India Ratings and Research (Ind-Ra) has affirmed Hi-Tech Pipes Limited's (HTPL) bank loan facilities ratings at ‘IND A+'/Stable/‘IND A1+'.
The affirmation reflects Ind-Ra's expectation that the Hi-Tech Group will sustain its growth momentum, supported by a steady demand for its existing product portfolio and capacity augmentation from the recently completed capex. Additional volumes are likely to be generated upon the commissioning of the ongoing capex projects. The group has demonstrated a gradual improvement in its EBITDA per tonne over the past two financial years, aided by a higher share of value-added products, benefits of economies of scale, and operational cost efficiency initiatives; however, the margins are likely to remain range bound in the near-to-medium term.
Ind-Ra also takes note of the improvement in the group's credit profile in FY25, driven by an equity infusion that facilitated debt reduction and partially funded the capex programme. The ratings continue to be supported by the group's diversified product portfolio and low customer concentration risk.
Nevertheless, the ratings are constrained by the group's susceptibility of margins to raw material price volatility and intense market competition.
Key Rating Drivers
Strengths:
- Healthy revenue and volume growth in FY25; momentum likely to continue in medium term
- Improved EBITDA per tonne; likely to remain range-bound over medium term
- Healthy credit profile
- Diversified product portfolio and low concentration risk
Weaknesses:
- Susceptibility of profitability margins to raw material price fluctuations
- Intense competition
HTPL's sales volume grew at a healthy 24% yoy in FY25, reaching 485,447MT (FY24: 391,147MT), which translated into a revenue of ₹3,067.6 Crores (₹2,699.3 Crores), despite a decline in the realisations. The volume growth was supported by the commercialisation of the first phase of its greenfield capacity at Sanand, Gujarat (Sanand-II) in March 2024 which contributed to the performance for FY25. Furthermore, the company registered a revenue of ₹791.36 Crores during Q1 FY26.
The Phase-1 of the Sanand-Il facility has an installed capacity of 1,50,000 tonnes per annum (TPA). The second phase, which is under implementation, will add further 1,30,000TPA of pipes and tubes, with operations expected to commence operations in 2HFY26. Additionally, HTPL is undertaking a greenfield expansion at its Sikandrabad facility (Unit-II) for producing steel tubes and pipes, with a proposed capacity of 1,50,000TPA, which is likely to begin operations by 1HFY26. The company is also in process of setting-up a greenfield manufacturing unit in Jammu for producing colour-coated sheets, with commercial operations likely to commence in 1HFY26.
Hi-Tech Group's consolidated EBITDA per tonne improved to ₹3,308 during Q1 FY26 (FY25: ₹3,297; FY24: ₹2,937), supported by an increasing share of value-added products (contributing 40% of the consolidated revenue in 1QFY26) and enhanced operational efficiencies. The group's consolidated EBITDA margin remained stable at 5.2% in Q1 FY26 (FY25: 5.2%; FY24: 4.3%), with a consolidated EBITDA of ₹41.03 Crores in Q1 FY26 (FY25: ₹160 Crores; FY24: ₹114.9 Crores). The improvement in profitability during FY25 came despite lower steel prices, aided by the company's strategy of securing secured a significant share of fixed-priced orders, which helped mitigate the impact of volatility in the steel prices.
Hi-Tech Group has witnessed a notable improvement in its financial risk profile following an equity infusion of ₹500.7 Crores in October 2024 through a QIP, which was partially utilised for debt reduction at the group level and partially earmarked to fund capex initiatives. These measures, coupled with the healthy profitability, have resulted in a sharp reduction of the consolidated net leverage (including acceptances) to 0.95x at FYE25 (FYE24: 3.88x). Of the total proceeds, ₹140 Crores has been set aside for funding the brownfield expansion at the Sanand unit and a greenfield expansion in Sri City, Andhra Pradesh, to be incurred over FY26-FY27. Additionally, HTPL raised ₹136.1 Crores during 1HFY25 through the conversion of share warrants into equity, strengthening its capital base.
HTPL's revenue stood at ₹2,550.19 Crores during FY25 (FY24: ₹2,207.4 Crores). The EBITDA margin stood at 5.3% (4.0%), interest coverage at 4.02x (2.79x) and net leverage at negative 0.44x (3.04x).
Incorporated in 1985, as M/S Ram Lal Harbans Lal Limited, the company was later renamed as HTPL. The company manufactures steel tubes and pipes, galvanised and corrugated sheets, cold-rolled products, and colour-coated sheets. It has an installed capacity of a total of 8,20,000MT across its manufacturing plants located at Sikandarabad (Uttar Pradesh), Sanand (Gujarat), Hindupur (Andhra Pradesh) and Khopoli (Maharastra). HTPL is listed on National Stock Exchange and BSE Limited.
| Particulars (₹ million) | 1QFY26 | FY25 | FY24 |
|---|---|---|---|
| Revenue | 7,913 | 30,676 | 26,993 |
| EBITDA | 410.3 | 1,600 | 1,149 |
| EBITDA margin (%) | 5.2 | 5.2 | 4.3 |
| Interest coverage (x) | 5.24 | 3.72 | 2.74 |
| Net adjusted leverage (x) | NA | 0.95 | 3.88 |
HTPL is listed on National Stock Exchange and BSE Limited.
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