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SURYA ROSHNI LTD. Q1 FY27 Results

SURYAROSNIQ1 FY27 Results
Filing
Result:Good· Market: DownBroad basedMargin expansion

Outlook: Cautiously Optimistic · Guidance: Cut

MetricValueQ4 FY26Q1 FY26
Revenue2.0K Cr5.4%27.5%
Total Income2.1K Cr5.7%27.0%
Expenditure2.0K Cr3.6%25.6%
PBT80.69 Cr38.4%76.7%
Net Profit59.60 Cr39.4%77.2%
OPM5.49%1.65pp1.14pp
NPM2.90%1.61pp0.82pp
EPS2.7439.3%76.8%
View full financials

Manufacturing/metals lens: revenue +27.5% YoY and adjusted PAT +77.2% YoY with net margin expanding to 2.9% from 2.1%, driven broadly by both Steel (+31.7%) and Lighting (+14.9%) segments with no exceptional items — a genuine standout, though capped short of the very top since no street consensus exists to confirm a beat and the base isn't unusually depressed.

SURYA ROSHNI · Q1 FY-27 · THE VERDICT

Record volume masks ₹600/ton margin gap; EBITDA guidance cut signals H2 challenge

Revenue surged 27.5% YoY and PAT 77%, but sequential profits fell 39%, guidance dropped ₹30 Cr, and order book declined 20%. The margin pressure is structural, not cyclical.

18 Aug 2026 · 6 min read
Revenue YoY

+27.5%

₹2046.5 Cr delivered

Revenue QoQ

-5.4%

Post-Q4 sequential decline

PAT YoY

+77.2%

Inflated by low FY26 base (ERP disruption)

PAT QoQ

-39.4%

₹59.6 Cr vs ₹98 Cr Q4 FY26; reveals margin decay

Surya Roshni delivered record Q1 steel volume (2.28L tons, +21% YoY) and reported PAT growth of 77%, which on the headline looks exceptional. But the quarter reveals a company grappling with structural margin compression, and the market has rightly called it out: the stock fell 4.78% on day 1 and 5.45% by day 3 as investors parsed the guidance cut and QoQ PAT collapse.

The real story: EBITDA per ton is ₹600 short, and management doesn't have a proven fix

The company guided to EBITDA of ₹670–680 Cr for FY27 (down from prior ₹680–700 Cr) with steel EBITDA per ton of ₹4,600–₹4,700. Q1 delivered ₹4,006 per ton — a 13% shortfall driven by freight costs of ₹800 per ton and input inflation of ₹200 per ton. For the full-year target to hold, Q2–Q4 needs to average ₹5,000+ per ton, a bold assumption given management's own order book fell 20% (from ₹1,000 Cr to ₹800 Cr) in the quarter.

Q1 FY27 Steel EBITDA/ton, ₹
01,7363,4725,2084,006Q1 Actual4,650FY27 Target644Gap to average
Management claims ₹600–1,000/ton upside from fresh order repricing and freight normalization in Q2–Q4, but the order book decline signals repricing velocity is slower than guided.

Management's key claims, fact-checked

Q1 announcements vs. what the numbers show

Record volume performance

Overstated

2.28L tons (highest Q1), but 14% below the 2.65L implied by guidance; vessel delays + Middle East softness blamed

Export growth acceleration with fresh orders repriced higher

Partial

78k US API tons in hand, export mix rising to 20% (from 17% FY26). But old order book locked at old freight rates; fresh repricing benefit unquantified and unproven in Q1

Freight costs normalizing for EBITDA recovery

Partial

Q1 ocean freight ₹3,800/ton created ₹800/ton EBITDA drag. Management claims new orders priced in fresh rates, but provides no detail on velocity, pricing power, or timeline

77% PAT growth reflects operational strength

Overstated

Q1 FY26 PAT ₹33.6 Cr (ERP disruption base), so ₹59.6 Cr Q1 FY27 = +77% YoY. But Q4 FY26 was ₹98 Cr, so Q1 FY27 is -39% QoQ — revealing actual margin deterioration

11L tons annual volume target on track

At risk

Q1 delivered 2.28L (21% of annual), needs 8.72L in Q2–Q4. At current 82% utilization, headroom exists, but Q1 miss of 370k tons signals execution risk; capacity expansion critical

What changed on this call

Downgrades and revised expectations
  • EBITDA guidance narrowed and cut by ₹10–₹30 Cr

  • Order book visibility reduced: ₹1,000 Cr (March) → ₹800 Cr (Q1-end)

  • Middle East export headwind materialized: 15–20k tons/qtr → ~5k tons/qtr (67% decline)

