Jindal SAW Ltd
NSE:JINDALSAW
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
194.1188
992 833.596
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Jindal SAW Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Jindal Saw Limited Q1 FY '23 Earnings Conference Call hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vikash Singh from PhillipCapital India Private Limited. Thank you, and over to you, Mr. Singh.
Good evening, everyone. On behalf of PhillipCapital, I would like to welcome you all on Jindal Saw 1Q FY '23 Conference Call. From the management side, we have Mr. Neeraj Kumar, Group CEO and Whole Time Director; Mr. Vinay Gupta, President and Head Treasury; Mr. Narendra Mantri, President, Head Commercial and CFO; and Mr. Rajeev Goyal.
So without taking much time, I would like to hand over the call to Mr. Neeraj Kumar for the opening comments. Over to you, sir.
Welcome to all our stakeholders, friends. Friday, we had our Board meeting where we announced our first quarter results as well -- which is standalone as well as consolidated. The gross income was INR 3,019 crores with an EBITDA of INR 255 crores, PBT of INR 37 crores, PAT INR 28 crores. These are all stand-alone numbers. Since the consolidated numbers are -- the contribution in the consolidation is not of very much or very large significance, we would focus on the stand-alone numbers a little more.
So if you now look at these results, Q1 2022 top line was INR 2,477 crores which is the comparable quarter, trailing quarter INR 3,345 crores. If you now correlate this with our order book position, this gives us enough comfort that now the demand is picking, and we expect the year to end on a very robust note. On all our business segments, we are seeing a healthy demand in terms of the deal flow or in terms of outlook.
Raw material consumption continues to be a matter of concern for all of us. The other matter of concern is finance expenses, which has moved away from INR 97 crores to INR 131 crores. So the major contribution on one side, you have a positive on the top line, which gives a very good and a healthy order book plus a trajectory for growth ahead. For this quarter, raw material and finance charges are something which has caused the EBITDA to drop to INR 255 crores as opposed to INR 412 crores for the comparable quarter and INR 391 crores for the trailing quarter.
Let's first deal with a simple finance expenses. This is nothing but primarily because of the fluctuation in the foreign exchange. As we all know, this last quarter has seen a lot of volatility in the dollar-rupee market. So that is a large contributor to the increase in foreign exchange expenses because the accounting treatment requires that the negative must be booked as the financial expenses. Even though when there is a positive debt, actually, it comes to the top line, it comes to the receivables. So this quarter happens to be the year where as per the accounting, the exchange has put us on the wrong foot.
The raw material, we all know what the whole world commodity has gone through. Just to take a few comparisons. Coal, which is now around -- 200 used to be, it went up to 600. So it has gone very volatile and unprecedented level of cost for commodities like coal, iron ore, which has kind of put our inventory and consumption at a very high level. This did suppress the result for this quarter. But the good news is that now we are booking orders, we are seeing a very robust growth.
Commodity market has largely corrected itself. And we see that the trend should continue. So going forward, the second quarter may still have some residual impact of raw material. But definitely, the way the raw material bookings, et cetera, are happening, we are very, very confident of the second half that we would reap the benefits of the reversal in the commodity price at this point of time as well as the robust order book that we are seeing and the orders that we have booked. So that is about the raw material.
As far as coal is concerned. We have long-term contracts for economies of scale, we take one shipment per quarter, which is from -- we import those coal, which has provided us with a very stable raw material. Actually, the prices -- the contract is such that the quantity and the periodicity they are all confirmed. The price is fixed spot. So even though we did take -- we have taken precautions for kind of hedging our raw material. But this time, because of the extreme spike, the hedging mechanism didn't work, but it had a minimal impact. So we did have 1 or 2 shipments. So as I said, Q2 also may have some residual impact on the volatility in the raw material prices. But beyond that, we see a very, very good outlook.
So on that, let me then turn my attention to the gross consolidated or the consolidated results. There, again, if you see the PAT does show a marginal spread, but it's primarily because of in Abu Dhabi facility, which is, again, we have a very good order book. It's operating well, but there, again, we got hit by the raw material, which is pig iron.
Pig iron has been hit in Abu Dhabi primarily because of the: a, commodity prices; b, Russia-Ukraine war. But now we have stabilized, we have found alternate market to buy it from. And going forward, that should be again stabilized. So nothing beyond that in the consolidated except that the performance of Abu Dhabi was less than expected on account of the raw material -- change in raw material prices.
