Industrial Goods

Maharashtra Seamless Ltd- From Debt reduction to Sustainable growth

Maharashtra Seamless Ltd - Fundamental Analysis

Maharashtra Seamless has 55% market share in Seamless pipes and 18% in API certified ERW pipes.

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(A) About

Maharashtra Seamless - logo

Maharashtra seamless Ltd was incorporated in 1988 and is a part of the DP Jindal Group. The company's products are used in a variety of applications, including oil and gas, power, construction, and infrastructure.

Moreover, the company is a leading manufacturer of seamless and Electric Resistance Welded (ERW) pipes and tubes in India.

(B) Journey

(C) Board Members

Maharashtra Seamless - Board Members

(D) Shareholding Pattern

Maharashtra Seamless - Shareholding Pattern
Maharashtra Seamless - Shareholding

(E) Product Segments

(i) Seamless Pipes

These are pipes without a seam or a weld joint in contrast to seam or welded pipe. In a Seam or Welded pipe, the weld joint is the weaker part of the pipe limiting the strength of the pipe to the strength of the weld joint.

Applications of these pipes are in Oil & Gas, Refinery, Petrochemical, Chemical, Fertilizer, power, automotive, Bearing, Mechanical & Structural applications.

Meanwhile, the company currently have a capacity of 4.5 lakh MT in Maharashtra.

(ii) ERW Pipes

These pipes are manufactured by cold forming of steel coil into a round cylindrical shape. In the initial times it was done with low frequency process later changed to high frequency AC current to provide a higher quality weld.

ERW Pipes have various applications like fencing, line pipe, scaffolding etc. ERW steel pipes are also available in various diameter, wall thickness, finish & grades. Major Applications of these pipes are Water pipelines, Agriculture & irrigation, Gas pipe lines, LPG & Other non-toxic gas lines.

Currently company has a capacity of 1,25,000 MT/annum.

(iii) Renewable Energy

Currently company has 52.50MW AC Solar power capacity in Maharashtra & Rajasthan, and Wind power capacity of 7MW in Maharashtra.

(iv) Rig

Currently Maharashtra Seamless has 4 offshore which includes:

1 in India, 1 in Gulf of Mexico, 1 in Middle East and acquire 1 rig from Star Drilling Pte. Ltd (Singapore) for $100 Mn in March 2020.

(F) Revenue Segment

Maharashtra Seamless - Segment Revenue
Maharashtra Seamless - Operational and Financial Performance
*In Q1 FY24, maintenance shutdown of one seamless pipes manufacturing mill at Telangana was taken leading to lower production and dispatches.

(G) Cost Structure

Maharashtra Seamless - Cost Structure

(H) Financials

Maharashtra Seamless - Financials

Company has grown its revenue at 18.84% in past 10 years, while PAT grew at a CAGR of 25.85%. Moreover, company’s operating and Profit margins increase from 8.02% in FY14 to 13.44% in FY23.

Maharashtra Seamless - Du Pont Analysis

Company sales to total assets increased from 0.4 to 1.0 times over the past 10 years. While its assets to equity decreased from 1.6 to 1.2 in the past 2 years.

(I) Management Discussion & Concall Highlights

Industry Outlook

  • Global Market for seamless pipes and tubes estimated at $175 bn in FY22 and is projected to to reach at $248 Bn by FY26, growing at a CAGR of 5.5%. Meanwhile hot and finished pipes are projected to grow at a CAGR of 6.5%.
  • PM has also announced that government of India plans to invest around Rs 7.5 trillion in Oil & Gas infrastructure over next five years.
  • Government would add 100 more districts to the city gas distribution Network in the next few years. Additionally, it is also working on the Har Ghar Jal Mission to provide tap water supply to every rural household by 2024.
  • Furthermore, the replacement of ageing pipelines in Europe is likely to raise rapidly in the next year which will further boost demand of pipes.

Market Share of Maharashtra Seamless Ltd

  • 55% in the Seamless pipes.
  • 18% in the API Certified high frequency ERW pipe segment.

Capex Plan

Maharashtra Seamless - Capex/ Capital expenditure

Q1 FY24 Concall Highlights

  • Company has become 100% debt free in Q1 FY24, with a cash reserve in excess of Rs 1000 Cr.
  • As of July 23 it has an order book of Rs 1725 Cr in which 51% come from ONGC & OIL and rest 49% come from Exports & others.
  • Moreover, company expects its margins to remain steady and could sees 5-10% volume growth.
  • Furthermore, currently company has an installed capacity of 6,50,000 ton in which 5,50,000 ton is active. However after installation of its finishing facility its active capacity will increased to 6,50,000 ton.
  • Moreover, currently company has a capacity utilization of 91%.
  • During the quarter its ERW pipes margins decline due to reduction in sales to PSU's. Company enjoys better margins from PSU's than supplying to the market.

(J) Strengths & Weakness


(i) Leadership position in the domestic seamless pipes sector - Company has a strong presence in the high value-added and also in large-diameter seamless pipes segment (outer diameter or OD >10 inch), which sees relatively lower competition.

(ii) Operational support from anti-dumping duty and preference given by PSUs to domestic seamless pipe manufacturers - To address the issue of dumping from China India imposed an ADD for five years starting May 2016, which has been extended for another five years in October 2021.


(i) Vulnerability to cyclicality associated with the oil and gas industry, besides its exposure to volatility in input prices - The profitability remains exposed to volatility in input prices due to the fixed-price nature of its contracts and lack of backward integration although it takes orders with short tenures and stocks raw material inventory to mitigate the risk.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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