Usha Martin Ltd
NSE:USHAMART
| 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 |
277.45
440.85
|
| 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.
Usha Martin Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Usha Martin Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Devrishi Singh, from CDR India. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and thank you for joining us on Usha Martin's Q2 FY '24 earnings conference call.
We have with us Mr. Rajeev Jhawar, Managing Director of the company; Mr. Anirban Sanyal, Chief Financial Officer; and Ms. Shreya Jhawar, from the Strategy and Growth team of the company. We hope all of you had the opportunity to refer to the earnings document that we had shared with you earlier. We would now like to initiate the call with the opening remarks from the management, following which we will have the forum open for a Q&A session.
Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation.
I would now like to invite Mr. Rajeev Jhawar to make his opening remarks. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone. On behalf of the management team of Usha Martin, I would like to welcome you all to our earnings conference call. I will begin by sharing quick operational and strategy-related updates on the company, following which our CFO, Mr. Anirban Sanyal, will run you through the key financial highlights.
I'm pleased to report that we have concluded the first half of this fiscal year on a healthy note, making significant progress in our various strategic initiatives. We had two key objectives as a company: one, enhance our product portfolio to value-added products to increase volume and value through our CapEx initiatives. Our strategy to enhance our product portfolio has delivered positive results.
Comparing figures on a year-on-year basis, our operating EBITDA increased by an impressive 24.8%, and our operating EBITDA margins improved by 3.4 percentage points, reaching 18.1% during H1 FY '24. Moreover, enhanced contribution from international markets with higher realizations have supported our margin improvements.
The share of the wire rope revenue in our consolidated earnings has increased to 69% in H1 FY '24, reflecting an increase from 66% in H1 FY '23. International markets are also playing an important role in our growth story, contributing to 55% of our revenue during H1 FY '24.
While our revenue growth was muted in the first half, largely attributable to subdued performance in the wire and LRPC segments, we maintain a positive outlook for the business expansion in the later half.
Our commitment to value-added industry segment has yielded productive results. With the share of these segments in our consolidated revenue increasing to 50% during H1 FY '24, up from 44% in FY '23.
Specifically, within the wire rope category, value-added segment accounted for 70% during H1 FY '24, reflecting an increase from 65% in FY '23.
I would also like to highlight that despite facing a decline in steel prices during the last quarter, our wire rope realizations have constantly trended upward. This positive trend is especially evident in our value-added wire rope products, which require significant engineering know-how and technical expertise. These products are enabling us to mitigate the inherent volatility in raw materials prices.
Additionally, we made considerable progress regarding our CapEx initiatives. Our Phase 1 expansion in Ranchi remains on track, and it is expected to become operational in the coming months. We would start to see the benefits of that in subsequent quarters.
As a specialty wire rope solutions provider with a substantial presence in international markets, we are closely monitoring the evolving macroeconomic landscape, including current geopolitical issues. Today, we firmly believe that Usha Martin is well equipped to identify and navigate global business challenges that may arise.
In conclusion, I would like to emphasize that our commitment to the strategic initiatives at Usha Martin remains strong, and we are confident that these efforts will yield positive results, driving growth for the company.
With this, I would like to hand over to Mr. Anirban Sanyal, our CFO, who will present the operational and financial highlights for the quarter and half year ended September 30, 2023. Thank you.
Thank you, and a very good afternoon to everyone. I will now provide a brief overview of the company's operating and financial performance for the quarter and half year ending September 30, 2023.
The consolidated net revenue from operations stood at INR 784.7 crores in Q2 of FY '24 as against INR 820.2 crores in Q2 of FY '23.
As the MD mentioned earlier, the 4.3% year-on-year decline in revenue was due to lower contribution from both the wire and the LRPC segments. However, as we assess the current situation, we maintain our confidence in improving our revenue trajectory for the second half of the year. Our revenue performance during the quarter was supported by an increased realization in the wire rope segment.
Our operating EBITDA for the quarter registered a healthy 25.5% rise on a year-on-year basis at INR 144.3 crores. Moreover, the operating EBITDA per tonne also demonstrated a 35.8% year-on-year improvement at INR 31,178. The operating EBITDA margin of Q2 FY '24 rose to 18.4% from 14% in Q2 of FY '22. Our net profit for the quarter stood at INR 109.5 crores, registering an increase of 38.7% from INR 79 crores in Q2 of FY '23.