As you would see, deliberately as a strategy to contain our exposure towards the volatility of the raw material, we had brought down our order book from the usual comfort level to around 60% to 65%. Now you would see a trend where the order book is going to swell up to our comfort level, which will be around $1 billion. Order book at this point of time is largely driven by a very strong tailwind in the domestic market.
If you look at Europe: a, there is a question mark because at this point of time, even if there is some orders, we are not very sure how Europe is going to perform if indeed a recession happens. We are not sure how Russia-Ukraine war will pan out. We are that way relieved to see that at least now the China-Taiwan conflict is not in the immediate near. It may be somewhere distant, but at least the way it was panning out appearing, we had some concerns, but that is a sense of relief. U.S. are sending some very strong signals. U.S. is giving good demand. Inflation is high, which is kind of squeezing the credit control there, which is a mixed bag for us. But there is demand in oil and gas.
In India, the Water segment that we are seeing, that is what is going to drive the growth. The other is the new segments of the new markets that we are entering, which is seamless, stainless, alloy and now with Hunting. This combination is going to be very, very formidable, the Hunting joint venture, we are moving towards a soft launch in this year for sure, we are targeting that if we can do that towards the end of this calendar year or beginning -- or the first calendar quarter next year.
But that plus the seamless, stainless and alloy combination, that basket has become very, very formidable. We are likely to get a lot of orders from -- or a lot of tenders are in the pipeline from ONGC, and that would give us a lot of comfort. So Hunting joint venture once it comes into play, we also have now signed exclusive technology transfer with OSI USA.
That's again a very specialized oil and gas company across the globe. They would -- we would become their exclusive partners in India. So we have signed that exclusive arrangement -- exclusive agreement. And that would give us even a strong foothold in the OCTG market. So that gives us the sense.
The good thing that we are seeing is large dia because of the water sector is coming back, oil and gas also in large dia, we are seeing a good traction. We have got some very good wins. As the commodity prices moves, we are seeing a little bit of softening on the pellet prices, but that's expected, and that's okay because that is getting more than compensated by the price in the pipes.
With that, broadly, I think I have covered the stand-alone as well as consolidated results at a high level. One thing that I'm sure is all of you would be looking at is the update on NTPC. The next date for NTPC is September 6 and 7. This time, the judge has given 2 dates, and therefore, we expect that the arguments would begin on merits. Once that happens, then we are very hopeful that we should be able to close this process soon.
So with that, let me pause and take some questions for my -- for the questions, I have my colleagues, Vinay and Narendra. Wherever the numbers are required, they would assist. One request that if you have something which is very, very specific or a very small nitty-gritty number, if we do not have the answer around the table now, please send a mail, Rajeev, is sitting. He will note down your -- he would expect a mail from you. We would be answering by mail as well something that is of my new detail or a minor detail for which we may not have those numbers on the table for now. Let me stop here. Thank you.
[Operator Instructions] The first question is from the line of Saket Kapoor from Kapoor & Company. My apologies. The first question is from the line of Pratiksha Daftari from Aequitas.
My first question was if you could quantify the ForEx expense that is included in our finance cost right now for this quarter. What is the impact of ForEx?
It will be in the tune of upwards of INR 40 crores, say, between INR 40 crores sand INR 45 crores.
Okay. All right. And the last quarter comments you had mentioned that for SAW pipes and DI pipes, we had covered our raw material. So the order book raw material was covered. If you could just update us on the position for current order book?
Again, what you would see that there is a lag in the raw material. But as I explained to you, in coal where we get 4 shipments per -- we get 4 large shipments in coal per year. So there, the contract is it's a framework arrangement. The coal prices is fixed on the monthly average in which the supply takes place. So that is more or less on spot. This at least has given us assured supply of good coal, which is largely imported.
Okay. And how about the metals, sir?
Say it again.
Sir, the metals have -- for the steel and -- for DI and SAW pipes, does the steel also -- that covered order book?
Yes, yes. The steel now we have booked the raw material prices for future where the DLCs, et cetera, have opened. When the market was very volatile, then the suppliers were also shying away from getting into a contract, which was anything beyond that, a very short delivery period. Because what we have seen in the commodity market is absolutely unprecedented. So that kind of disrupted on the market order or the trade arrangements that we had. But now they have all come back to normal, it looks like it will normalize. And therefore, we are able to block or book raw deals.
