Volume surge masks margin stall; integration execution key

28,372 MT vs 21,864 MT prior year = 29.7% growth

18,677 MT vs 8,200 MT = 127.8% growth

₹3.48 Cr vs ₹1.89 Cr = 84.5% growth

EBITDA 4%, OPM 3.9%, NPM 1.8% — all flat/thin YoY despite 30% volume surge

Management cited 10-12% decline to ~9k MT from high ocean freight and export market headwinds

TMT-melting integration now in trial runs vs planning stage prior call. Products meet customer standards; teething troubles being resolved. Commercial ramp expected Q4 FY27 vs undefined timeline.

Prior calls promised EBITDA margin expansion with volume ramp. Now deferred to FY28 with vague 2-3% target. Q1 EBITDA flat at 4% despite 30% growth reveals execution risk; suggests margin levers weaker than expected.

Volumes down 10-12% YoY to ~9k MT vs stable prior; geopolitical and high ocean freight cited as headwinds. Offset by TMT ramp but limits segment upside. Normalizing post-supply overhang but not quickly.

60%+ target reaffirmed for FY27 (vs 51-52% in FY26); on track. But 80-85% long-term target remains distant — ramp slower than historical guidance implied.

Not disclosing exact figures. Hoping to maintain Q1 momentum subject to Q2 monsoon. Equal split construction/B2B helps offset seasonal drag.

Stainless ~9k MT, down 10-12% YoY due to geopolitical disruptions and high ocean freight. Endeavoring to maintain prior year levels; issues in West Asia not fully resolved.

FY26 achieved ~51-52%. Currently improving. Maintaining guidance of 60%+ for FY27 rolling mill; on track.

Trial runs taken for integrating melting capacity with TMT plant. Once we achieve 70-75%, we'll look at expanding further. Studying refining equipment additions for value-added products.

₹4-5 Cr YTD. Full-year ~₹15 Cr (₹10-12 Cr maintenance + capex for debottlenecking). Largely from internal accruals.

Renewable consumption 20-25%, flexible based on power exchange rates. Flexibility to increase/decrease depending on contracts. No specific cost advantage quantified.

Rathi brand owned by family trust (extended Rathi family). Company is licensee. Negligible royalty: ₹400-500 per annum.

Procuring >95% domestically. Protected from currency fluctuations and long lead times. Domestic raw materials enable faster supply.

Focus on margin-accretive products, not high rupees/kg. 80-90% product range is 200-series stainless (low nickel/moly dependency). Flexible to ramp TMT 550D if margins equal stainless.

Largely 80-90% from NCR region. TMT 100% NCR. Stainless steel: some sales in West India (Gujarat). Secondary steel producer business model is regional due to freight economics.

Prior guidance (from FY25 base): 20% CAGR growth over 2-3 years. That target looks achievable. Strategy: ramp existing capacities, integrate operations, improve profitability.

Stainless not affected by imports. IBC acquisitions ramped up domestic supply ~2 yrs ago; supply-demand mismatch normalizing. Stainless long-term growth potential robust (low per-capita vs developed). TMT: pan-India capacity ramp, but proportional demand increase.

TMT ~45-48%, stainless ~52%. Nearly equal split. Mix may fluctuate; flexible to adopt to margins and product demand.

May not have exact figure. IR team can provide. Reluctant to give unverified number.

Now new norm; gives preference in bidding with large builders. Direct quantification difficult, but reflected in higher sales volumes and easier order acquisition.

Steel is WC intensive. Additional requirements met from working capital cycle via extending supplier credit periods. Looking at refinancing options with lenders to lower borrowing cost and enhance limits.

TMT ~47-48% goes to real estate (retail/end-users, some infrastructure). Wire rod/stainless ~50-52% to B2B (engineering, household). Hardcore real estate: ~47-48%.

Trying best to improve. Stainless was margin-accretive past (FY21-23) but normalized. Cost-saving projects yielded results. TMT integration, product mix, refinancing working capital should help. Peers have 2-3% higher EBITDA; targeting similar by FY28.

TMT brand segment (48-50%) not integrated. Trial runs for integration underway. Aspiring to achieve 40-50% of production integrated (vs 0% now). That will add margins.

1) Ramp capacity, maintain 20% CAGR from ₹500 Cr base. 2) Access to right working capital at lower cost (refinancing ongoing). 3) Integrate TMT 550D operations (post-monsoons). All three over 2-year horizon (FY27-28).

Forward visibility ~1 month orders ideally on hand. Order-to-dispatch: USP is quick service. Maintain inventory of fast-moving grades/sizes. Truck dispatches reach customers in 10-12 hrs (NCR-based). Strength of model.

TMT: GreenPro certification required by builders. Already have BIS approval. Basic requirements in hand to cater to demand.

Credit period 30-40 days max on average, depends customer-to-customer. Exact Q1 receivables figure not available.

Multiple sizes in trials; products meet standards. Teething troubles being resolved. Monsoon (Q2) subdues demand; Q3 pollution controls halt construction. Full pickup expected Q4. Technical stabilization + demand seasonality → Q4 ramp.

Still in talks with suppliers; assessing feasibility and viability. New sheds designed to support it. Won't finalize until sure of supplier projections. Not a significant part of power requirement.

On track. Q1 delivered 24.5% YoY growth. Implies FY27 target ~₹600 Cr (20% growth).

From current 4% base targeting 6-7%. Drivers: TMT-melting integration, product mix, working capital refinancing. Q1 shows margin flat despite 30% volume gain; execution risk flagged.

₹10-12 Cr normal maintenance + ₹3-5 Cr debottlenecking/modernization. Funded from internal accruals.

Despite 30% volume growth, EBITDA margin flat at 4% YoY. OPM 3.9%, NPM 1.8% suggest cost inflation, energy volatility, or product mix drag offsetting volume leverage. Prior guidance promised margin expansion; not yet delivered, raising execution risk.

Stainless volumes down 10-12% YoY to ~9k MT due to high ocean freight and geopolitical disruptions (West Asia supply chain). Export-oriented customers hit. Offset by TMT ramp but limits upside if geopolitical tensions persist.

Rolling mill utilization at 51-52% in FY26; targeting 60%+ in FY27. Far below 80-85% historical guidance. Operating leverage limited until utilization reaches 70%+.

Direct charging integration for TMT in trial runs; technical issues being resolved. Commercial ramp expected Q4 but Q2 monsoon and Q3 pollution controls defer full pickup. Timeline slippage risk if teething troubles persist.

30% volume growth with thin 1.8% NPM requires high working capital. Management extending supplier credit terms to fund growth. Refinancing at lower rates is ongoing; if unsuccessful, WC costs could further compress already-thin margins.