe order, in the exclusive pipe segment order, not only INR 3,000 crore order is pending with the BHEL. What are the tender has been issued by the NTPC from NTPC or from Adani Group, the BHEL or other power company. We are anticipating in the next four to five years, almost more than 8,000 metric ton demand will come from the power sector. Still there are a lot of tender is pending to come in the domestic market. They will float almost in every 6 months or every quarter, they will float some new tender. This demand will continually maintain at least for four to five sector. Further, this demand will be also limited to very few players who are approved in the either BHEL, NTPC or Adani Power.
Sir, in INR crore, how much does this translate into?
Almost you can say it will be more than INR 6,000 crore, near about.
Okay. 6,000. Our market share as of now in the tenders which have already been ordered is how much, sir?
Almost we can say right now, the water tenders we've floated in last one year, our market share is near about 15%-20%.
15%-20%. Okay. Can this market share increase or given the.
Yeah.
Okay.
Yeah, definitely it will increase since we have developed a new plant, the condenser power, or we have now received not much tender in the condenser power sector from the power sector, which we are anticipating in the coming quarter. Our contribution definitely will improve.
How much of the pending order book of BHEL is remaining now?
It's around 60%-65%.
60%-65% is unexecuted still?
Yes, unexecuted, which will be executed in coming two quarters to substantial portion of it.
Okay. Secondly, sir, is it possible to highlight few key approvals, which we might have received maybe in the Middle East or Russia? Any clients which you may want to mention, which can be potentially big clients going forward in terms of ordering?
Yes, definitely. In the last quarter, we have received some new approval from overseas nuclear sector, overseas domestic and overseas oil and gas sector, and domestic food processing industry, for some more new grids in power sector domestically.
This is from which country, sir?
This I want to keep this secret.
Okay. This is primarily UAE, that's what you're highlighting?
Not only. Both KAB and few of the companies are multinational also, who are scattered around the world also.
Okay. Understood. Great, sir. Thank you very much for your replies and all the best.
Thank you.
Thank you. Participants who wish to ask a question may press star 1 on their touchtone telephone. Our next question comes from the line of Pallav Agarwal from Antique Stock Broking Limited. Please go ahead.
Yeah, good afternoon, sir. Just one question on what is the net debt levels at the end of the quarter?
Net debt was around INR 260.
Okay. Do you expect that this should be the peak level or maybe because of CapEx and working capital, this can increase slightly?
For the coming quarter, we believe it should not increase much. INR 10 crores-INR 20 crores from here.
Okay. Any improvement in our working capital levels over the previous quarters?
No, similar to it. More or less similar.
Okay. Sir, anything on the margin front? We were at about 18% EBITDA margin, and that has come down to about 16% level. With the VAP going up, can this go back to about 18% by FY 2028?
Yes. As we said, with the start of this coming quarter, this condenser value-added project, then fitting business, then also on the side of seamless business, wherein tubing and BHEL business will be there. Definitely, in the coming two years to go, it should definitely improve from 16.4% and move to around 18%.
Okay. Yeah. Thank you, sir.
Thank you. Anyone who wishes to ask a question may press star and one on the touchtone telephone. Our next question comes from the line of Dhananjai Bagrodia from Alchemy. Please go ahead.
Alchemy.
Hello.
Hello.
Sir, I just wanted to ask you, the end market, how is the end market doing and how are we predominantly taking market share as well?
Can you please repeat?
Sir, how is the end market doing? How are we taking market share from there? I mean.
Sir, definitely. In case of domestic, predominantly, the supply is mainly to the end market only. We're definitely getting those shares. On the front of export, generally it is not to the end industry, it is to the distributor, trader of those. We are seeing demand from power plants, chemical, oil and gas, and petroleum.
Okay. What I want to understand, how much in your estimate would you give the end market as well? I'm just trying to understand, predominantly, how are you taking market.
Your voice seems to be very muffled.
Yeah, absolutely.
Okay. Can you hear me now?
Yes.
Yeah, comparatively better.
I want to ask you, how is the end market doing and the company will be taking market share from who predominantly? Would it be from global players, Indian players? Who would be taking market share, considering the capacities are certainly so small in stainless steel.
See, the demand is there from power sector wherein the demand was which was not there in the system.