So we should then given -- by that, we should see margin deterioration even in the next quarter, right, from these levels?
We should see not margin deterioration. We should see pressure. What we expect Q3, Q4 to be absolutely fantastic where we should actually see an upswing major. Q2 should be a residual impact. So it would be under pressure, but maybe a little better than Q1.
Okay. Okay. And on seamless front, if you could just highlight on the export quantum, the export opportunity there? And also with...
Export order doing very well. Export -- okay, in seamless business -- stainless business, Ukraine was a major supplier to the world. So that supply has been kind of vacated, which gives opportunities for us, new players to enter. So export is doing well. We are getting very good prices. And we want to build on it. We want to consolidate on it.
So from our existing order book, how much would be exports for seamless, sir?
Export in terms of our top line, you would see around 30%.
And order book?
[indiscernible].
Yes, the seamless order book on June 30 is close to $120 million and exports are approximately 30%.
[ Same ], 66% -- 30% -- 70%-30%.
Okay. Okay. And so we've seen our order book to be pretty range bound for the last 2, 3 quarters [indiscernible] yes, so...
You will see that now increasing because as the raw material prices have stabilized, we would go for longer delivery, and you will see the order book build.
So we do expect volume growth and seamless for this year?
We do expect, yes, seamless as well as stainless.
Okay. All right. And on UAE front, again, we've seen that our order book for last 3 quarters has been fairly lower as compared to the few quarters before that. So how do we look at...
We are likely to close the year higher than last year. And as I said, it was a deliberate strategy to keep the order book low so that we don't get exposed to long delivery versus the volatile raw material prices, it will -- now the order book will build. We have a very healthy pipeline, and the year-end, we expect it to be better than this year, means the 31st March '22.
Okay. And we would expect margins also to improve given the raw material...
Raw material prices have improved.
Okay. And just one last question on other expenses. We've seen some -- is there any one-off [indiscernible] sharp increase in other expenses this quarter?
Let me see. Other expenses.
Other expenses is dependent upon the order. Suppose if there are certain GDP contracts. Because of that, the freight and the duties are also linked to that contract and that is covered under that other expenses.
So you can't have a -- you cannot predict a pattern that -- so this is essentially because a larger portion of GDP contracts have been executed during this quarter.
Okay. And would -- if you could just comment on the trajectory for your working capital to the loan, given that we expect the prices have softened. Would we expect the working capital loans also to trim down going ahead? .
Yes. So the -- eventually working capital intensity was higher for the quarter ended 30th June, primarily for 2 reasons. Number one, as you also mentioned, the prices were higher. Number two, now we started booking the raw material for the new orders to block the prices. But moving forward, with the softening of the raw material prices, we expect that the raw material intensity in terms of total working capital borrowing can go down, but not very significantly because we are looking for increasing the production and the steel quantity.
[Operator Instructions] The next question is from the line of Abhishek Maheshwari from SkyRidge Wealth Management.
So a follow-up on the previous question regarding working capital debt. So there will be some slight reduction in WCA debt in coming quarters. Can you share the effective interest rate we are looking at right now? Including the current rate hike we had from RPO?
Okay. So the rate which is a mix of rupee and a USD was close to 6.5% for the last quarter. We does not -- we don't expect significant increase in this quarter because it depends how the pricing is done in the sanction. But yes, over next -- I mean for the balance period, we expect an increase of [ only ] 25 basis points in general.
Okay. And sir, secondly, in previous conference, you had mentioned about consolidating the organization structure somewhat. I think you have around 27 subsidiaries and associates and you had said that you'll be merging some of your subsidiary companies with your parent company. So sir, how is that process going?
So there was basically a merger of 3 associated [ only ] subsidiary, which is Jindal Fitting, Jindal Quality and JTIL. So this merger has been now approved by the NSE and BSE, and this is going on. This has been recently approved by the BSE, NSE.
Okay, okay. And thirdly sir -- sorry.
The process is being followed. .
Okay. Okay. And thirdly sir, how much inventory do you keep in the sense that do you generally contract for 3 months inventory or maybe 6 months inventory and if suppose a time such as this when things are very, very volatile, do you keep 1 month inventory and keep changing on. So how does that work, can you explain? .