On a half-year basis, net revenues from operations stood at INR 1,599.1 crores compared to INR 1,578.9 crores in H1 of FY '23.
During this period, we witnessed positive improvements in our value-added offerings, notably in the wire rope segment, along with a healthy traction in various industry segments such as mining, oil and offshore, fishing, elevator and crane. Operating EBITDA stood at INR 290 crores for H1 of FY '24 as against INR 232.4 crores in H1 of FY '23. Profit after tax for H1 of FY '24 stood at INR 210.3 crores, registering a 30.4% year-on-year increase.
Our balance sheet position remains strong with our net debt-to-equity improving to 0.06x in September 2023. The modest rise in absolute net debt is a result of our ongoing investments and the allocation of funds for dividend disbursement.
With regards to our working capital cycle, we have strategically augmented our inventory levels during this period, preparing for the projected upswing in demand anticipated from new customers we have developed through our European operations. With our European operations now closely linked with Ranchi factory for supply of wire and strand raw materials, it becomes essential to have the inventory in stock to meet customer requirements and delivery times. Further, our cash flow generations have improved significantly year-on-year.
The cash flow from operations before income tax for H1 of FY '24 stands at INR 310.5 crores and at 107% of operating EBITDA compared to INR 95.6 crores during H1 of FY '23 and at 41% of operating EBITDA. Robust cash flows along with adequate headroom on working capital lines will continue to support our brand capital allocations.
In conclusion, I would like to say that overall, things are moving in the right direction, and Usha Martin remains optimistic that its business strategies and initiatives will play a pivotal role in further strengthening its leadership position. We expect that favorable industry dynamics, coupled with Usha Martin's inherent strengths will enable the company to deliver consistent performance going forward.
This brings me to the end of my address. I would now request the moderator to open the line for the question-and-answer session.
[Operator Instructions] Our first question is from the line of Aman Sonthalia from AK Securities.
Sir, what would be the impact of slowdown in Europe? Is it possible for the company to grow at the rate 15% in volume term over the next 2, 3 years?
So, on Europe, I'd just like to say that we did see a slight slowdown in specifically the services part of the business in Europe, in EMM and De Ruiter compared to last year. But we do think that with a healthy order book in our Brunton Shaw, U.K. factory, we do have a positive outlook for especially the higher value ropes for the second half of the year.
And your second question was on overall volume, is that correct?
Yes, yes.
So on volume, so volume is obviously a very important factor, but not the only factor. As mentioned, with the CapEx coming in, the volumes should improve, but we will have to continuously balance between the volume and the value aspect to see what would help us achieve our bottom line profitability targets as well.
Okay. Second question, I think is that, in Europe, I think there are a lot of small rope manufacturers are out there, and they are not in a very good shape. So since our company has very good cash flow and already we have a presence in Europe, so are we looking for any acquisition in the European market?
Right now, of course, Europe is going through a recession and many of the companies are going through a difficult period. I think there are big opportunities for us with our current setup to gain market share between our integration with Usha Martin in India, as well as Brunton Shaw, as well as from Usha Siam and Brunton Shaw. And we have made major breakthroughs and progress with quite a large number of customers and the distribution network over there. And I feel that, that is something which we would like to really ensure that we successfully develop this model and build a good brand for entire Usha Martin and Brunton Shaw. And I think that is our first priority.
Going forward, of course, if there are opportunities which would come, we would be open to have a look at those.
Okay, sir. And sir, one more question is that the, since the U.S. economy is doing very well and we have already presence in the U.S. market, so how much growth we are expecting and how big the U.S. market would be for Usha Martin in next 2, 3 years?
So, the U.S. market definitely is a very important market for us. In the first half of the year itself, we saw good growth in the U.S. especially on three key value-added segments that we were targeting. One is the elevator rope. For that, we did see an increase of over 50% in volumes compared to first half of last year.
