30-Oct-2026 18:53:35
STEAMHOUSE INDIA Q1 CONCALL: TARGETS 20–25% VOLUME GROWTH, 60–65% CAPACITY UTILIZATION & ₹1,000+ EBITDA PER TON; PLANS CAPACITY EXPANSION TO 705 TPH, SECURES ₹311 CR UNA PROJECT & EXPECTS 30–35% EBITDA CAGR
• Volume Growth Outlook: Management expressed confidence in achieving approximately 20–25% company-level steam volume growth, supported by existing customer demand recovery and commissioning of new capacities. • Existing Plant Growth Outlook: Management expects approximately 5–10% volume growth from existing operating locations, with additional growth coming from new facilities. • EBITDA Growth Outlook: Management discussed its earlier 30–35% EBITDA CAGR guidance and indicated that it would aim to maintain or exceed this growth trajectory, without providing a firm FY27 commitment. • EBITDA Per Ton Guidance: Management expects EBITDA of approximately ₹1,000 per ton to remain sustainable at its steam generation and distribution facilities over the next few quarters, excluding possible seasonal weakness in Q2. • EBITDA Margin Outlook: Management expects margins to remain healthy, with potential improvement from higher utilization, waste-to-energy operations and discontinuation of low-margin coal trading. • Capacity Utilization Target: Management aims to increase steam capacity utilization to approximately 60–65%, compared with 41.4% in Q1 FY27. • New Plant Utilization Guidance: Management expects newly commissioned boilers to achieve approximately 50% utilization during their initial months of operation. • Capacity Expansion Plan: Company plans to increase steam distribution capacity from 345 tons per hour to approximately 705 tons per hour through ongoing and planned projects. • Existing Capacity Tie-Ups: Approximately 70% of the current 345 TPH installed capacity is tied up with customers under supply arrangements. • FY27 Project Commissioning: Management expects four under-construction projects at Jhagadia, Vapi, Nandesari and Ahmedabad Pirana to become operational during FY27. • Under-Construction Project Capex: Approximately ₹60 Cr of additional expenditure is required to complete the four ongoing projects. • Future Expansion Capex: Management plans approximately ₹170 Cr of expenditure over the next 15–18 months for IPO-funded projects and the planned Tarapur facility. • Tarapur Project Timeline: Company's proposed 60 TPH facility at Tarapur is expected to become operational during Q4 FY28. • IPO-Funded Project Timeline: Facilities at Dahej GIDC, Ankleshwar and Panoli are targeted for commissioning during Q1 FY29. • Una Bulk Drug Park Project: Company secured an approximately ₹311 Cr EPC mandate, including GST, for a 300 TPH community boiler facility at Una, Himachal Pradesh. • Una Project Funding: The facility will be funded by Himachal Pradesh Bulk Drug Park Infrastructure Limited, allowing Steamhouse to execute the project without funding the plant's construction capex. • Una Operations & Maintenance: The contract also includes long-term operations and maintenance of the community boiler infrastructure. • Una Revenue Sharing: Management indicated that 9% of steam revenue would be shared with the project authority, with the amount intended to be recovered from end customers. • Una Project Margin Outlook: Management indicated a preliminary margin expectation of approximately 8–10%, depending on fuel pricing and final contract terms. • Una Project Agreement: Management clarified that the final agreement and detailed commercial terms had not yet been completed at the time of the call. • Government Project Opportunities: Management is pursuing opportunities in Bulk Drug Parks, PM MITRA textile parks and other industrial clusters adopting centralized boiler systems. • Gujarat Bulk Drug Park: Management confirmed interest in participating in the Gujarat Bulk Drug Park community boiler tender. • Government Policy Support: Management highlighted increasing regulatory and government support for common boilers to reduce industrial air pollution and provide plug-and-play industrial infrastructure. • Community Boiler Efficiency: Company's centralized boiler systems operate at approximately 80–83% thermal efficiency, compared with around 50–65% for conventional captive boilers. • Customer Cost Savings: Management indicated that eligible industrial customers could achieve approximately 25–35% cost savings by outsourcing steam generation, depending on their existing fuel and operating arrangements. • Steam Pipeline Network: Company has developed more than 60 km of steam distribution pipelines across seven industrial areas in Gujarat. • Steam Distribution Capability: Management indicated that steam can be supplied to customers approximately 7.5–8 km from generation facilities, with pressure losses of around 1 bar under typical conditions. • Steam Distribution Losses: Management estimated steam losses of approximately 3–7% during distribution, depending on distance and weather conditions. • Steam Sales Capacity Calculation: Management uses 80% saleable capacity, 330 operating days and 24-hour operations when estimating annual steam sales potential. • Industrial Gas Expansion: Company is developing nitrogen, oxygen and other industrial gas distribution opportunities by leveraging its existing customer relationships and pipeline infrastructure. • Nitrogen Plant: Company commissioned a PSA-based nitrogen generation and distribution facility at Ankleshwar with capacity of 350 Nm³ per hour. • Industrial Gas Technology: Management is evaluating air separation units to produce