It depends -- really depends on the product mix because for the longitudinal helical pipes, this is back-to-back. In that sense, these are made-to-order inventory. So there is no concept of commodity. So inventories are always [indiscernible] specific order, and they are made to order our inventory. Now in terms of the tailoring times, the raw material is cooking coal and the iron ore. Cooking coal, we take broadly 3 ships in a year, and this is given as per the schedule 3 to 4 ships. And it really depends when the ship is coming, what delivery time he has given. And that the iron ore we are buying practically every day. Normally, the iron inventory would be in the vicinity of 3 to 5 weeks' time. So we don't -- this is not like we are keeping the inventory as like we will keep 3 months or 5 months. It is a very specific product-wise inventory.
Okay. And lastly, sir, you mentioned that during Q2, there might be some spillover effect of high cost inventory of Q1. But Q3 and Q4, you're expecting them to be really good. Sir, can we expect the margin levels for H2 of the financial year to be relatively same as the previous year or a little better than?
That would be some forward-looking statement. But what we have said is that the H2 looks better than the H1.
Okay. But you cannot give any particular number. If it will be equivalent to previous year? .
We are prohibited to say that. So we are giving like H2 will be better than H1.
[Operator Instructions] The next question is from the line of Neha Jain from Brickwork Ratings.
Sir, I just wanted to confirm, do we have any price escalation clauses because a lot of our orders are the government based. So how about these escalations and all?
We have succeeded in persuading the government to include price variation clause. That was one of the strategy that we had adopted -- conscious strategy that going forward, we must get this included in our government contracts, especially when we went through such volatile, and I'm happy to let you know that, yes, now many of the government contracts are including price variation clause.
Okay. So sir, out of this U.S. $733 million order book position, how much we can presume is from the government entities and are backed by the price estimation clause?
[indiscernible] roughly 60% would be government. The rest would be EPC. So you can say roughly 60% to 65%, we would be covered by price variation clause.
And what would be the tentative variation percentage if we talk about?
In terms of variation, okay, you get covered -- you get compensated more or less 80%, 85% because they are linking it to [indiscernible] which is a correct indicator to link it.
Okay. And as you said, regarding this amalgamation of these 3 entities, it was recently approved by NSE and BSE. So by when we can expect some updates in the financials, it will be towards the end of this financial year only?
The answer is yes. The effective rate is now 1st of April 2022. So whenever it happens, you will get to see that. But for all practical purposes, you can assume that these 3 entities have been amalgamated and merged. This would again help us position Jindal Saw in a much, much stronger position.
[Operator Instructions] The next question is from the line of Akshay Kothari from Envision Capital.
Sir, regarding the case of Jindal ITF versus NTPC, have you received that amount of around INR 1,900 crores or not?
Okay, maybe you have missed my initial part. The matter is in the High Court. At this point of time, the hearing is in September 1st week, 6 and 7 September. We have received an interim award of about INR 850 crores against time guarantee. But otherwise, we will have to wait for the High Court to -- there is an appeal available. The award is always -- already in our favor, unanimous award. So the appeal is what is in progress at present.
Okay, sir. And sir, you mentioned somewhere in the comments -- opening comments...
Akshay, sorry to interrupt you. Can you speak a little louder, please?
And sir, you mentioned in the opening comments that due to unprecedented price rise in commodity hedging mechanism did not work. So just wanted to understand what would be our hedging cost as such for the full year?
No, when I said hedging, okay. So we have either natural hedge or we book prices. We do not have, in India, the commodities or the future market, and we do not operate in that. So the cost is no implicit cost in it.
The next question is from the line of Anurag Patil from Roha Asset Managers.
Given that the demand environment is now positive and commodity prices are stabilizing. What kind of volume growth we can expect in FY '23 in pipe segment particularly?
Pipe segment, you should see a healthy growth. In terms of what we last year ended at -- what did we end in the last year?
$1 million [indiscernible] .
$1 million. So we should see growth over that.
Okay. And would it be fair to say the major growth will come from the DI part of the business?
Both DI, large dia.
[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company.
[Foreign Language] Sir, when we look at the volume data for Q1 and compare it with last year's season, we have seen lower execution on all the verticals, except [indiscernible] so even the pellet is down. So could you explain, sir, what was the reason for lower execution for this quarter?