In crane ropes as well, we were able to double our volumes. And then finally, mining ropes, for which we have had initial trials that have been good. And because of those trials being successful, we have secured a long-term contract with a big customer that should help us get consistent volumes and value over the next 3 years. For mining ropes, again it's not just the U.S., but it's also Canada and Latin America as well, including Brazil, Chile, Peru, which are very important.
And other than these three segments, we are also going forward, looking to grow the market in Swage ropes as well as Gondola ropes, which are critical applications and again, high-value products. So that's going forward something that's a focus for us.
That being said, I would just also say that for the general purpose rope market, which is usually a lower-value product, but a high volume product; typically, right now, we are seeing some competition in the U.S. market, particularly and also some pricing pressure from other Asian manufacturers. So while the high-value products, we are seeing continuous growth, there might be some impact of that, but overall, a positive outlook for the U.S.
And one more question, I mean, the Saudi market is really a very exciting market. So, is the company seriously looking at this market, Saudi Arabian market?
Yes, definitely. So like you mentioned, Saudi is a growing market, and we do plan to increase our presence in this market for sure. And it will become a focus market for us, especially for, I would say, oil and gas, ports as well as crane ropes. And to that effect, the activities to tap into this are already well underway, and you would hear more about that going forward.
[Operator Instructions] Our next question is from the line of Gunjan Kabra from Niveshaay.
My first question is that, just in the single follow-up with the last question; you mentioned that Europe is not doing well, but still our order book is very strong. So are we gaining market share from other players or the other players are operating at low capacity utilization? Or are we having any competitive edge in terms of costs? So why is it that the market is not doing well, but we still have a strong order book?
Yes, we have a strong order book and the efforts which were put in with the integration between Brunton Shaw and our Usha Martin India operations, we had made some good breakthroughs in our last year, second half of last year. And those contracts have been well supplied, and we have now got repeat orders and also getting more and more references to get more orders from other such similar customers. This is helping us to have a strong healthy order book because these are long-term delivery because there are logistics issues between supply from India, U.K. and to the customers. And these are all specialized, mostly all specialized ropes. So that is something which is helping.
Now, coming to answer your second question, of course, it's a competitive market, and we are competing with the Europeans and the Americans to get esteemed market share. We have some cost advantage, but I think it is more that how you are able to place your product and your brand and along with our global development center, which is our R&D setup over there together to help us get these orders.
And to, let me put it that, our few successful supplies, which we have made, have been well appreciated by our customers. And this is helping us to get to bigger share of the pie from the European market.
Okay. And -- is the CapEx plan, the Phase 1 was expected to start in Q3. Is that on time or how is it?
See, the Usha Martin Ranchi plant, which we have put in the major part of the Phase 1 of the CapEx, it's a brownfield expansion in Ranchi plant. So this is a combination of adding additional manufacturing equipment, both in wire drawing, stranding and closing, and also increasing our patenting facilities to enhance the volume. While most of the equipments are almost in the final stages of commissioning, one important furnace, which will help us increase the volumes is getting commissioned in January.
So I would say that we will be able to complete all of it towards the -- and start getting the benefits of that from quarter 4. Some we may get in quarter 3, but majority of that we start getting in quarter 4, once the entire thing is getting implemented.
Okay. Okay. And also, I wanted to understand that in this quarter, volumes quarter-on-quarter, if I compare it with Q1, it was for wire and wire ropes, it was exactly the same. And in the opening comments, you were guiding a higher realization. But quarter-on-quarter, if you see the wire and wire ropes, the realizations have dropped by 3%, 3.5%.
So what could be the reason for this? And also, if you can give us that how the volumes in the outside India -- the volume numbers in outside India and versus the volumes in India?
Anirban, can you take this question, please?
Yeah, Gunjan, are you just -- are you talking about quarter-on-quarter developments or year-on-year for the quarter development in terms of volumes and...
Quarter-on-quarter for Q1 FY '24 and Q2 FY '24. If you see, the volumes that has remained the same, which is 23,000, but the realization has dropped, whereas if you see H1, the prices of steel have increased. Sir, why is that so?
