Earnings call transcript: Maha Capital Q2 2025 highlights strategic shift

Maha Capital reported a challenging second quarter of 2025, highlighted by a strategic shift towards becoming a diversified investment platform. According to InvestingPro data, the company maintains strong fundamentals with $156.38 million in revenue over the last twelve months and an EBITDA of $28.92 million, despite current market headwinds. The company, previously known as Mahamaya Steel, navigated a negative EBITDA of $1.5 million and a net loss of $20.2 million, primarily due to an $80 million unrealized loss on Brava shares. Despite these setbacks, the company remains debt-free, with $88 million in cash and liquid investments. The stock saw a modest increase of 1.1%, closing at $350.7.

Key Takeaways

• Maha Capital has rebranded and is transitioning to an investment platform.
• The company reported a significant unrealized loss on Brava shares.
• A new $100 million revolving credit facility was signed.
• Production at Brava increased by 21% quarter-over-quarter.
• The company is focusing on cash flow-generating assets.

Company Performance

Maha Capital’s performance this quarter was marked by its strategic pivot from traditional steel operations to a broader investment platform. The company is now focusing on high-potential investment opportunities and cash flow-generating assets. Production at Brava operations increased by 21%, demonstrating operational improvements amidst broader market challenges.

Financial Highlights

• Cash and liquid investments: $88 million
• Negative EBITDA: $1.5 million
• Net loss: $20.2 million, due to $80 million unrealized loss on Brava shares
• Total assets: $109 million
• Equity: $180 million

Outlook & Guidance

Maha Capital is optimistic about its partnership with Q World, anticipating full utilization of the credit facility within 12 months. InvestingPro’s Financial Health Score of 2.76 (rated as "GOOD") supports the company’s positive outlook. For deeper insights into Maha Capital’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The company is also negotiating a call option extension in Venezuela and is seeking to build a high-performance investment portfolio.

Executive Commentary

Roberto, CEO of Maha Capital, emphasized the company’s new direction: "We are focusing on becoming a diversified investment platform." He also highlighted the importance of cash flow operational assets: "We want to bring cash flow operational assets that generate returns since day one."

Risks and Challenges

• Market volatility: The significant decline in oil prices from $75 to $65 per barrel could impact future earnings.
• Regulatory hurdles: The company is awaiting an OFAC license for its operations in Venezuela.
• High interest rates: The Brazilian market’s 15% interest rates are challenging for equity markets.

Maha Capital’s Q2 2025 earnings call revealed a company in transition, navigating financial losses while setting the stage for future growth through strategic partnerships and a focus on investment opportunities.

Full transcript - Mahamaya Steel Industries Ltd (MAHA) Q2 2025:

Roberto, CEO/Executive, Maha Capital: Welcome everyone for our earnings presentation. So we will start here that we say that we are pleased to announce that now we are Maha Capital. This transition to Maha Capital marks a very important step in in in our in this new reposition, we’re evolving into, and transforming us into a investment platform.

So we are very happy with this new chapter. I think we have here several things to talk about it, and I will walk through here during the presentation. So starting here with our main highlights for the q two two thousand twenty five, we start with Brava. Brava reached in q two around 90 85,000 barrels, which represents 21% increase if you compare to q one twenty twenty five. And now after plugging two additional wells in Atalanta, they reach almost 91,000 barrels in July, which is additional increase of six percent comparing to q two average.

Talking about Illinois Basin, we have a production of 258 barrels with a low OpEx per barrel of $17 a barrel. And regarding Venezuela, we are working as we speak in the co option extension, so we have more time, to see how things will evolve between US and also Venezuela. And as I was mentioning before, we changed our name into MAHA Capital. This is a strategic repositioning, for us to become a investment platform in the Swedish market. And now, we just published a few weeks ago, this partnership with Q World.

I I’m I’m going to tell and walk through about what is Q, what we are trying to build with them, and also talk about the revolving credit facility that we signed of up to a $100,000,000. And we end up the quarter with a very solid $88,000,000 of cash and liquid investment position. We also raised subsequent event, a loan agreement of $12,500,000 to work through in this Q transaction as well. So now we are very focused on building this high performance portfolio commitment to to value creation to our shareholders. Going going to Q update, I think we want to start here with the rationale behind this transaction.