  • Input cost pressure sustained: ₹200/ton drag on Q1; no recovery timeline given

Upgrades and confirmed opportunities
  • US API ERW pipe market opened with 78k tons of orders in hand

  • Export volume ramp confirmed: 20% of steel volumes now, targeting 25% FY27

  • 3 new DFT mills commissioning Aug–Dec 2026 (capacity 14L → 16L tons)

The bull case vs. the bear case

How the street is positioned

The stock opened at ₹222.41 on August 17, 2026, down 29.28% from its all-time high of ₹314.5 and below all major moving averages (SMA20 ₹237.25, SMA50 ₹248.68, SMA200 ₹248.19). The post-result price action was bearish and held: a 4.78% day-1 decline extended to 5.45% by day 3, suggesting the market consensus agrees that the headline numbers mask unresolved margin pressure. This is not a panic sell-off (RSI 32.3 is neutral, not oversold), but a deliberate repricing.

Institutional flows confirm the skepticism: FII ownership trimmed to 3.81% from 4.68% (87 basis points outflow), and DII ownership fell to 1.90% from 2.10%. Promoter stake held steady at 63.02%, suggesting no insider selling, but the absence of insider buying is notable. Volume is trending upward, consistent with deliberate unwinding rather than panic. For a stock down 29% from ATH to stabilize, the next catalyst must be Q2 results confirming margin recovery — or the stock could test lower levels.

Ranked risks — what matters most for a holder

The four risks that should concern you most, in order

1

Severity

High

Why it matters

Management claims ₹600–1,000/ton EBITDA upside from fresh order repricing and freight normalization. But order book fell 20% in Q1, signaling repricing velocity is slower than guided. If this doesn't materialize, full-year EBITDA target of ₹670–680 Cr will miss further, dragging FY27 ROE below 9%.

Margin recovery is unproven

2

Severity

High

Why it matters

Q1 delivered 2.28L tons vs 2.65L expected (14% shortfall). Q2–Q4 needs 8.72L tons to hit 11L annual. Vessel delays, Middle East softness, and API spiral weakness drove Q1 miss. If these persist or worsen, full-year volume guidance drops and so does absolute EBITDA.

Volume execution gap widens

3

Severity

Medium

Why it matters

Middle East volumes collapsed 67% (5k tons/qtr vs prior 15–20k). Export now 20% of steel mix, targeting 25%. If geopolitical uncertainty spreads or tariff regimes change, export-led growth (78k US API tons in hand) becomes a headwind, not a tailwind.

Geopolitical headwinds extend beyond H2

4

Severity

Medium

Why it matters

Coating material, gas, ORM up ₹200/ton in Q1. Management expects normalization but gives no recovery timeline. Manpower cost reduction (20% over 1 year) helps, but automation takes time. If input costs stay elevated, EBITDA per ton stays depressed and full-year margin target misses.

Input costs don't normalize

What to watch in the next 90 days

The three things that will resolve the Q1 debate
  • 1 · Q2 EBITDA per ton: Does it hit ₹4,400–₹4,500 as guided?

    This is the make-or-break number. Q2 results will show whether freight normalization and fresh order repricing are real or just rhetoric. If Q2 delivers ₹4,200 or lower per ton, the full-year target is dead and guidance will be cut again.

  • 2 · Order book rebuilding: Does it climb back above ₹900 Cr?

    The 20% Q1 decline (₹1,000 → ₹800 Cr) is a yellow flag. If the fresh order flow is as strong as claimed, order book should stabilize or grow by Q2-end. Stagnation or further decline signals demand is softening and repricing is not offset by volume.

  • 3 · Demerger / buyback decision: Does the board meet and commit?

    Management deferred both decisions to a future board meeting, citing macro uncertainty. Clarity on capital allocation (buyback to boost ROE, or demerger to unlock value) would reset valuation. A concrete timeline would be a positive catalyst; continued deferral suggests management is uncertain about earnings visibility.

Surya Roshni is a quality compounder with genuine structural growth tailwinds (export ramp, capacity expansion, value-add shift). But this quarter shows that near-term margin pressure is real and not easily reversible. The stock's 29% drawdown from ATH is not a capitulation dip or a gift — it reflects a legitimate repricing of Q1 FY27 as a transition quarter, not the start of a new growth leg.

The number to track from here is EBITDA per ton in Q2. If it recovers toward ₹4,400–₹4,500, management's thesis holds and the stock may stabilize. If it stays near ₹4,000 or declines further, the margin recovery narrative crumbles and the stock could test lower levels. Until Q2 results land, hold at the current price is the honest call.

Informational and educational content only. Not investment advice.