No, no. So prices of steel, don't look at the purchase price. So there is the consumption price and quarter-on-quarter, we've actually got a benefit from the steel prices. So we always have a 45 to 60 days of stock in hand. So therefore, so it is not exact -- the purchase price is not equivalent to the consumption price.
So we had a benefit quarter-on-quarter for about INR 4,000 in the price of steel. And the realization in domestic terms also, we've got an improvement in specifically wire ropes to the tune of around INR 4,000 to INR 5,000 per tonne, quarter-on-quarter.
In the domestic market, 4,000 to 5,000 tonnes. Then sir, why has the realization declined quarter-on-quarter by 3%, 3.5%?
No. So, basically, it is the drop in -- overall drop in LRPC and wires that has resulted in this overall realizations.
Okay. I thought it is just wire and wire ropes which I was actually calculating. No problem, we can get in touch offline, not an issue. Also, if you can...
Both in terms of volumes and realizations, its LRPC, that has been the -- that has taken the biggest decline.
Biggest decline, okay. And sir, is it possible to share the volumes outside India and Indian volumes?
We can. Sure. We'll do it separately. I mean, we generally put on standalone and console numbers.
That grew, but yes.
Yes.
Okay. And also, I wanted to understand that, which is just new CapEx is happening, which we are actually trying to cater to the export market. So are we very confident because of the -- because the Indian markets are doing pretty well right now in terms of capital goods and construction and oil and gas. But in the domestic -- in the export market, Europe is fairly, we have a strong order book. But U.S., Europe, there the activity is not that strong compared to the Indian thing. So are we very confident on ramping up at full capacity utilization, in say, 2 to 3 quarters?
The demand in India is strong, which is absolutely right, and we are seeing that across because of the investment in the infrastructure, which is taking place. So we are increasing our market both in terms of -- we already have 65% to 70% market share, but we are maintaining and increasing our volumes in the domestic market based on the overall growth.
But our various initiatives in the international market, as we had mentioned earlier that our share in the U.S. market is only 2% to 3%. It was only 2% to 3%. And even in Europe, it is around 8% to 9%. So, there is an opportunity for us to increase our market share in these markets. So the new expansion, which we are doing are two parts.
One is, of course, we are increasing the volume. And secondly, it is also going to help us improve the capabilities of higher value-added products in the mining, crane, elevator, and all these sectors, where we are reasonably confident of increasing our market share in the international market also. So we don't see a problem in being able to ramp up the capacity in 3 to 4 quarters, which you want to know, it will be possible for us to do that.
[Operator Instructions] The next question is from the line of Rajesh Majumdar from B&K Securities.
I had a couple of questions. One was that if you look at the turnover growth in the first half, it is 1.3%. And you have guided for a 15% kind of revenue growth per annum. So now it looks unrealistic for us to expect that kind of revenue growth in the second half without significantly increasing our LRPC sales, which will be at the cost of margins. Is that a correct assumption?
And the second point to this is how do we read into the margins in the second half, given that it's 18.4 in the first half with a lower proportion of LRPC sales?
I can -- first question, what you said is absolutely correct. The lower volume, the -- although we got a 1.3% increase, there was almost a 20% to 25% lower sales in our LRPC and wire segment. The second half of the year, we expect it to be better because of now the -- and there is a very strong demand coming from the infrastructure projects in India, which were affected during the monsoon period, particularly the segments in which we were selling our products. So we expect the second half of the year increased both LRPC and wire sales.
And also, we should be -- and which is going to, of course, the blended margin is definitely going to be impacted because as we had even mentioned earlier that we have -- we operate in 3 segments: the wire rope segment, the LRPC segment, and the wire segment. So these 3 segments we operate.
Naturally, if the volume of the -- and the value of the wire and LRPC, which is the lower end, would be coming down, which has come down. So although it has impacted the revenue, we have been able to get a better margin because the wire rope gives us a better margin.
So what we would suggest is that when, the way we look at it is the absolute profitability. And I think the focus on wire rope would continue, and that is something which we feel will -- in the second half, it should be better. And with the projects getting commissioned, the volumes and the higher value-added products would keep on increasing on the wire rope segment.