So looking into the t GTC program, which I’m going to explain a little bit later and about this queue partnership. In terms of investment thesis, we see a very solid business fundamentals with huge, avenues and room for growth potential and also a high return profile of regarding this transaction. In terms of capital allocation, Maha still has this solid balance sheet. We are all the time working cash management and fees efficiency, and we have funding opportunities available such as syndication of this loan agreement is that facility that we have created with Q. So this reinforces the value creation opportunity to Maha with this transaction.

So huge transaction in the day is very aligned with our new strategy, direction, and also reinforces our commitment to value creation. Talking about what is QGTC. GTC is the global trade card program, which is basically a combination of travel entertainment and also b two b payment solutions into this credit card for corporate clients in US dollars. So our partnership with Q with QWorld is a fintech focus on credit with real time payments and b two b solutions, which already operates in Mexico under a a license granted by American Express. And now together with Maha, we will fund the QGTC program, which I just explained.

I I will give a little bit more details on on the specific products of the program. But the idea is to operate into a strategic partnership also with a leading US based credit card rail provider, offering basically US dollar card solutions for our clients, but and starting the program inside Latin America. So just to give a overview about what is T and E T Solutions and b two b solutions, Basically, the T and E, travel entertainment, we have the physical cards where we can sell, offer to the clients several types of products. So, basically, when you see management team, CEO, CFOs traveling abroad for corporate business, they have this credit cards where they can use to pay their their air tickets, their hotel bills, also dinners, transportation, and also have the benefits of using these cards and having benefits such as lounges in the airports. And also in the same T and E solution, we have the central bill accounts, which is basically a centralized credit cards so we can buy all the tickets and purchases inside our company and have better internal controls in terms of all these bills being centralizing just one vehicle, just one person, just one area.

And also, we have here the b two b solutions, basically a physical card where the company can make corporate acquisitions with their suppliers and also a virtual platform where we can have a b to b payment ecosystem in order to to organize better terms so the client can have almost enough balance short term debt product and solution. So I think here is also important to show a little bit how a credit card work a credit card transaction works so everyone can understand how we we create value inside this business of credit card. So, basically, we have five main stakeholders in each single transaction. We have the credit heart the credit cardholder, of course, which will buy something and pay later in up to forty days approximately. We have the merchant, which is basically the store or the the seller who is selling a product and receiving a instant payment.

We have also here the acquirer, which is the basically, the PSO machine, which is sending the payments to the merchant. We have here the the card rail provider slash network, which is the one that is processing every single transaction and confirming all the the credit. And we have here at least a credit issuer, which is basically a a fintech or a financial institution that is granting the thirty days, forty days credit for the clients. So here, Q is exactly in this structure being acting as the credit issuer, and we have here the composition of the value inside of this chain is based on the MDR, which what is the MDR? It’s the merchant discount rate.

So every single transaction that the merchant accepted, he’s accepted also a discount fee on each transaction of or an average basis of 3%. So a 3% discount on the merchants is what is going to pay the whole chain of the acquirer, the creditor, hail provider, and also the credit issuer. So if we imagine, for instance, an amount of a transaction of a 100,000 a $100, the credit the creditor will pay a $100, which $97 after discounted 3% of the M and D are. We always stay with the merchant. 1.35 will stay with the acquirer.

0.15 will stay with the credit rail. And the credit issuer stays with 1.5, out of this a 100. So that means the credit issuer has an average basis of 1.5 remuneration to grant this credit for thirty to forty days. And now talking about a simplified operational chart, basically what will happen is the following in a timeline basis. The client will transact with the merchant and pays in the day that the transaction happens.

In the next day, the rail will pace the merchant. Remember, the 97% of the transaction. And after four days, QGTC pays the the the rail provider, the 98.7%, which is the reduction that will stay after four days when the client pays 100% of the transaction to Q. So that that’s the financial cycle. So basically, we are talking about financing our clients in forty days and retaining this 1.5% of every single transaction.

