Surya roshni ltd


Cmp 178 mcap 974 crores. Promoter holding 63%. 23.67% pledged.

Company is present in interesting business segments and products are quite visible in the markets and I could not find a thread on the company and hence decided to start its thread to get feedback from other boarders.

Company has two main business divisions

Pipes and lighting and consumer durables.

Pipes contributed nearly 75% of total revenues whereas lighting and consumer durables contributed 25% of revenues in FY 19.


In pipes division company makes GI Pipes, ERW black, section pipes, API and spiral pipes and cold rolled strips.

Manufacturing locations are at Bahadurgarh in Haryana, Malanpur in MP, Hindupur in AP and Anjar in Kutch.

GI Pipes contribute 35% to pipes revenues while 20% each is from structural pipes and black round pipes and rest consists of 14% from CR sheets and 11% from API and spiral pipes.

Company exports its products to more than 50 countries.

H1 FY 20 revenues from pipes division was at 2109 crores (vs 1994 crores for H1 fy 19) and EBITDA for the division was at 117 crores (vs 100 crores for H1 fy 19).


The products of this division consist of LED lighting (49% of segment revenues), conventional lighting (33%) and consumer durables (18%)

Company is India’s second largest lighting company.

Company entered into fans business in 2014 and kitchen appliances in 2015.

It provides electrical heaters, room heaters, dry irons, steam irons, immersion heaters. It recently launched glass cooktop.


H1 FY 20 revenues for the segment was at 628 crores (vs 672 crores for H1 fy 19) and EBIDTA was at 52 crores (vs 60 crores for H1 FY 19)


Company as a whole (all segments combined) reported revenues of 2734 crores (vs 2665 crores for H1 FY 19) and EBIDTA of 168 crores (vs 160 crores for H1 FY 19) H1 FY 20 EPS (not annualised) was at 7.66 per share. Second half is usually better for the company historically.

Company reduced debt by 53 crores in H1 FY 20.

The order book for API and 3LPE coated segment of coated pipes stood at 480 crores largely catering to oil and gas pipelines, CGD and water pipelines (according to press release of q2 fy 20 results) and the Anjar facility has been booked for the entire financial year.



Company claims to be a beneficiary of Jal se Nal scheme and the govt thrust on city gas distribution growth.

Company has given a strategy of its thrust and priorities in its Q2 FY 20 presentation. This includes constant thrust on value added products and quality and debt reduction.

Commencement of 3LPE coating pipes has improved the margin outlook for the company as its products attract higher margins.

Increased spend on advertisement and brand building. They sponsor the Rajasthan royals team as one of the sponsors.

Move up the value chain in LED steet lights, batten, downlighters, other LED lightings.

Better working capital management.



High debt remains a big risk to the company.

Company has high receivables on its balance sheet. Part of it is due to supply of lighting products to govt entities, as well as exports.

Part of promoter holding is pledged.

Return ratios are sub par at 13%.

Disclosure: Token position taken to monitor the company. (My view is with change in market sentiments, companies which have reported steady numbers and have good prospects and are available at attractive valuations need to be watched.)

This is not an investment advice and anyone contemplating investment should do their own diligence.


Both the segments of the company have never fired together. In 2010-2011, they had started their capex journey funded by warrant issue and pref issue to the management is being run by professional managing director, who recently got elected as an mp.the company management is quite close to the government in power.the company has been contemplating demerging the two divisions for past 10years.


Hi @hitesh2710 sir, The valuations look attractive. Results are out today. What’s your take on the results?


Surya roshni overall results have been steady. The really interesting part is the performance and margin improvement in the pipes segment. Segmental profits has grown from 38 to 54 in q3 fy 19 to q3 fy 20. Lighting and consumer durable segment has been a laggard and depends a lot on govt orders for LED lighting projects. So that will be lumpy till the time the B2C business scales up big time. That time seems some time away.

The merit in surya roshni investment thesis is the valuation differential between APL Apollo and Surya Roshni in what is largely a consolidated industry. The quality of both companies has been different and APL is far superior quality wise and financial parameter wise but I felt there was some valuation mismatch to be exploited and hence had taken a token position to see how the thesis worked. Lets see how it pans out.


Few concern regarding surya roshni

promoter next generation not joining

In Indian scenario, usually in family businesses, next generation takes over and they are made director of the company.

However, current CEO and MD are outsider.

Why next generation is not joining the business?

Managing director

Raju Bista has been appointed as managing director.
He’s MP from darjiling.

Neither his background nor his work - ex indicate that he was the best person for the job.
He was appointed directly as director in 2009 (he was born in 1986, so he was 23 years old at the time of appointment)
He was made full time MD, at the age of 33.

How many people run a 5800 Cr sale enterprise at the age of 33?