LRPC and the wire segment in the next 3 quarters before the monsoon, I feel that, that should be coming back to which normalized levels, and that is something which is going to help us get a higher topline, but it is going to have a blended EBITDA margin, which would be there. But again, at the cost of repetition, we would focus to get a higher overall PBT in the company, and that is possible by utilizing all our assets to its fullest possible extent.
Sir, in this connection, I have an added question. Is the return on capital on LRPC wire as lucrative as the wire rope business? Because the margin is something, but basically, for a businessman, the main thing is the return on the capital employed. So is that comparable across all the three businesses?
No. No, no, no, sir. It would be much lower. If you look at the -- while we do about 23% -- around 23% ROCE, the rope ROCE is much higher compared to the LRPC and wire. They would be significantly lesser.
Okay. Okay. And sir, my second question is on the value addition from Ranchi. So you have guided at 18% kind of margin, and we are already at somewhere above 18% or maybe around 18% considering a drop in the second half. So is it safe to assume that post the Ranchi expansion in full swing, say, after a year or so, we can look at a slightly higher margin trajectory for our wire rope business?
Yes, of course, we expect the margins because the new capacity expansion is not only helping us increase the volumes, but it is also focused into the more higher segment of wire ropes which we plan to increase our volumes. So I'm sure that is going to help us improve our margins.
[Operator Instructions] Our next question is from the line of Saket Kapoor from Kapoor & Co.
So when we look at your employee cost as a percentage of sales, what should be the number? Currently, I think it is closer to 13% on a topline of -- on a consolidated topline of INR 785 crores, the employee cost is around INR 105 crores. So what should it look like going ahead? And why -- any reason why the numbers are so high?
You see, this includes all our international operations and India operations on a consolidated basis. We operate in different parts, even in developed countries where the cost, the manpower cost is higher. The way we are planning to expand our -- the way we are planning to expand our volumes in the international market, there would be a marginal increase in our cost, particularly on the sales force, but the basic overheads would remain the same.
I would say that going forward, with the commissioning of the new capacity and increased activity of business in our Brunton Shaw and all, the percentage should improve -- should come down as a percentage going forward by at least 1% to 1.5%.
And sir, as you articulated to the point of the CapEx initiative at Ranchi, the entire capital work in progress, the amount is around INR 210 crores. So what will get capitalized by the end of this year? And where are this money being deployed to? Is it entirely to the Ranchi CapEx or if you could just provide the breakup?
Anirban, would you like to take this answer?
Sure. In the, particularly in first half of the year, we spent about INR 136 crores in CapEx. That's been the CapEx spend. Out of which on the various programs that were ongoing, it's about INR 90 crores during the first half. And we expect that by Q4, the Phase 1 of the CapEx should be entirely capitalized, which would be in the range of INR 300 crores to INR 310 crores, but by end of Q4.
So this entire amount is spent for the Ranchi facility only? The one, which is the closing balance of INR 210 crores also and the one which will be spent across till Q1 of next year?
So don't look at closing balance. Closing balance includes a lot of other CapEx also at [indiscernible] level. You will have the SAP projects ongoing, other digitization projects ongoing. But from us -- I am just giving you from a spend perspective that almost of the total CapEx till date, we spend almost INR 230-odd crores. And we will complete that the balance spent by the end of the year related to the program, and it will be capitalized somewhere between INR 300 crores to INR 310 crores by end of Q4.
And that is entirely for the Wave 1 and it is pertaining to the Ranchi facility. Is this correct?
Yes. So when I'm talking about INR 300 crores, INR 310 crores, that is specifically for the Wave 1, as we've guided, and that's entirely in Ranchi.
Okay. Sir, Mr. Jhawar, 2 years or maybe 1 year down the earlier you have spoken in the AGM that you were making some inroads in some very new nascent markets in the export segment, wherein it takes around 3 to 4 years to develop the product. And once you get a patent and you are ready with the testing part, then there is a series of orders flowing. So where are we in terms of the work that we have done and when are we going to start bearing the fruits, whether we have already started or in which stage are we?
We started this journey and we started getting some big contracts and trial orders, more trial orders and big contracts in the second half of the last financial year. And it takes almost 3 to -- 4 to 6 months because the wires and strands are produced in India, then finally closed in Europe.