And how Mahi intend to fund our loan facility, we we just released in in last weeks of up to a $100,000,000. Basically, the idea is to leverage the credit facility by bringing senior lenders with lower interest rates so we can enhance our yield total return out of this leverage structure. Okay. So going to Venezuela. So basically, as we mentioned in the previous quarter, we already concluded our business plan, which we signed during May, two years two two months ago.

And now we are handling operations with a minimum cost, which is basically just having our small office until you have more clarity on the license, and also to provide us these negotiations with Perede Vesa. And now we are working in the call option extension beyond November 2025 because we are still waiting, as everyone knows, our OFAC license to be submitted. So considering all these new milestones in Venezuela, Chevron having a second license to operate, we are willing here to to extend our options so we have more time to have our our license from OFAC, and then we can start our projects in Venezuela. Now talking about Brava. Brava released their q two last week, And the main message here is they are now in lower leverage and higher element scenario.

So if you see the production profile from the last quarter and also July, we can see here the very consistent increase in operational efficiency going forward. So after this turbulent Q4, we’ve seen after Atlanta is starting to to appoint these two two new wells during q April and also additional two two more wells during July, driving here this huge increase from almost 70,000 barrels to 91,000 barrels. This is a very positive scenario going forward because now the company has already this diversified portfolio between onshore and offshore. And also, they already has been working in reducing the execution risk and also transition into this new moment to lower and very marginal CapEx with focusing higher return investments and projects going forward. And if you see the financials, they presented strong financials in Q2.

If you see more than $500,000,000 revenue implying this two thirty five million dollars EBITDA, which was stronger than was expected by the market and also around $238,000,000 operational cash flow. As I mentioned before, now that they surpassed the most part of their CapEx related to Atonte and Papatera, they will start the leveraging phase now going forward. They had also been working liability management, so they basically refinanced their Portugal debt facility. It was around $500,000,000. They lowered their cost of debt from around 11% a year to around 8.7, which brings a weighted average cost going from 8.7 in in q one two thousand twenty five to around 8.2 going forward.

So they are always working in this liability management towards their debt and their capital structure. And now the leverage is on the way. We’ve seen also in the last couple of weeks the monetization of Atunta receivables, which they are bringing now around $260,000,000 positive cash flow inside the company. They, of course, will have some additional value to bring after the next three years, which is basically some positive effects in terms of tax structure. They are building this transaction.

And by the end of the day, this company, if you analyze the second quarter EBITDA of this year, you end up the year with around less than two times net debt to EBITDA ratio. So the leverage is on the way. Production is increasing. We have more efficiency. So I think now Bravo is turning the page and going to the next chapter here of successful, implementation and execution.

Going to our Illinois based asset, talking about the production, we ended up the quarter with around two fifty eight barrels a day. We were mainly impacted during this quarter by a small flood we have during April, which has a temporary shutting of some wells. And after we make the investment program 2024, 2025, we basically now seeing here the natural decline of these wells, which were expected for this type of basing. And we end up with a netback for this quarter of around $700,000 which is almost $30 a barrel netback ratio. And about our strategy on Illinois going forward, we are looking for investments to be made once oil prices rebound, because remember we are targeting projects with IRRs above 20% a year.

And due to this low oil price environment, we postponed some of these new drilling programs so we can reassess in the next quarters. And now going to the financial highlights, starting with production revenue. So as I mentioned, revenue has this natural decline expected due to the nature of the unconventional and vertical wells in the Illinois Basin. As the oil price has declined, we have here in revenue chart the significant impact from 68.5% to 6.8 decline on the realized oil price, which together with the natural decline has created this 30% around 30% decline in our revenues if you compare to Q2 twenty twenty four. Going to the next slide and talking a little bit about OpEx and netback, we have a very stable OpEx, of course, considering that we are not doing significant investments of new wells and so on, we expect the OpEx to decline.

We still remain with this OpEx per barrel in a very low around $70 a barrel range and a net back of around $30 a barrel, which has mainly been impacted by the oil price. Going to the next page, we are talking about EBITDA. So we ended up the quarter with $1,500,000 negative EBITDA and a net result of minus $20,200,000 which were mainly impacted by the unrealized loss of $80,000,000 regarding Brava shares price. And just remembering, this is an unrealized loss and we will still be exposed to volatility going forward. And this could impact the quarters going forward.