I have already explained to you. It was primarily because we had -- because the higher you would have executed, the more the impact of the raw material -- higher-priced raw material would have been there. So the whole idea of when in the raw material prices, if you see in LSAW, HSAW, DI, all of these if you compare your Q1 2022, we are on the lower side, which was primarily because we are trying to contain our supplies and trying to curtail the hit on the raw material.
And still we are left with a portion of the order book that will be executed.
Yes, yes, some part -- some residual.
In percentage terms, sir, can you give some color to the same?
Say it again.
In percentage terms, what portion of our current order book is still at lower prices, and we will take a hit on the margins?
Okay. In the second quarter, you could take maybe 60%-40%, 60% would be the residual raw material, 40% would be new orders with -- or orders with new raw
material.
Okay. Sir, what are the current maturities that have proven [indiscernible] for FY '23? And how are we looking to pay or whether we are going to [indiscernible]?
[indiscernible]
No, sir, in terms of money, loan maturity.
Okay, loan. How much is the repayment obligation...
Yes, sir. Yes.
[indiscernible].
Just INR 300 crores.
[indiscernible]
So INR 300 crores is what is payable during this year, INR 225 crores has already been paid. So on term loan -- sorry, INR 225 crores is remaining. INR 75 crores has been paid. I'm sorry for that. So their -- cash flow-wise, we are okay. Loan-wise, we are okay trending. So...
Sir, two small questions. Firstly, sir, on the Sathavahana. You did mention that it is still in the IBC part and due to some litigation factor and all, it is still pending.
Very soon, we are hopeful to get the nod from NCRT because as you know, one of the -- NCLT, one of the creditors have filed a case or objection to the NCLT. And it is now lying with the President of NCLT to finally adjudicate the order. We are hopeful that it should go in our favor.
And it should happen pretty soon.
And we have already spent the INR 250 crores on modernization of the plant. And what is the update on the...
Yes, yes. So that is different. There are 2 things which is happening on the parallel -- there are 2 things which are happening parallelly. One, there is a repair and maintenance contract that we have got. We have spent that INR 250 crores, which is completely safe. We would get chance to recover that going forward. So there is no doubt about that. That has been used to speed up the commissioning of the plant. The plant is getting ready now to get commissioned. .
And then on the parallel path is the NCLT process, where Jindal Saw is also an interested bidder and is very much in the rate. So these 2 are parallel path, independent path, which -- in which case the plant -- Sathavahana plant would get commissioned soon. We hope that it will get commissioned during this year -- calendar year. And by then, if the NCLT results come in our favor, so that would give us a head start to get this plant up and running and operational very soon.
Right, sir. Sir, on the noncore asset sale, any more light you want to share? I think some assets were lined up.
Yes, we are cleaning up some noncore assets, you would see some movement both on the consolidated basis as well as on the stand-alone basis, loans, advances, noncore assets, there is a work plan which is definitely progressing. And before this year-end, we should see some definitely noticeable or even significant movement on those parts.
Any size you can share, sir.
No, at this point of time since those transactions are all under negotiation or they are -- there is an exclusivity that we have, but I can tell you that it would be something which will be noticeable. The other important thing that I wish to mention is that now both JWIL, which is the EPC, they have started doing very well.
So whatever is the old outstanding you would see there on the stand-alone balance sheet, there is a certain return in loans and advances. The waste-to-energy business is not taking any more support from anywhere. They have, in fact, started returning support, 4 of the plants would be operational very soon. Okhla with an increased capacity. So those 2 businesses have become profitable and are looking really good.
Okay. And then the last point, sir, out of the total remuneration paid to chair fees, including you, Mantriji and Vinayji. How much is the fixed part and how much is performance? And when is your renewal due, sir, Neerajji?
Mostly, everything is -- you can say, 95% would be kind of fixed, and it happens every March. Every March is our appraisal cycle.
Okay. There's no variable pay -- no performance payments as such?
There is a portion which is there in the -- which is linked to SAR. And that's what I told you, that's about 95% is kind of fixed.
Okay. And your terms comes up for renewal when sir?
Next year -- probably next year is when it would come for a renewal.
It comes to vote.
[Operator Instructions] The next question is from the line of Vikash Singh from PhillipCapital.
Sir, I want to understand what is our bid book position currently versus what it was 5, 6 months back, how it has been moved in last 6 months? .
Yes, in the order book?