nitrogen, oxygen, liquid nitrogen and liquid oxygen for industrial customers. • Industrial Gas Business Models: Company is considering both self-owned gas generation facilities and build-own-operate arrangements with established industrial gas suppliers. • Industrial Gas Infrastructure Savings: Management indicated that adding new gas pipelines could require only approximately 10–20% of the investment already made in the underlying support infrastructure. • Industrial Gas Cross-Selling: Management expects gas distribution to strengthen customer relationships and create additional revenue streams across chemicals, pharmaceuticals and other industrial sectors. • Waste-to-Energy Expansion: Company is increasing the use of industrial waste as boiler fuel where commercially viable, aiming to improve steam generation economics. • Vapi Waste-to-Energy Performance: Management attributed part of the improvement in EBITDA per ton to higher utilization of waste-to-energy boilers at Vapi. • Coal Procurement Strategy: Company shifted from credit-based coal purchases to cash purchases after May 2026 to reduce fuel procurement costs and support profitability. • Coal Price Pass-Through: Most steam supply agreements include coal-linked variable pricing, with adjustments generally made monthly and quarterly for certain customers. • Contract Tenure: Customer supply agreements typically range from 1 to 10 years, with non-exit provisions included in most contracts. • Minimum Offtake Agreements: Management indicated that newer supply agreements increasingly contain minimum guaranteed offtake commitments to improve volume visibility. • Customer Retention: Repeat customers accounted for approximately 90.72% of FY26 revenue and 99.38% of Q1 FY27 revenue. • Customer Base: Company currently serves 21 customers with multiple operating units connected to its distribution network. • Customer Diversification: Management is expanding beyond chemical and pharmaceutical customers into tyre manufacturing, food processing and other industrial sectors. • Haldia Business Expansion: Company signed a steam distribution arrangement with a food processing customer in Haldia, West Bengal. • Steam Trading Opportunities: Management confirmed agreements for steam purchase and distribution opportunities at Dahej SEZ and Haldia. • Steam Trading Business Model: Management highlighted that purchasing and distributing steam requires lower capital investment than constructing generation facilities and can generate higher returns on capital. • Sarigam Utilization Recovery: Management reported improved capacity utilization after onboarding two to three new customers and is pursuing additional large industrial customers. • Working Capital Guidance: Management expects a positive working capital cycle of approximately 35–40 days going forward. • Receivables Collection: Company follows a fortnightly billing system, with customer payments typically received within approximately 7–15 days. • Operating Cash Flow Outlook: Management indicated that operating cash flow conversion relative to EBITDA could remain healthy, although the previous approximately 1.2x ratio may moderate. • Debt Reduction Strategy: Management plans to use IPO proceeds to repay high-cost borrowings and support identified capacity expansion projects. • Finance Cost Outlook: Management expects finance costs to moderate during FY27 as debt repayments improve the borrowing profile. • Related-Party Transactions: Company continues purchasing steam from Sanjoo Dyeing & Printing Mills for distribution at Sachin, with these transactions expected to continue for at least the next few quarters. • Related-Party Business Outlook: Management may evaluate alternative steam generation arrangements in the Sachin industrial area, potentially reducing reliance on related-party steam purchases. • Future Technology Strategy: Management is evaluating advanced boiler technologies, industrial waste-based fuel systems and longer-term atomic energy-based steam generation concepts. • Q1 Steam Sales Volume: Steam sales increased 16.70% YoY and 11.52% QoQ to 3,05,816 tons. • Q1 Revenue Performance: Revenue from operations increased 13.35% YoY to ₹128.62 Cr. • Q1 Steam Revenue: Steam revenue increased 46.07% YoY to ₹123.37 Cr, compared with ₹84.46 Cr in Q1 FY26. • Q1 EBITDA Performance: EBITDA increased 60.08% YoY to ₹30.93 Cr. • Q1 EBITDA Margin: Margin expanded to 24.05% from 17.03% YoY, an improvement of 702 bps. • Q1 EBITDA Per Ton: EBITDA per ton increased 37.17% YoY to ₹1,011, compared with ₹737 in Q1 FY26. • Q1 Net Profit: PAT increased 80.25% YoY to ₹18.34 Cr. • Q1 PAT Margin: Margin expanded to 14.26% from 8.97% YoY, an improvement of 529 bps. • Q1 Capacity Utilization: Utilization improved to 41.40%, compared with 36.06% YoY and 38.32% QoQ. • Q1 Revenue Mix: Approximately 73.7% of revenue came from internally generated steam and 22.2% from purchased and distributed steam, as stated by management. • FY26 Financial Performance: Revenue stood at ₹491.51 Cr, EBITDA at ₹83.49 Cr and PAT at ₹38.64 Cr. • FY26 Return Ratios: ROE stood at 22.36%, while ROCE stood at 16.06%. • Debt Position: Gross borrowings stood at ₹359.48 Cr in Q1 FY27, compared with ₹281.62 Cr at FY26-end, ahead of planned IPO-funded repayments. • Key Challenges: Monsoon-related operational disruptions, dependence on chemical and pharmaceutical sector demand, relatively low existing capacity utilization, commissioning delays, customer offtake requirements and execution of multiple expansion projects remain important factors.
STEAMHOUSE INDIA LIMITED