Arihant Note on Hariom Pipes
Key Highlights 
-Debt to be Zero by FY27E
-Q4 would be the best quarter
-Entering new states (Gujarat, Maharashtra & Rajasthan)
-Guidance of FY26 is intact (2500 Crores)
-WC will improve going forward
No Recommendation
Biased & Invested
| NO OF EQUITY SHARES | 2.89 | ||
|---|---|---|---|
| FY24 | FY25 | FY26 | |
| REVENUE | 1290 | 1754 | 2404 |
| EBITDA | 154.8 | 211 | 288 |
| PAT | 90.3 | 123 | 168 |
| EPS | 31 | 42 | 58 |
| CURRENT P/E MULTIPLE | 29 | ||
| CURRENT SHARE PRICE | 565 | ||
| FORWARD MULTIPLE | 13 | 10 |
This is a very basic estimate of the company’s forward earnings that I have created. I have taken the following assumptions in the table:
Fundamental things that I understand will play a role in their growth story are as follows:
Backward integration: Since they are backward integrated, they have stability in their raw material prices, which promises a stable margin if not better.
Sectoral growth: Consumption is in their favour, overall market is growing and is very unlikely to go down in the medium term.
Operating leverage: Operating leverage is going to play out for them in the next quarters.
What I can not understand is the antethesis in the comnpany’s core operations and corporate governance and the things that can go wrong for them. I want to understand that more deeply. If anybody who’s tracking thgis closely can throw some light on this.
It will really help new investors to get a deeper understanding.
Preciously and Very Neat estimates… Even I agree with all your assumptions + Triggers…
Trading at very reasonable valuation of below 10 in FY26 Estimates
For antithesis:
Anti dumping duty on China is on till 2028
If I am not wrong then Anti-dumping duty is on Stainless Pipes & not on ERW Pipes
I read the concalls, management commentary, investor presentations, got pretty excited. Just remembered today that I forgot to check one of the main things i.e. Operating cashflows. Operating cashflows of the firm are negative! Can anyone give their views why is it the case and is it normal or can be a red flag?
Disc.- tracking position. No recommend to buy/sell
I have a question, did anyone notice in Mar’23 results the cash conversation cycle and trade receivables increased heavily. Any idea why ?
With increasing loan and negative CFO does not look good unless their capex plays as per expectations
Results Q4 look good.
In a quarter when all its peers struggled to post 10% growth.
They have posted excellent topline growth.
Dep. And intrest is hurting but that will play out gradually.
Hariom Pipes Results
Impressive Set 
Sales up 18% QoQ n 32% YoY 
EBITDA up 29% QoQ n 34% QoQ
EBITDA Margin at 12.7% vs 11.64% QoQ n 12.47% YoY
PAT up 70% QoQ n -3% YoY
OCF +4.95 vs -100cr YoY
OCF +ve after 5 Qtrs
Div of 0.6₹
Expectations Beaten 
Even I Beleive Results are Good
Some Positive things:
Only Negative:
The company kept its guidance of achieving Rs.2500cr. revenue by FY26. The fixed assets/Capacity has been expanded and kept in place… But still 0.8 debt to equity ratio. Now it remains to be seen whether company will be able to optimise and reach revenue targets or not.
Proposed dividend outflow is minuscule : 2.89 Cr equity shares x 0.60/- = 1.73 Cr approximately which anyway wouldn’t have any material impact on debt /interest reduction.
I think its more of a signal to investors that they are confident of OCF gearing up in coming quarters.
Absolutely Agree…
Just I feel they should have waited to further stabilize the operation as OCF turns positive after many Quarters as every penny saved will move to bottom-line
Not a Negative thing… I take my word just what I feel
Announced acquisition of Ultra pipes operating assets for 40 cr :https://www.bseindia.com/xml-data/corpfiling/AttachLive/1199b8fa-1749-4d5a-9884-eab8290d8bf9.pdf
Snapshot of credit rating report of ultra pipes below : Rating Rationale
what will be the net impact ?? And how are they going to pay 40cr ?? Already 372 cr of borrowing they have
Now that’s an intresting development ultra pipe’s acquisition will come under "Related Party Transaction ", not sure what’s the point of it for an already debt loaded company.
There has been changed in promoter holding in March quarter.
Reduction of almost 3%.
Anyone familiar whether it was an open market sale?
In January, warrants issued by the company got converted to actual shares. This leads to the dilution of shareholding
what advantage could you please help