Yes. Bid book position, bid book, the order for which we have bidded, but...
That I've already covered it, growth wise is very healthy. A lot more demand is being [indiscernible] a lot of inquiries, a lot of serious inquiries in terms of converting it into negotiations, discussions, and we see a very robust and a healthy bid book.
Sir, that is largely on the water side in India. If I believe, in your -- from your opening remarks.
No. I'll tell you, water, oil and gas and in exports seamless.
Understood, sir. Sir, in your comments, you said that Europe is currently kind of a gray area where nobody can tell for sure. But there's another theme which is running parallelly which is the Europe shifting from Russian oil and gas basically. For that, they might need a huge CapEx and bring a new pipeline. So just wanted to understand your thought process on the same? And how much of that area is an addressable market for us?
Europe wanting to move away from Russia, yes. But will all that translate into pipelines, not sure. because they are also looking at LNG terminals, they are looking at shipments because they have to fill that gap immediately. So pipe is a good transporting solution, but it's a long-term transporting solution.
So at this point of time, a, Europe has to find that money if they want to make that kind of investment. If it gets into a recession, it will be that much more difficult. Plus at least in the interim phase, temporary phase, Europe has to look at ways to fill that gap. And therefore, we still have -- because if it gets into a recession, then the making investments into large pipelines would be an issue. And they also have to find first stable suppliers in terms of where would they get this from? Because once you build an LNG terminal, then they have options to import it from multiple locations. But building a pipeline, then first, they have to find a stable supplier.
Understood sir. Sir, in terms of our Abu Dhabi plant, is this Saudi water market is also addressable by us because I was just reading somewhere that the Saudi has a very big water CapEx plants for the next 3 to 4 years?
Correct. Saudi is one of the primary markets that we address to because of the geographical proximity [Audio Gap]
Understood sir. Sir, just one thigh. Since our DI pipe capacity has already been running to kind of a near to full potential, and we are giving a volume guidance of a higher volume, so it's just coming from where -- SAW pipes where you are seeing the larger part of the growth or if it's a seamless, and if you could just explain a little bit on those also?
As I said, all, and we are also hopeful that in DI, if the NCLT comes in our favor, then there could be some towards the end of the year capacity increase or supply increase even in DI.
Okay. Sir, our existing capacity, which was roughly 5 lakh tonne, is it [ any way ] or debottlenecking where we can take up to 5.5 lakh or 6 lakh or that 4.5 lakh can go at max 5 lakhs only? And then we have to basically pray that the Sathavahana lands in our lap.
No, you're talking about...
I'm talking about our existing DI capacity because the way I see that the next 3 to 4 years is very -- going to be very good for DI pipe players. A lot of demand is pending. So just wanted to understand, since our capacity -- we have some capacity constrain there.
No, capacity constrain, it's like now, we have put 2 more finishing lines, which is now focused on exports. So to that extent, the capacity is balanced. Now it is getting balanced properly. We are going to get capped now on our hot metal because we have 2 blast furnaces. And the hot metal is what is going to be constrained now and therefore, in Samaghogha beyond 5.5 lakh et cetera, is not possible.
[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor and Company.
[Operator Instructions] The next follow-up is from the line of Abhishek Maheshwari from SkyRidge Wealth Management.
Sir, I wanted to know, apart from Sathavahana and Hunting JV, you don't have any other CapEx lined up at the moment, right?
No major CapEx, some related CapEx with respect to Hunting and OSI is there. But yes, apart from these, there is no major CapEx on the line.
Sir, any measures that we are undertaking to improve our debt to equity and reduce the debt portion? Because see, we are already operating at less than our -- much less than our current installed capacity. But we are...
Just hold. When you say debt to equity, I hope you are meaning our long-term debt to equity, which is -- I put it in a very, very healthy category because -- our long-term debt is less than INR 2,000 crores, and the net worth is more than INR 6,000 crores. Now when you have a working capital, when you add that, typically should not be a part of the debt-to-equity ratio because working capital is a part of the trade finance, which is related to operations.
No. Yes, I understand that. I mean the debt to equity is also less than one, but I'm just saying that since we are already operating at our less than optimum utilization. But then we are still acquiring Sathavahana and also I understand that you want to gain some foothold in South India also. But like what's the end strategy because can't we just get our existing...
