India: Jindal SAW records sharp growth in orders in Q2FY23

Jindal SAW (JSAW) recorded a steep growth in orders that reached $1,300 million in Q2FY23 as against $733 million in the previous quarter, SteelMint learnt at the company's investor's call held on 14 November, 2022.

Order growth nearly doubled this quarter, out of which exports accounted for 40%. The company received a few large orders from the Gulf Cooperation Council (GCC) region totalling $335 million for exports of Saw pipes.

Also, the government's focus to create a strong infrastructure for the oil, gas and water sectors is expected to drive demand in the coming quarters.

The seamless pipe segment was majorly driven by demand from the power and auto and bearing sectors. The current volume of orders from these segments is 970,000 t.

Performance highlights:

UAE operations: The company sold 430,000 t of DI pipes in Q2 compared with 300,000 t in Q1. However, in H1FY23 sales stood at 730,000 t as against 920,000 t in H1FY22 due to the imposition of import duty by Saudi Arabia and also on account of rationalisation of orders in the past.

Update on Jindal ITF Ltd. v/s NTPC case: The case is being heard by the Delhi High Court. The hearings, which were scheduled in early September, have been deferred by the court and will now take place in late-November.

Update on Sathavahana Ispat: JSAW is one of the Resolution Applicants for Sathavahana Ispat Ltd. (SIL), which is going through a Corporate Insolvency Resolution Process (CIRP) under IBC. The company has received Letter of Intent from Resolution Professional (RP) in October as the highest bidder. The RP has recommended the matter to the National Company Law Tribunal (NCLT) for final approval.

SIL has DI pipe capacity of 200,000 t/year, which is strategically located to cater to the south Indian market. In the event of a takeover, JSAW's DI pipe capacity will expand and the company will be able to significantly improve its market dominance. The entire process may take a few months to resolve.

Joint venture with Hunting Energy Pte Ltd: JSAW has entered into a collaboration with Hunting Energy Services Pte. Ltd, Singapore, a leading technology company globally in the oil country tubular goods (OCTG) premium segment. A joint venture company was formed, with JSAW holding 51% and Hunting the remaining 49%. Both the shareholders have contributed equity totalling INR 30 crore in proportion to their respective shares. The project is on schedule and operations are expected to commence in FY23.

Outlook: The second half of FY23 will see good demand as the company expects to receive additional orders from the oil and gas and water sectors.

Furthermore, GCC countries are gradually shifting their focus towards developing into service-driven economies, which will create opportunities for infrastructure-related investments that is likely to boost sales of pipes.