This was my first employer when I started my journey after completion of engineering . I was posted at Malanpur unit . We had GET graduate engineering trainee cum guest house at thatipur in Gawalior . We had companies buses for employees taking them for the three shifts at Malanpur industrial area Distt Bhind of MP
The management is very conservative and efficient capital allocator .

The have generation of loyal employees as the company is taking care of the employee .

They have huge ground where we used to play cricket .We have extra curricular activities of literary events and games week ,

In 1996 when the traditional companies like hind lamp etc were producing FTL ( tubelights and GLS ( bulbs ) using old HMT make machine .They had bought VHS ( 3600 GLS / hour ) from FLAMA Switzerland and send there employees to Switzerland to get trained and the employees are either Diploma or ITI with only one Manager with degree in engineering . It is complete state of art machine. at that time touch screen control panel were very few .

They do had HMT or OSRAM make machines for making GLS .

At that time they had dedicated department for making the halogen lamps which they used to manufacture for OSRAM on contract basis . They were also manufacturing the FTLS ( tube lights 4 ft and 2 ft ) for other brands as well on contract basis for phillps , Laxman salvenia ,Osram etc at that time

The bahadurpur unit was making the PIPES .

The really interesting part is the performance and margin improvement is they are making in house spare in their workshop even for the imported machines which reduce the operational cost . They are good at making indigenous JUGAD ( high performance and robust mechanisms ) .

The regular weekly and daily meeting and performance is tracked in order to reduce EMC( extra manufacturing cost ) .We have regular preventive and predictive maintenance In place along with regular emergency shutdown maintenance .

They have ability to scale very fast and they are delegating the responsibility very well and financial approvals for the expenditures takes time .

The shop floors are market and very well managed .

This kind of culture takes time to build but it will last for more years .

The traceability of the samples are good .

The weakest part is packing the packing were done manually and the packing area is messy however they have cartoon sealer machines for the boxes but takes more time for manually filling the bulbs .

Some of the thoughts based on screener data :
Rise of inventories and receivable
The margins are not healthy but with additional value added products one can se the change but again depend on the volume growth and the market share
This the first time their reserve is more than the borrowing .
The cash conversion cycle is more .
in SRL The transportation cost is the key eater of the margins .( it is observation not form screener as the bulkiness of the material )
Gross block is increasing but it seems the financing is done through the debt. They are not paying interest .
It is tough industry to compete but the company has survived for 4 decades and its experience made SRL a tough candidate to beat .


Disc :Interested yet not invested This is not any recommendation to buy sell or hold . I am not any sebi approved analyst .


Anybody still tracking this company? They had taken a hit during covid but seems to recovering sales.

Seems to be a candidate to double its earnings in the next 3-4 years. Below are few reasons as per my understanding of the company:

  1. Increasing mix of GI Pipes and API pipes.
  2. API pipes order book increasing QoQ. It was around 840 Cr at the end of Q1 which increased to 1000 Cr+ this quarter.
  3. DFT-based large Dia section pipe capacity of 72,000 MT under installation which will reduce costs and increase margins. I believe Surya will be the only player after APL Apollo with DFT technology
  4. Lighting Division- LED prices bottomed out and might increase from here
  5. Reduced Warranty costs in LED (Warranty period reduced to 1 year from 2 years)
  6. Backward integration in LED component manufacturing as a part of PLI scheme
  7. Increased Advertising expenditure in the Lighting division in line with other peers will improve Surya’s brand visibility
  8. New product launches in Consumer Durables
  9. Management’s aim to make company debt-free in next 3 years which will itself add to PBT by 70 Cr (Company reducing debt QoQ, generating decent cash flow and no further big CapEx lined up)

In Q2 FY22, Sales increased but margins were compressed I believe due to higher raw material costs, logistics costs in exports (Surya being No 1 exporter of GI pipes from India), and Coal/Gas costs. Once these costs normalize I think even if EBITDA margins stay in the range of 6.5%- 7%, it can double its earnings in the next 3-4 years given the tailwinds due to Government Capital expenditure, Real Estate demand uptick, and changing the product mix to higher-value products.

Disc: Invested from lower levels


Initiating coverage report

Q2FY22 update

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Good video on Surya Roshni’s business.

Nirupam Sahay, Executive Director & CEO Resigned

@yourraj Is the management any way related to Prakash Industries…

Is there any reason for resignation of ED& CEO?

Ved Prakash Agarwal (Prakash Industries) and Jaiprakash Agarwal (Surya Roshni) are two brothers doing separate business.

Has the dft facility been commissioned? Any idea about margin profile expected from this product segment

It was supposed to be commissioned by the end of FY22. Lets see what is the update on this in this quarterly presentation. I think it might positively impact margin by 0.5% in the medium term.

It has commenced:

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New order from IOCL

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