💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment: manufacturing of welding consumables and Metallurgical Cored Wires. Total Operating Income grew by 13.87% to INR 157.82 Cr in FY24 from INR 138.60 Cr in FY23. Growth accelerated in 9MFY25, reaching INR 149.98 Cr, a 34.27% increase compared to INR 111.70 Cr in 9MFY24.

Geographic Revenue Split

Not specifically disclosed in available documents, though the company maintains a nationwide distribution network of nearly 150 dealers across India.

Profitability Margins

Profitability is moderate and fluctuating. PAT margin declined to 1.72% in FY24 from 3.01% in FY23 due to higher depreciation, interest costs, and deferred tax. 9MFY25 PAT margin stood at 2.09% compared to 2.22% in 9MFY24. Return on Net Worth improved to 11.15% in FY25 from 6.76% in FY24 due to absolute profit increases.

EBITDA Margin

PBILDT margin was 6.36% in FY24, a slight decline from 6.76% in FY23, driven by increased raw material and employee expenses. 9MFY25 PBILDT margin was 6.70%. Adjusted for a one-time provision of INR 0.51 Cr for a long-due debtor (RINL), the 9MFY25 EBITDA margin would have been 7.1%.

Capital Expenditure

The company expects to generate gross cash accruals of INR 13.75 Cr in FY26, INR 15.65 Cr in FY27, and INR 17.18 Cr in FY28. These funds are slated to cover debt repayments of INR 3.48 Cr to INR 5.16 Cr annually, with remaining surpluses available for potential capex. Downward rating factors include any unplanned debt-led capex.

Credit Rating & Borrowing

Infomerics assigned a long-term rating of IVR BBB-/Stable and a short-term rating of IVR A3 as of May 23, 2025. Conversely, CARE Ratings moved the company to the 'ISSUER NOT COOPERATING' category (CARE BB+/Stable; CARE A4+) on March 28, 2025, due to non-payment of fees.

⚙️ Operational Drivers

Raw Materials

Specific raw materials include steel and various metallurgical components used for welding consumables and 800+ electrode variants. Raw material costs are a significant driver of the moderate and fluctuating margins.

Capacity Expansion

The company operates three manufacturing plants located at Indore (MP), Ghatabillod (MP), and Durg (Chhattisgarh). Specific MTPA capacity figures are not disclosed, but the company is shifting focus toward higher-margin value-added products starting FY26.

Raw Material Costs

Raw material costs increased in FY24, contributing to the compression of the PBILDT margin to 6.36%. The company faces high volatility in these costs because pricing varies significantly across different grades of welding products.

Manufacturing Efficiency

All three manufacturing plants hold ISO 9001-2008 certification. Efficiency is monitored through regular internal audits reporting directly to the Audit Committee.

Logistics & Distribution

The company utilizes a comprehensive sales and distribution network comprising approximately 150 dealers across India to reach end-user industries.

📈 Strategic Growth

Expected Growth Rate

34.27%

Growth Strategy

Growth is driven by the Indian Government's focus on infrastructure, which increases demand for capital goods. The company is transitioning its product mix toward value-added products to improve profitability from FY26 onwards and leveraging its established track record with reputed clients like BHEL and DNV.

Products & Services

Welding consumables, Metallurgical Cored Wires, and over 800 variants of welding electrodes.

Brand Portfolio

D & H India Limited (formerly D & H Welding Electrodes (India) Ltd).

New Products/Services

The company is focusing on increasing the contribution from value-added products, which is expected to enhance profitability margins starting in the FY26 period.

Market Expansion

The company targets growth in sectors such as Steel, Shipbuilding, Petrochemical, Construction, Transport, and Energy, supported by the national infrastructure push.

🌍 External Factors

Industry Trends

The industry is evolving with a focus on infrastructure and capital goods. The welding consumable market is currently growing, and the company is positioning itself by diversifying into value-added products to counter the moderate growth of standard electrodes.

Competitive Landscape

The industry is characterized as highly competitive and fragmented, featuring many players which puts pressure on the company's moderate profitability margins.

Competitive Moat

The company's moat is built on a 40-year established track record, a portfolio of 800+ specialized products, and certifications from major bodies like BHEL and DNV. This is sustainable due to the technical nature of welding requirements in critical sectors like defense and energy.

Macro Economic Sensitivity

Highly sensitive to Indian Government infrastructure spending and general economic development, as these drive demand in the capital goods and industrial sectors.

Consumer Behavior

Industrial demand is shifting toward more specialized, value-added welding consumables that offer better performance in complex infrastructure projects.

Geopolitical Risks

The company notes risks from changes in global economic development and government regulations, though no major immediate risks are foreseen beyond normal demand-supply fluctuations.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to governmental regulations and statutes related to manufacturing and industrial safety. The company holds ISO 9001-2008 certifications for its plants.

Environmental Compliance

The company maintains safe operations and conducts regular internal and external safety audits to comply with health, safety, and environment performance standards.

Taxation Policy Impact

The company follows Indian Accounting Standards (IndAS). PAT in FY24 was specifically impacted by deferred tax adjustments.

Legal Contingencies

The company made a provision of INR 0.51 Cr in 9MFY25 against a long-due debtor, Rashtriya Ispat Nigam Limited (RINL), which has been outstanding since 2016. A historical fine of INR 0.44 Cr was paid to BSE in 2022 for a 2015 shareholding pattern filing delay.

⚠️ Risk Analysis

Key Uncertainties

Key risks include raw material price volatility and demand-supply fluctuations in the capital goods sector. A decline in revenue or profitability could lead to a deterioration in the credit profile.

Geographic Concentration Risk

Manufacturing is concentrated in Madhya Pradesh (Indore, Ghatabillod) and Chhattisgarh (Durg).

Third Party Dependencies

The company depends on a network of 150 dealers for its distribution, making it reliant on these third-party partners for market reach.

Technology Obsolescence Risk

The company manages technology risk by maintaining a wide portfolio of 800+ variants and shifting toward value-added metallurgical products.

Credit & Counterparty Risk

Receivables quality is a concern, as evidenced by the 60-day collection period and the necessity to provide INR 0.51 Cr for the long-overdue RINL debt.