These ropes are between 200 to 350 tonnes single reel. So I'm happy to say that all the trial orders and the initial orders we received have all been successfully delivered to our customers. And now based on -- we have got repeat orders from the same customers as well as it has helped us to build a reference and we are getting decent -- we have a decent order book now and the pipeline of inquiries is good, particularly in the oil offshore and wind energy sector, in the European, South American and some of them in the Australian market. And I expect benefit of that to start coming significantly in the coming quarters.
So these all will add to the value-added segment?
All these are in the value-added segment only.
Okay. And sir, when we look at the numbers on standalone and consolidation, so in your presentation, sorry, if I'm incorrect, correct me there also. If you can provide us the -- what goes into consolidation separately, explaining that, that would be very helpful. And also on account of this JV part, the share of profit on JV, if these two aspects are more insights are provided, that would be more helpful if going ahead.
Anirban, if you can explain them offline.
Sure, sir.
See, it would be good if you can share it offline with him. I think, all these are -- I would just like to add that on the share of the profit of our joint venture, we have one such joint venture, which is called Joh Pengg Usha. Pengg Usha, which is a joint venture with an Austrian company producing very high-end wires, which goes into the auto sector, oil tempered wires, which goes into the auto sector.
This is -- has done well. We have 40% of the shareholding, and 60% is with Joh Pengg. It's got the plant in Ranchi. We jointly manage it, and it is a profitable business and then helped us very well in improving our market share in the specialized wire market. So this is something I would like to share. The rest, Anirban can share with you offline.
Okay. If I may add just a small point, and then I'll join the queue, if I'm allowed? Or shall I join? May I ask one more question?
Yes. Go ahead.
Yes, sir. As you mentioned about the order book pipeline, if you could throw some more color on the order book pipeline. And also going ahead as the earlier participant had asked this question about our revenue growing by 15%. So how should H2 is currently looking in terms of the topline part? I think, the profitability portion we may match this 18% EBITDA number. So what should be the ballpark number we should look forward depending upon the figures on the -- as you have spoken about a strong pipeline? And do we have any order book number which you can share and the executable period on the same?
Let me tell you that we -- as I mentioned to you, that we are in the process of the final stages of improving the -- implementing the CapEx in Ranchi, the Phase 1, which is getting completed by Q4. Also, the LRPC and the wire, because of the second half, we expect the volumes to be better compared to what it was in the first half. So overall, I can say that we should be doing better in terms of -- doing better in terms of the bottom line.
Of course, the full benefit of that CapEx will start coming from Q4 and further quarters. I think, what as a management we are focusing, still surprised, the volume comes, is how to maximize our profitability. That is something by virtue of looking at how to improve our product mix, how to improve our share of value-added products and services. Till such time our volumes start coming in and we get the benefit of volume and value both. So I think the next 2 quarters, while I would say that we would have a higher top line than what we did in the first half, the immediate task is to see that how we improve and get a better profitability out of our operations and followed by volumes coming in the subsequent quarters.
Our next question, it's from the line of Pratim Roy from B&K Securities.
I have two questions. Firstly, you said that, the net debt has gone up sequentially. So if I'm not wrong, just because of the working capital thing, so how many days raw material inventory that we have currently for 3Q?
So yes, -- yeah, I'm just answering, sir. So, right now, although you see an increase in net debt, but I would say that if you look at the leverage ratios, they are very much comfortable. The overall increase in net debt has primarily occurred of two reasons. One is there has been a dividend payout during Q2 and also because of the CapEx spend of almost INR 136 crores during first half.
In terms of working capital -- in terms of the working capital days, we are at 190 overall NWC, of which, which is almost about 186 is pertaining to the inventory. It is slightly built up from the FY '23 end levels for the simple fact that we are building up the inventory as the subsidiaries for the simple reason that we anticipate the higher rate of sales in H2 of this year.
So it's sort of planned, and we hope that the inventory levels would reduce substantially over the next 2 quarters.
And my second question is -- yes, tell me, sir.