Talking about our CapEx and balance sheet, basically as I explained, considering the low oil price environment, we are postponing the decision on the new wells in our leases. So basically, this is why we have this very small amount in terms of investment in Q2. And together with that, we are also working a lot to reduce our expenses in terms of G and A. So if you can see the chart in the right side of the slide, we can see this trend of reducing G and A going forward. Basically, have a recurring G and A of around $1,000,000 for the quarter.

We have also nonrecurring effects mainly related to these legal fees and things related to consultancy expenses of around $700,000, but we are working this headcount optimization, cost control initiatives, and other legal and other expense reductions so we can keep this trend and keep reducing g and a going forward. And our balance sheet highlights are basically we end up the quarter with total net cash plus liquid investments of $88,000,000 zero debt and around $109,000,000 total assets and $180,000,000 in equity. And talking now about our cash flow overview, so we end up, q one with around a $106,000,000 in net cash plus liquid investments where around $9,000,000 were basically, Brava shares and around $15,000,000 in available cash. If you see, basically all the main difference here between Q1 and Q2 is this unrealized in Brava shares valuation. You can see we have a small negative operational cash flow, mainly impacted by our negative EBITDA, But we have also a positive incomes in terms of investment investment and also financing cash flows mainly related to dividends collected by GTB, our Bolivian Gas Pipeline, debentures with, Bravo offshore.

And then we end up the quarter with around $88,000,000 of net cash and liquid investments where around $72,000,000 were Brava share price and, $16,000,000 of available cash. And just for purpose of comparison, as we speak now, Brava has increased if you compare to end of Q2, and the $72,000,000 is around $80,000,000 as we speak. And now talking about our strategy going forward. So, now we are starting to become a diversified investment platform. This transition to MAHA Capital marks this important milestone.

So, we are focusing the in this evolution into this investment platform. The this this transformation is totally aligned with and and committed with value creation, and an ambition now is to pursue and look for high potential opportunities beyond traditional focus of MAHA, which were at Just Energy and Minerals. Looking forward, we are very excited with Q. We believe the credit lines are expected to increase in growth in the upcoming weeks with a view of our potential syndication of our loan with other investors. Together with that, we are still awaiting for OFAC license and also progressing in these discussions to extend our call option.

Hopefully, I will bring more news on that in the next weeks. And we are still actively pursuing other business to bring to Marha. So with that, I conclude here my presentation. Carlo, I think we can open here for the q and a section. Thank you very much for your time.

Carlo, Moderator/Analyst, Maha Capital: Well, thank you, Roberto. And as always, we received a fair amount of questions ahead and there are coming in questions as we speak. So I thought I will structure this like general questions and then we can touch upon Brava, Venezuela and then we can end on with Keogh. Basically, changed the name, and I quote, as a pivotal step in strategy repositioning. So how will that affect your acquisition strategy, focus on shareholder value and the dividend policy?

I know there’s three question in one, but just touch upon those.

Roberto, CEO/Executive, Maha Capital: Perfect. Well, so the idea and the rationale behind this transition is so MAHA can be an investment platform, and that means we can look for several accretive and interesting opportunities, not only focus on oil and gas and minerals such as Q. So, when you look for this type of opportunities, we are seeing here also opportunities to bring cash flow operational assets that instead of deploying huge amount of CapEx, we can already bring a new project, a new company, a new asset, which is already performing and being a cash flow generator since day one. So that’s the type of profile and and the opportunities that we want to bring for Maha structure.

Carlo, Moderator/Analyst, Maha Capital: And any comments on future dividend policy?

Roberto, CEO/Executive, Maha Capital: I think we probably need to reassess this dividend policy. Of course, our board is totally aligned on generating value pursuing the opportunities to bring dividends in the short term as well. And of course, this is our intention going forward.

Carlo, Moderator/Analyst, Maha Capital: And when it comes to, well, let’s say, increasing the portfolio here, would we expect more acquisitions in Q3, Q4 or is it steady as you go?