From there we have been able to get an order. Apart from that, again, from the domestic players, generally, demand has been shifted from them, from the smaller or unstructured players to us. These generally happen in the domestic market.
Mm-hmm. In your estimate, how much would be the industry growing?
It's very tough to say those numbers because the factors are being added. Generally, we see a range of 8%-10%, but keeping this demand of power and industries being added, it will be definitely higher than that.
Okay, fine. Sir, maybe I missed this, but just in your revenues, how much percent should come from volumes and how much would be coming from ASP increase?
From? No. Volume numbers, we are not currently giving.
No, don't give any numbers. I'm just saying broadly from a revenue growth percentage-wise, how much percent would be from revenue growth and how much would be from ASP increase?
See, from volume growth, it should be at least, you can say from quarter-on-quarter, more than 15%.
Year-on-year?
It will be again, same sort of numbers.
Okay. Would it be fair if we've taken price hike as we move up, the chains of price hikes have been taken or in terms of realization has been improving because of a segment mix change?
Not much on the change of segment currently. It is again, the grade mix is three points volume, which also altered the prices of the goods.
Okay. Predominantly, it would just be, we've been able to increase revenue of particular items. Would that be fair?
Revenue up, yeah, definitely. The contribution for seniors are increased, that is increased for revenue. That is also helping.
Oh, okay, fine. Understood. Thank you so much.
Thank you. Our next question comes from the line of Sonal Minhas from Prescient Capital Investment Advisors LLP. Please go ahead.
Hi, sir. This is Sonal Minhas. I hope I am audible.
Yes.
Yes. I have two questions. First question was regarding the BHEL order and the backlog you were talking about, and you mentioned to the previous person who was asking the question, you have around 15% market share. Just wanted to understand who were the other two, three noteworthy players who basically bagged these orders. If you could share one or two names just for understanding the industry and comparative measure, that will be helpful.
See giving the name of other player would not be right. Again, generally, just to mention you, for this power bidding of BHEL and all, generally five to seven players are approved currently in the country. Out of this, we are amongst them.
Okay. Isn't this public knowledge? Like who gets what.
I don't see. No, they don't.
Okay.
It can be available through BHEL, but not on public.
Okay, I understand that. Second question, sir, was with regard to the price realization and the volume growth. You were just talking about to the previous gentleman. The kind of realization growth that we've seen right now in this particular quarter should essentially materialize into little higher gross margins, little higher EBITDA margins. Directionally, are we heading towards, let's say, 18% kind of EBITDA margins in FY 2027 and 2028, or that's still a little far off?
No, not absolutely far away. You rightly said by FY 2028, the 2027 would be a year where you've definitely seen the for nine months. For the nine months, this is 16.32% EBITDA margin. It will definitely be improving from here and by FY 2028, that means the target is to reach by around 18%.
Got it, sir. Just squeezing in a third question. You mentioned about getting approvals in the international market, some in Middle East. Wanted to understand, what is the lead time of getting these approvals with a particular, let's say, consultant or a refinery or somebody who's applying there. What is the lead time to get in the approval list?
It again depend on each client's line budgets and their comfort level. Sometime it can take you three to five years also. Sometime keeping your credential and all, it can get in less than two years also. Generally, the lead times are generally high for getting these approval from these multinational companies.
Is it higher in, let's say, oil and gas than compared to power? Just for our understanding.
It's more time in the nuclear sector. Nuclear sector takes more time than oil and gas and power. Normally, especially in the case of lead time. Lead time normally vary, depends on the plan. We can consider the lead time on the plant front as well as your past track execution and the plant capability, all these things does matter.
Sure, sir. Got it. Thank you, sir. Thanks for answering my questions. Thank you.
Thank you. Our next question comes from the line of Sahil Sanghvi from Monarch Networth Capital Limited. Please go ahead.
Yeah. Hi. Thank you for the opportunity. Congratulations for a very good summer. The first question was with respect to CBAM. What we are hearing is that there are already benchmarks in place and there are third-party evaluators also. Have we done that evaluation and where do we stand on the liabilities that could come? I understand we don't have to pay this year, but any sense on that front and could that really impact our margins?