Let me add a point to this, is that, our debt is still very low despite the INR 76 crore of dividend and the CapEx outlay, which has -- which is ongoing. Even considering everything, the company is highly deleveraged, and of course, our focus on managing working capital and generating free cash flows to make it better going forward.
And second question is that, sir, is there any market share gain we have observed during the first half of the financial year in the international market?
I couldn't get you. Can you come again, please?
I'm asking, sir, is there any market share gain that we have observed during the first half of the financial year in the international market -- from the international market?
International markets, as I mentioned, have been -- of course, there are challenges in the European and the American markets in terms of the overall economic situation over there. But the company has been able to gain its or strengthen its position in the specialized roles as what Shreya mentioned earlier in the European and the American market. And we have started getting benefits, and we expect that to continue even in the coming quarters.
Our next question is from the line of Arjun from Fordham.
Sir, thanks for releasing such excellent results. And I think you're among the few companies I track, where the management has been so prudent and frugal in their capital deployment. Given this backdrop post the announced already CapEx plans, do we have -- will we have any more CapEx other than the maintenance CapEx for the next 2 or 3 years?
We have CapEx Phase 1 of, which is getting completed of INR 310 crores. And we have already announced another CapEx, which will be done over a period of next 2 years of INR 160 crores in India and around INR 60 crores in Thailand over the next 2 years.
Other than whatever has been announced, we do not have any other CapEx plans, and it would be more -- and as of now till we complete all these, we would -- it would only be routine CapEx.
This is great news. Because if you're having the CapEx or if I sum it up, it would come around like INR 250 crores, INR 300 crores, but we generated around INR 500 crores, INR 600 crores cash flows this year and maybe much more than next year. So can we safely assume that a part -- a major part of these cash flows would come as a dividend to shareholders?
You see, we have a dividend policy, which is there -- which is about 25% to -- minimum 25% to 30% of our profits, we will -- which is stated policy. And I'm sure if the company does well, it will reward the shareholders.
Okay. So because we will be generating around INR 600 crores, INR 700 crores cash flow is what we estimate, given the growth rate what you have. So why can't we -- because we don't have a great amount of CapEx after this. Why can't we expect a 40%, 50% kind of a dividend payout?
See, let's see, we will definitely look at all options. We will definitely look at all options depending on finally, the cash generation and returns. So if this is what is currently stated, I'm sure the Board will look at all these options and all these things once we get to those levels of returns.
Okay. Okay. So we could, as investors, expect if there's not much of CapEx plans around a 50% dividend yield, right -- dividend payout? Is that the possibility?
I can only talk right now about the CapEx, and that is what we have committed, and that is what we have in plans to do and the balance is routine CapEx. And hopefully, if the things become better, things will -- I'm sure all stakeholders, including our shareholders, who are very important, will definitely benefit out of it.
Thanks for that reaffirming statement, sir. Sir, another question on your margins. Given now Q4, you will start commissioning on those high growth -- high-margin growth business from Ranchi. Can we -- what kind of margins can we expect after this on an average from the company?
Yes, as I mentioned, you see, margin is also depending on how our all three segments perform. It is, we look at actually -- when we look at internally, while of course, margins of individual businesses are important, but we have the manufacturing capacity for all 3 products, which, as I mentioned, the rope, and the LRPC, and wire were subdued in the last couple of quarters. We expect that to come back.
So when the volume of those will grow, of course, the overall profitability will grow, the blended margin may come down marginally. But again, with the increase in the wire rope of the higher value added, it will go up. So I think we should -- we hope that we continue at these levels. It depends also -- the margin going forward also depends on the weightage of the 3 segments, how much we are producing and how much we are selling because all these 3 are totally, it's disproportionate in terms of the margins between the wire and LRPC and rope. But we expect it to be at similar levels or growing gradually as we go forward.
Yes. So because we are getting into high-growth margins from Q4, natural expectation would be that we would be higher from where we are right now, sir?
But if the volume of wires and LRPC also grows significantly in these quarters, it will help us in overall profitability. But it may have a blended effect on the overall margin. So you see, we should -- it's a very dynamic business. And if we expect the LRPC and wire, because of the demand prices are good, we would continue to increase our production and sales of LRPC. And it may add a little dampener to our margins, but it will improve the profitability.