Roberto, CEO/Executive, Maha Capital: I think now we are focused on Q. I think we’ll have to work on execution. But, of course, we will be alert in other opportunities. So, we don’t want to give here any expectations. We will be totally alert if there’s any opportunity across ourselves in this next quarter or so, we’ll be totally here prepared to analyze and see if it’s such a good opportunity or not and in parallel executing here a Q transaction.

Carlo, Moderator/Analyst, Maha Capital: Okay. So I’ll jump into Brava here. Will Brava retain its onshore operations? Or will there be a divestment there?

Roberto, CEO/Executive, Maha Capital: Well, I think that’s a question up to Brava, right? But we’ve seen here some news in the papers. But I think now thinking the leveraging, thinking this mixed portfolio between onshore and offshore, I in my opinion, makes sense to keep the assets. But of course, this is a company’s decision. It’s up to them to decide on it.

Carlo, Moderator/Analyst, Maha Capital: And here is more a statement rather than a question, but I think it’s worthwhile highlighting because Braava substantially increased its production and now very close to the 100,000 barrels that barrels of oil equivalent, I should say, that you have been talking about. But we haven’t really seen anything in the share price. Any comments around that?

Roberto, CEO/Executive, Maha Capital: Yes. I think in terms of execution, they are performing two quarters very well, right? I think we just saw that in the chart showing the production not only of Q2, but also July after adding up these two new wells in Atlanta. But you you I think there are two things here basically that is not supporting the share price increase. The first one, I believe is the oil price, which has declined from around 75 almost 65 now, right?

And this, if you compare to the other peers in Brazil, they also suffer in the same period as Brava. And also, if you look for the debt market in Brazil, the interest rates are here 15%. So part of these investors in Brazil are now shifting their capital into the fixed income so they can have this 15% with zero risk, if we can say that. And then waiting for this improvements and also this deleverage going so they can move back to equity markets. And this is not only for oil and gas, I believe, but also for the whole capital market as a whole.

Carlo, Moderator/Analyst, Maha Capital: Thank you for that. And then let’s jump into Venezuela here. There is a lot of comparisons with Chevron and Venezuela. And you have stated that you’re targeting agreement like the Chevron ones. And I’ll just read one question here.

Do you have a similar setup as Chevron in Venezuela where you can claim oil for debt?

Roberto, CEO/Executive, Maha Capital: Yes, that’s the idea. We are pursuing the same model where we can act even though being a minority shareholder in the JV, we act as the operator. That’s the the most important thing to do because we can have the controls in terms of business plan and also financing and also the cash flows. This is what we are pursuing. Of course, these negotiations, is not in the same, path and time that we want to do, but we are also still waiting for OFAC license.

And OFAC license is something that is not in our control. Right? We are still waiting this policy between US and Venezuela, take some conclusion and take some place. And and so considering this not clarity on timing, we are negotiating with Novo Nordisk extension so we can have more time to exercise a call option and have more time to wait for OFAC license.

Carlo, Moderator/Analyst, Maha Capital: So we have a couple of questions regarding the timeline here, but basically, it’s just wait and see. Is that the right way to interpret this?

Roberto, CEO/Executive, Maha Capital: Yes, exactly. We are going to wait this development between US and Venezuela and and how US will grant grants the licenses to non US company and to US companies like Chevron. In the meanwhile, we will have almost zero cost in the structure because we are basically negotiating, the same type of contracts like Chevron has with, PDVSA, and we will be waiting awaiting of a license. That’s the major milestone here for us to exercise the call option.

Carlo, Moderator/Analyst, Maha Capital: And the last question on Venezuela would be your call option expires in November. And do you think you will have everything in place until then?

Roberto, CEO/Executive, Maha Capital: For sure, we are pretty advanced. I think we will probably have more updates to our investors in the next couple of weeks.

Carlo, Moderator/Analyst, Maha Capital: So let’s jump into Kyo and wrap this up here. Kyo credit facilities, as I understand it, is estimated to USD 100,000,000. Would you have any expectations regarding, let’s say, commitment year over year for next year and the coming year? Should we divide that into, let’s say, 100,000,000 by four for four years? Or how should we look upon that?