At the end of December, they have come up with a revised calculation formulas. We have to take those numbers from our. Because precursor emission is also need to be considered while calculating the CBAM value. We have also taken up with our suppliers. Each one in the system is working because the formula calculation has been revised at the end of December. Everybody's working, and as and when it come ups, then we can be able to. Again, we are also taking guidance from certain entities also for that.
What will be our current split as in percentage basis, if you can give on the export. I mean, how much goes to Europe and how much U.S., and how much Middle East?
On a nine month basis, it was Europe was around 60%-65%, and U.S. was around 20%-25%. Middle East, UAE and Saudi, around 10%-12%, and balance to other countries.
Right. Any kind of benefits that we are getting from the EU trade deal? I mean, because from 1st of July, there was this quota reduction. Is there anything in the EU trade deal for us?
No. From pipes and tubes, as such, we have not seen that. Again, this quota reduction is to every country who are exporting to the EU. It's not standalone to India only. Applicable to everyone.
Okay. On a YoY basis, this quarter, was there a price improvement or a price reduction?
No, a sort of improvement only.
Okay. Sure. Thank you. Thank you, and all the best.
Thank you. Our next question comes from the line of Sneha Talreja from Nuvama. Please go ahead.
Hi, team. Congratulations on great set of numbers. Just two questions from my end. Given the U.S. tariff, that got finalized, how do we see the opportunities in the U.S. market shaping up, given in last two years they've done so much work, especially with Europe, Middle East. Where do you see opportunities for the U.S. market? That's first.
Absolutely, the opportunity should be there because, as you rightly said, we have worked on U.S. part, and there was a time where to get those benefits, but this hovering of tariff had come. With this clear cut ease of tariff currently, and as I said earlier also, Section 232 is same for all the country exporting to U.S.A. As there was no clarity on the side of tariffs, that's why the volume or demand, the order was not coming in quantum. Definitely we believe it should be a better opportunity going forward from U.S.A.
One could touch upon the working capital requirement, how different it is from domestic versus export market, and more in terms of margins, given that we've recently seen rupee depreciation.
See, working capital is more or less similar. It's not that much changing between domestic and export. Again, margin perspective, generally, when you are establishing these European, U.S.A. market, we generally drive a higher margin. As said, coming forward quarters, I think we should be able to do a better profit in export market as compared to domestic. Again, after you are set up in those markets, we generally came to a benefit.
Understood. Lastly, on your order book currency, we've seen a great improvement on a quarter-on-quarter basis from INR 3.5 billion-INR 4.7 billion odd. The incremental order book would be coming in from which areas? Is it mostly domestic or export?
Mainly from power sector and export.
Understood. Thanks a lot, team, and all the very best.
Thank you. Our next question comes from the line of Romil from Electrum PMS. Please go ahead.
Thank you for the follow-up. Sir, one clarification I just wanted. See, we have got new qualifications from the export market also. Our exports are also anticipated to grow. In India also, I think domestic power and all is doing well. We have two orders received. Just want to understand. Next year probably you said we'll grow 20%+ kind of number. Beyond that, because next year you will have the seamless capacity also coming in. Beyond that, let's say, 2028, 2029 going towards there, shouldn't we face some capacity crunch if at all the demand remains stronger? In context of that, do you see the capacities which are coming up by the competition, can they gain that market if we don't have capacity? How does that stack up? If you can just throw some color.
Definitely. After this new capacity expansion, we'll able to do the 20% growth for the FY 2027 as well as FY 2028. We always plan for the in advance.
Yeah.
We see the market, how the market demand is going on. We are always open to do the capacity expansion. We are also focusing on our cash flow. We don't want to take the not much debt for the capacity expansion. We want to leverage our position. Whenever it will be required, we are open to do capacity expansion. You can see in the almost in last four years, we have did the capacity expansion almost more than 4x. Whenever need will arise, definitely we are open for that. We are more focused on the growth as well as the balance sheet focus and the debt focus.
Okay.
Also focus on the ROCE and ROE. Again to mention here, see the new demand has come from this power sector, which was not there in the system, as I think I said also. That we're also driving. See the export geographies we are trying to capture more. We are expanding our horizon to many part of the world. That will also come into play. Our suppliers towards food processing and other. Again, see, we are also adding a product like fitting, which generally many of the competitors doesn't have. We are also adding many of the value-added products, which generally not many players are there in those
I see.