But on the other side, our effort to increase the wire rope value-added as well as the volume would continue. So, what it would ultimately determine would also depend on the margin of all the 3 -- volumes of all the 3 coming. So we are all working towards absolute profits, and hopefully, it should improve the margins.
Okay. Okay. Sir, as investors are really expecting that you grow a little more aggressive, at least from my point of view, a little more aggressive in your dividend payout, if there's not much of CapEx. Hoping that you'll help us with that.
Our next question is from the line of Anant Jain, who is an investor.
Congratulations on a good set of numbers, Rajeev. My first question is, you've done a remarkable job in wire ropes moving up the quality curve. We also had similar plans for wires. Where are we on those plans? And where can we see significant developments in that direction?
The wire side of the business, to be honest to you, our focus has been in the last few quarters more on the wire rope, because we saw big opportunity and particularly through our integration. We have identified quite a few areas of wires, a lot of which is awaiting the new patenting capacities, which are getting added. One of them has just been upgraded and the other one is expected to get commissioned in January. So then, we will see the volume of wires going up.
So we have -- our focus is still there, but I would say that it would start happening from next year. Because all the attention and capacity was primarily first given for increasing the rope products.
So even this new increase in wire capacity that we'll be looking for going ahead, maybe in Q4 or Q1 of next year, do we expect them to be at a reasonably higher margin than the current wires that we are doing?
Yes, of course, because all those will be through the patenting route, which in generally helps you get a better margin than just pure straight wire.
On the volume side, Rajeev, so in this quarter around, was it because that we wanted to have a higher volume of wire ropes and that is the reason that we had a lower volume of LRPC or this is because that, we did not have orders for LRPC that our volumes went down?
You see the LRPC -- the wire rope and LRPC making capacities are completely independent of each other. So there was no loss of LRPC, because of the focus on rope. So that is because they are two independent plants within a plant. The LRPC, the orders in the markets where we were operating were definitely affected in the monsoon period, which affected. We are seeing an upward traction from November onwards, partly in October, but November onwards. And the order book is also getting better. So hopefully, the LRPC volumes, we will see better in Q3 and of course, should do well in Q4.
And how about plasticated LRPC? Because I think that's -- how is that doing? That's a very specialized product that we have.
It is. LRPC is -- I'm happy to say that the products which we have supplied have been accepted well by the customers. These are all project-based. Some of the projects where LRPC plasticated, we have supplied, we have all been accepted -- both in India and we have done some internationally also, have been well accepted. The initial test results have been good.
We have got a decent order book. But in this quarter, we must have sold, if I'm not mistaken, close to about 500 tonnes in total. We could have done more, but those projects were affected because of the heavy monsoon in the area, and particularly in Bihar and parts of Northern India.
But this is an important project, important product for us, and we expect the volumes to be growing towards 400, 500 tonnes a month in the coming months.
Our last question for the question-and-answer session is from the line of Vivek Chaturvedi, who is an investor.
Sir, I just wanted to check what is your broad expectation in terms of H2 wire rope and LRPC volumes? Would you be able to share that?
I can only tell you that we are all pushing hard to do better, and it would be better than the first half, both the LRPCs because now the monsoon season is over. We expect the volumes to be higher in the quarter 2 -- in the second half of the year, both on the wire rope and on the LRPC. I can only say at the moment that we should do better.
Okay, sir. And the EBITDA would also be broadly similar to H1 levels? EBITDA per tonne?
I think as mentioned before, the EBITDA would really again depend on -- the EBITDA margins would really depend on the product mix. With regard to absolute numbers, the endeavor would be to continue to grow. But at this point, we would not be able to give any specific numbers around that.
That was the last question of our question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Thank you. I would like to thank everyone for attending this call, showing interest in Usha Martin Limited. I hope we have been able to answer all your questions. The company is dedicated to creating value for all its stakeholders in a sustainable manner. Should you need any further clarification or would you like to know more about the company, please feel free to reach out to us or to CDR India. Thank you once again for taking the time to join us on this call, and see you all in the next quarter. Thank you.
On behalf of Usha Martin Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.