Roberto, CEO/Executive, Maha Capital: Yeah. We will talk about what will be the business plan or the expectations. I think, in terms of the business plan, the company, the the the the program expect to increase pretty fast. We are seeing here a potential use of this fully amount of the facility in the next twelve months or even less. And the idea and and maybe anticipating here some of the questions.

And the idea, even though MAS commitment is up to a 100 a $100,000,000, we are working here hard to to find other investors to see the case, a huge portion of this facility. So, basically, I I cannot give you here a a a a idea of how much we are going to syndicate. I can say it would be a significant amount. So in a way, we can use our balance sheet in a very intelligent way to better allocate our resources in this structure.

Carlo, Moderator/Analyst, Maha Capital: So if I continue with that question here, because we have a couple of questions regarding dedication But basically, if you get a third party involved here, would you increase the credit facility or would you decrease your exposure to Keogh?

Roberto, CEO/Executive, Maha Capital: No, that’s a good question. We can do both, but the idea is to reduce our exposure. So, basically, the idea here is on top of the $100,000,000, we find investors to reach this $100,000,000 together. And the idea is to bring also senior lenders, which will have priority in terms of collateral, but they also will have lower cost of debt so we can benefit from this positive spread between the 12% interest rate for the loan agreement with the with these other senior investors. So then we can increase our returns on that.

But if this product increase more than or needs more than a $100,000,000, I believe we’ve been in this moment where we can find other senior lenders and cheapest debt structures to leverage even more this QGTC structure.

Carlo, Moderator/Analyst, Maha Capital: And I have to expose my ignorance here. Have you published any expected return on investments in Keio? And also have you discussed officially any expected credit losses as an average?

Roberto, CEO/Executive, Maha Capital: Yeah. So taking taking consideration the lower agreement, the expected interest rate is 12%. This is what we have considering the $100,000,000 facility. But of course, if you bring a substantial amount of a senior lender with low interest rates lower than the 12, all this positive spread goes into the subordinated quota. So that’s the idea.

We can’t have here. We cannot bring right now these percentages and these expected returns, but the idea is to enhance our own yield in this transaction. That means higher than 12% a year. And sorry, what was the second question, Carlo?

Carlo, Moderator/Analyst, Maha Capital: Basically, it comes to credit losses, would there be any, let’s say, expected average or going forward?

Roberto, CEO/Executive, Maha Capital: Perfect. No, perfect. So this portfolio presents a historical very low default ratio. If you see numbers in this sector, in the whole broad sector is below 0.5% in transaction percentage. And we expect to work to be even less because we are talking here about very high credit profile companies with, major or parent companies in The US with branches spread, Latin America.

So in terms of quality, our very high quality clients, we are having here conservative credit limits and risk concentration. And also, we have here sometimes the enforcement of these potential agreements in The US. So it is a robust and very defensive type of structure where we think we can have very low default ratios going forward.

Carlo, Moderator/Analyst, Maha Capital: So you’re pretty comfortable with the expected credit losses there. And just a final question here. When it comes to the syndication of the loan and you refer to senior lenders, would we have any timeline? Could we expect that in Q3 or tomorrow or before the end of the year?

Roberto, CEO/Executive, Maha Capital: No. Hopefully, I hope to bring more news in the next couple of months.

Carlo, Moderator/Analyst, Maha Capital: So what you want us to well, what you expect or want us to look for is perhaps syndication of the loan and maybe if the opportunity is there, losing more deals?

Roberto, CEO/Executive, Maha Capital: Exactly. I think we will have some further news in the next couple of weeks. Of course, we will work also in working here in a new communication with the market only about Q transaction. So in the next couple of weeks, probably we’ll have more news also regarding the extension of call option in Venezuela.

Carlo, Moderator/Analyst, Maha Capital: Right, Roberto. Thank you for that. Very interesting. It should be fascinating to follow NewCo as it were and speak to you later. A special thanks to everyone who’s put forward questions and questions during the broadcast.

Thanks, and see you later. Bye.

Roberto, CEO/Executive, Maha Capital: Thank you, Karl. Thank you, everyone. Have a nice day.

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