By keeping all the mixed bag, we believe as a company, we will be able to take it forward also.
Okay. To summarize on this point, probably we are saying that with the capacity coming in and the utilizations moving up, for 2027 and 2028, probably we should grow at around 20% odd with margins improving, plus fittings revenue coming in. Post that, if we need capacity, we will plan by 2027 or 2028. That's the right understanding, right?
We are basically, the company keep on planning that. If something comes up per year also, we will definitely update you.
Correct. Got it. Sir, just one thing on the export side. Obviously, in the last one year or two years, we have done phenomenal on the export front. Going ahead, what kind of growth rate can we expect on a normalized basis, considering you are getting approvals and all those things? Is export a higher margin business versus domestic?
If you see the current year export, it is not nominal. We believe it is a good ramp up. Further, see, again, the percentage of the total revenue should be more than 30%. The intent is that currently. We are trying that. Again, it depends. See, if there are good margin order in export, it can go higher than that also. The intent is currently at least above 30%. See, when you are established in which market, definitely you want a better margin as compared to domestic.
Okay. Sir, this quarter, how much OCF we would have generated, if you can give that number?
Currently, I'm not having.
Okay. Okay, sir. Thank you so much. Thanks.
Thank you. Our next question comes from the line of Shubham Thorat from Perpetual Capital Advisors. Please go ahead.
Thank you for the opportunity. Am I audible?
Yes.
Yeah, thank you. Sir, I recently started tracking the company, so kindly bear with me. Firstly, I wanted to know what is our current capacity utilization in seamless and welded segments.
In case of seamless, it's more than 90%. On the side of welded, it is more than 60%.
Okay. Secondly, I just need your comments on how much CapEx are we currently doing on the fittings and seamless side, and what kind of asset turn are we targeting there? Just wanted to ask when this capacity is going to be live.
See, the capacity of fitting and seamless pipe, a portion of seamless has come, but major capacity we are targeting by end of this financial year. Primarily, all the capacity will be live in the coming financial year, that is, 2026, 2027.
You mentioned by end of next financial year, right?
End of this March 2026.
Okay, sir, by March 2026. How much CapEx are we incurring for that, and what kind of asset turn are we expecting?
See, these all CapEx are on the side of seamless, it is on the side of fittings, on the side of condenser. Absolutely, it should be at least more than three times asset should be there.
Three times?
Three times, yeah.
Okay. Next, you mentioned that our current order book size around INR 470 crores, and incrementally we expect orders from the power sector and export demand. I just wanted to ask, what is the execution timeline for this current order book size, and what is the application of our products in the power sector?
The order size should be typically be between, you can say less than six, seven months, the execution time for this order book. The application in power is varied. These are used for boiler also. These are also used for condenser of power plant. It's a mixed bag of use in power industry.
Okay. Any more comments on demand situation, and just I want to get a general sense on what kind of issues we faced in the last nine months or the past quarter, that we are expecting to a bit relieved upon going forward.
See, few of the geopolitical issues have been there. With the recent ease of tariff on India by U.S., I think it's a good sign. India EU FTA was not directly impacting us. Again, it's a sentimental improvement is also there. We believe and also with the demand from power and other sectors in the Indian market also. Keeping all this perspective going forward, it seems to be quite positive from now onward.
Got it. Just final question. I just wanted to I mean, I missed your comments on the country-wide geography mix that you mentioned in the exports. Could you please repeat that?
We said, see, it was around 60%-65% on Europe and 25% on the side of U.S., and balance to other countries, including Saudi and UAE.
How much in Europe?
60%, 65%.
60%, 65%, okay. Thanks so much, sir. That's it from my side.
Thank you. Our next question comes from the line of Pallav Agarwal from Antique Stock Broking Limited. Please go ahead.
Yeah, actually my question has been answered. Thank you.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I would now like to hand the conference over to the management for closing comments.
Thank you all for joining us today. I hope we have addressed all your questions. We remain committed to keeping the investment community informed with regular updates on any development in the company. For any further information or queries, please feel free to reach out to us or our investor relation advisor. Thanks, everyone.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.