Strong growth masked by margin miss; NPCIL win opens long-term tailwind

Delivered ₹102.9 Cr, YoY growth 29.9%

MET

OPM at 11.4% implies EBITDA margin near 7.8%; below guided 10-13%

Supported But Below Guidance

Delivered PAT ₹6.8 Cr; material gap suggests one-time gains or definitional difference in 'adjusted'

Overstated (Likely Adjusted PAT Excludes Items In Delivered Result)

Confirmed: D&H Sécheron, Ador, and GEE; strategic barrier to entry

MET

Expanding wire capacity by 12,000 MT; MIG wire exhausted

MET

Obtained strategic certification from Nuclear Power Corporation; only 3 Indian suppliers (GEE, Ador, D&H). Unlocks ₹14 lakh Cr nuclear CapEx expansion (8.8 GW → 22 GW by 2031-32).

Received orders from Vietnam, Saudi Arabia, Russia. German Rail TUV approval in progress; 0% duty on stainless steel from FY28 onwards.

Both lines added in Q1; flux core at 300 MT capacity targeting 1,000 MT by FY29. SAW wire commercialization Sep-Oct 2026. Revenue contribution ₹150+ Cr to bridge ₹850 Cr (71K MT) to ₹1,000 Cr target.

Still targeting ₹1,000 Cr by FY29-30 with 25-30% CAGR; no change from prior FY26 calls. EBITDA margin target 10-13% reaffirmed (currently 7.8%).

Management said 'trying to get into 10% this year' (FY27); implies margin guidance for 10% EBITDA may slip. Depends on volume scale and reduced operating costs.

Only D&H Sécheron, Ador, and GEE are NPCIL certified. 7-8 major vendors (L&T, ISGEC, BHEL, MEIL) in inspection process; already received orders from 3-4 major players.

Last 2-3 years were rough patch; now overcome. Have capacity and capability. Strong R&D team. Achievable figures, not unimaginable.

Not 100% certain but trying; will increase sales revenue, leverage economies of scale, reduce costs. Hoping to reach 10% this year.

Cannot inter-use; both independent. Electrode partly underutilized, planning to maximize sales. MIG wire almost exhausted; expanding this year.

This year targeting export market with good feedback. Already received orders from Vietnam, Saudi, Russia. Distributor seeking NAKS approval for Russia. Middle East (Bahrain, Muscat, Dubai) also promising.

Both China and Indian manufacturers. Stainless steel wires: India competitive vs China due to raw material pricing and ores. German TUV approval in progress; 0% EU duty from FY28.

Incremental CapEx ₹30-40 Cr over 3-4 years; includes wire ramping, SAW wire, flux core, ancillary machines, Thane shift. Current asset level ~₹400-550 Cr revenue by FY27.

Cash flows expected to start accruing now. Area-sharing revenue model; company gets revenue as plot area is developed/sold.

₹30-40 Cr CapEx covers multiple initiatives: SAW wire setup (already done), flux core wire (already done), wire expansion, Thane shift, ancillary machines. SAW & flux core separate from 71K MT capacity; add ₹150+ Cr revenue each.

₹5-10 Cr in FY27; already set up two product lines, expanding MIG wire line.

Yes, by FY29. Commercialization by September end or early October 2026.

₹850 Cr peak revenue from 71K MT alone.

Industry slightly seasonal. Q1-Q2 slower due to monsoons (construction stalled). Q4 always higher. Work delays into next quarter. Won't become more/less pronounced.

27-30% from niche product category; larger chunk commodity. Both go to B2B and dealers. Niche percentage will increase post NPCIL approval and infrastructure development.

Flux core wire coming, submerged wire & flux coming. Electrodes in close discussion for import substitutes (govt mandate). Defense/submarine consumables also under discussion.

Primarily greenfield. From ₹1,000 Cr to ₹2,000 Cr will be brownfield via inorganic growth (tier 2 player acquisitions).

Interest cost down from 2.2% to 1.8% YoY. No term loans; only working capital facility (₹100 Cr) with headroom. Real estate cash flows will support brownfield expansion.

In process. By end of September 2026.

Separate. SAW wire and flux core not included in 71K MT. Separate capacities.

Current WC limit ₹100 Cr with comfortable headroom. Not looking at incremental WC in next year. Real estate cash + internal accruals sufficient.

Nuclear: recently approved, currently 0%; targeting 10% by FY29. Commercial shipbuilding: 3-5% by FY29 (flux core wire major consumption).

Pledge for ₹40 Cr personal loan (promoter settlement/business). Timeline 3-4 years to slowly free up.

Currently at 6% market share; target 10-12% at ₹1,000 Cr is not disruptive. Shift from unorganized→organized opening new market. Newer technologies (SAW, flux core) also new markets. Infrastructure boom creates incremental demand. Early certifications (NPCIL) give competitive edge.

Organic growth via capacity expansion (71K MT base + new product lines). Requires market share capture from unorganized→organized shift + infrastructure boom. Execution on SAW & flux core critical.

Management targeting 10% in FY27 but already soft in Q1. Depends on volume scale, economy of scale, cost reduction. Niche product mix improvement also needed.

Incremental CapEx includes wire expansion, SAW/flux core lines, ancillary machines, Thane plant relocation. Also funding inorganic growth via land monetization cash (₹400 Cr).

EBITDA margin 7.8% vs guided 10-13%. Management targeting 10% this year but soft Q1 suggests difficulty. Scale-dependent margin improvement may slip.

Company targeting 20-30% CAGR in 6-7% industry; depends on market share gain (6% → 10-12%) via unorganized→organized shift, new product lines, and strategic approvals. Execution risk on commercializing SAW, flux core, and capturing NPCIL/defense/shipbuilding demand.

SAW wire & flux core lines require successful commercialization by Sep-Oct 2026 and ramping to 1,000 MT for flux core by FY29. Technical and demand ramp risks.

Promoter shares pledged (₹40 Cr personal loan for business/settlement). While manageable (3-4 year repayment), shows leverage. WC facility ₹100 Cr sufficient for current scale but growth may require incremental facility.

Heavy reliance on large B2B customers (BHEL, L&T, JCB, Adani, ONGC, NPCIL). Loss of major customer or project delay could impact revenue. Also dependent on infrastructure/defense capex cycle.

Welding consumables linked to infrastructure/industrial activity; Q1-Q2 seasonal weakness (monsoons). Macro slowdown in construction/defense capex would impact growth.