At this point of time, the term loan profile is very nicely balanced. So there is no need to either accelerate because year-on-year, we have a cash flow burden of approximately INR 300 crores to INR 400 crores, which is -- which gives us a very comfort in terms of conserving the cash for operations and other things.
But no major CapEx planned apart from this, yes?
No, I've already said to, but your question about Sathavahana. Sathavahana is going to give us a significant advantage in terms of incremental capacity and then 2 locations, one in South and one in West. That also will kind of give us a strategic and competitive advantage because freight outward is something that we must watch when we are looking at pipes.
Okay. So sir, that's DI pipes. And regarding SAW pipes, we have like a very good capacity there which is running at low utilization...
Order coming especially in the water sector.
Next question is from the line of Saket Kapoor from Kapoor & Company.
Yes, sir. Sir, on the volume front, I missed your the deliverable for FY '23. How are we aligned to end the year in terms of the delivery schedule for the pipes. And I have another question about the value creation ideas taking into account when the working environment has been really tough for us because of the reduce of the commodity prices. And that is relevant to all 5 companies.
But over and [indiscernible] about what steps -- I think sir, we have only the professional management present here and nobody representing from the promoter side since they are the largest shareholder. But would like to understand the steps like -- creating steps like verticals, steps like going for a buyback, steps like creating acquisition, what's the thought process of the teams in terms of these assets. Since investors having invested in Jindal Saw over a period of time has been a losers lot.
So any -- and firstly, is it a cause of concern for the team or not? Because whoever is representing us on the board today are professional people who are there to discuss the numbers, discuss the outlook, discuss the way how things are today and what it can be shaping up tomorrow. But in terms of -- when it comes in terms of value creation, when it comes of the right value ascertain to your stock, which is trading on the stock market, you have limited powers. And it is only to the promoters that these questions could be very well answered. So your take on that please?
I think you would get a chance to have the promoters, the Chairman in the shareholders' meeting. So there, you would be able to ask them -- if you want to ask them the questions what you have in mind for them.
As far as we are concerned, as I have always been saying, the concern is always there because the market cap, if you see of this company is far below than what is desired. So it is a matter of concern. It is a matter of something that we look at very, very closely every day. But we do understand that there is some overhang of a few things, one of them being NTPC.
So we hope once we see some traction on the NTPC's arbitration, we hope that the market starts valuing us the way we should. Because in terms of -- if you see the kind of initiative that should have been taken either on the corporate or on the operating side or on the loans and advances. Corporate, as you know, now we are only a company focused on pipes on the core businesses as we define it.
Operating side, probably we have one of the best performance if you take any benchmark. Loans and advances also, things are now beginning to move. So if you look at the fundamentals, every time we discuss this. Everything that needs to be done, all boxes are ticked. But still, the market cap or still the market is not reacting to all of these because now we feel there are some exteriors factors, and there is an overhang on those factors, which is there. So we hope that things should get better.
And we are working towards it. We are not leaving anything unturned plus whatever is your -- or whatever is the feedback, it is always discussed, and we always keep everybody informed in terms of the questions that they have.
Right. Right sir. That's all from my side, and we hope that there is light at the end of the time.
Thank you very much. I now hand the conference over to Mr. Vikash Singh for closing comments.
Thank you. On behalf of PhillipCapital, I thank you all for joining the conference and Jindal Saw management for giving us the opportunity. Over to you, Neeraj, sir, for any closing comment.
I wish to close this by a big thank you to all of you. As always, I -- we fully have a sense of the anxiety and the concerns that people have in terms of market cap, not reacting to even though the issue that we are all grappling with is that if you look at the fundamentals of the company, they are very, very strong, look at the credit rating, look at the performance by itself, compare it over a period of time, the kind of things that we have gone through in the last 2 quarters, again, give us a lot of confidence that, indeed, the fundamentals is very robust. We are taking steps towards value-add, i.e., Hunting, i.e., Sathavahana. All of those are steps which are going to consolidate and improve, but yet the market cap is not giving us or is not reflecting all the efforts that are being put [ on the state ] of the company.
That's a matter of concern for all of us, and we hope that we would be able to correct that soon because of these exterior factors, one of them being the NTPC arbitration award. So with that, I thank you very much. We would be back with the second quarter or the first half yearly results. And hopefully, we would have lot more good news to share there. Thank you. Bye.
Thank you very much. On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines, thank you.