Record quarter masks FY27 caution; Q2 price softness ahead

Revenue ₹732.2 Cr (+31.1% YoY), EBITDA ₹100 Cr (13% margin), PAT ₹56.5 Cr (+66.9% YoY)

Q1 EBITDA per ton ~₹10,000+ (excluding sponge iron sales); calculated from ₹100 Cr EBITDA / ~100k tons volume

No volume data in transcript, but margin expansion (OPM 13% vs. typical 10–12% prior) consistent with higher-value mix

SS coil at ₹15,000–₹16,000 confirmed in call; future margin pressure due to QCO relaxation and Chinese imports acknowledged

Q2 guidance explicitly lower due to monsoon, price softness, demand slowness; represents normalization from Q1 peak

Kuthrel Unit 2 stainless CR coil capacity doubled: 58k → 116k tons/annum; consent to operate in place. Q1 achievement ahead of schedule.

Expanded from 10 (end FY26) to 28 (Q1 FY27); supplying 1,200 tons, targeting 2,500 tons by year-end. New distribution moat in stainless pipes.

Guided ~12% (±1–2%) vs. 10–12% prior; Q1 beat at 13% but FY27 expected to normalize. Price softness and monsoon offset volume growth.

Current ₹15k–16k maintained for FY27, but Kesda Phase 1 (HR coils) will compress to ₹12k–13k due to lower HR margin and Chinese import pressure from QCO relaxation.

₹200 Cr additional WC for FY28, ₹300 Cr for FY29 post-Kesda ramp. ₹100 Cr convertible warrant issuance approved to fund expansion and WC needs.

Peak debt ₹800–850 Cr term + ₹200–300 Cr WC debt by end FY27. Cost of debt 7.5–8%. Confident on Q4 FY27 Kesda commissioning; monsoon won't deter due to substructure completion.

Q1 achieved ₹10k+/ton due to strong market support. Q2 guidance ₹7,500–8,500/ton due to monsoon, price softness. FY27 EBITDA growth 10–15% over 2026. SS margins ₹15–16k/ton current, ₹12–13k/ton post-Kesda.

Not competing on product (JSL 1mm thick, wide coils; we do narrow, precision 0.1–0.4mm). Targeting ₹70–80k ton/month unorganised/import market. Post-Kesda, 360k ton SS capacity added. PLI subsidy 13% revenue till 2030.

MS pricing stabilising at 3–5% downward. Stainless margins ₹15–16k/ton held; immune to nickel due to 200-series (low nickel requirement, sourced via scraps). PNG shift in Jan 2026 mitigates LPG/propane cost volatility.

MS pipes 65% (market 70%), GP pipes 90%+, stainless 60% (market 60–65%). Sponge iron self-sufficient via in-house capacity; scrap-based SS model. No external sourcing needed post-Phase 1.

Stainless production peaked in Q1; Q2 monsoon (moisture, price softness, demand slowness) will dampen. Conservative over ₹270 Cr FY26 EBITDA base; weighted average Q1–Q4 justified. Chinese imports pressuring SS margins.

MS 230–240k tons, GP 90k tons, stainless 60k tons; ~400k total value-added. Weighted EBITDA/ton ₹7,500–8,500. Stainless margin floor ₹10k/ton (seen Q3 FY26), regular ₹15k/ton.

Serious commitment by promoters, management participating. Use: subsidiary capex (announced later), strengthen WC (Kesda Q4 completion), solar plant ₹25 Cr, DFT mill ₹100 Cr, power plant ₹200 Cr. Not enabling, binding.

Conservative vs. Q1's 31%; reflects expected monsoon dampening, price softness, market normalization. No new capacity ramp until Q4 FY27 Kesda.

Estimate derived from MD comment; assumes Kesda Phase 1 ramp & DFT mill commissioning (Q2 FY28). Not formally quantified on call.

Consistent with prior 10–12% guidance, top-end. Q1 beat at 13% due to supply-constrained pricing; expect normalization Q2–Q4.

Implies PAT ₹280–320 Cr for full year (~₹60 Cr Q1 annualised = ₹240 Cr at 6% margin). Conservative, accounting for interest on peak debt.

Kesda Phase 1 HR coils ₹12–13k/ton expected to pull down blended EBITDA/ton vs. Q1's ₹10k; 'upward of ₹8,000' suggests ~8,500–9,000 blended.

Explicitly guided due to HR margin compression and Chinese import pressure from QCO relaxation. Acknowledged as margin headwind.

On track for Q4 FY27 commissioning (360k ton stainless). Substructure complete, superstructure advanced; orders placed, no monsoon risk.

DFT mill adds 150k MS tone by Q2 FY28. Power plant reduces cost by ₹180–200 Cr/annum once live.

8 MW behind-the-meter at Kuthrel; board approved, capex phased.

QCO framework relaxation allowing Chinese stainless imports; stainless margins expected to drift from ₹15–16k/ton (Q1) to ₹12–13k/ton post-Kesda. Chinese cost parity with Indian production acknowledged.

Q2 FY27 expected softer due to monsoon dampening demand, price softness, and raw material moisture. EBITDA/ton guidance dropped from Q1's ₹10k+ to ₹7,500–8,500 for Q2.

Kesda Phase 1 (₹930 Cr) and power plant (₹200 Cr) must complete on schedule to meet FY27 guidance and unlock Phase 2/3. Monsoon construction risks acknowledged but mitigated (substructure complete).

New primary steel capacity coming online in India over next 2–3 quarters. Could compress MS pipe pricing if supply outpaces demand. Management monitoring but downplaying impact (pipe is only 10–12% of coil use).

Kesda Phase 1 ramp (FY28–29) requires ₹200 Cr (FY28) and ₹300 Cr (FY29) incremental WC. Peak debt will be ₹800–850 Cr term + ₹200–300 Cr WC by end FY27. Dependent on ₹100 Cr warrant issuance + internal cash.