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    Rathi Steel Q1 FY27 earnings call

    504903
    Capital Goods·18 Aug 2026
    Management Summary

    Rathi Steel reported a strong Q1 FY27, with total income up 24.6% and PAT surging 84.5% YoY, driven by a 30% increase in total volumes, particularly a doubling of TMT bar volumes. Despite challenges like softer steel realizations and geopolitical uncertainties impacting stainless steel, the company maintained healthy growth and improved PAT margins by 58 bps to 1.8%. Management highlighted flexibility in product mix and ongoing efforts in operational efficiency and cost discipline.

    Highlights

    6

    • Total income for Q1 FY27 stood at ₹193.67 crores, registering a year-on-year growth of 24.6%.

    • EBITDA for the quarter was ₹7.77 crores, reflecting growth of 24.83% on a year-to-year basis.

    • Profit after tax stood at ₹3.48 crores, registering a strong year-to-year growth of 84.5%.

    • PAT margins improved to 1.8%, representing an expansion of 58 basis points over the corresponding period last year.

    • Total volumes increased by approximately 30% on a year-to-year basis to 28,372 metric tons.

    • TMT bar volumes grew by more than double to approximately 18,677 metric tons from approximately 8,200 metric tons in the corresponding quarter last year.

    Concerns

    3

    • The broader operating environment remained characterized by softer steel realizations, volatile energy prices, geopolitical uncertainties, and fluctuating demand across certain end-user industries.

    • Stainless steel volumes were softer, down approximately 10-12% YoY, due to geopolitical disruptions and high ocean freight impacting export-oriented applications.

    • Monsoon season (July-August) and regulatory restrictions due to pollution in NCR can hamper construction activities and steel product usage.

    Key financials

    Single quarter

    05 metrics
    1. 01Total Income₹193.67 Cr+24.6%YoY
    2. 02EBITDA₹7.77 Cr+24.8%YoY
    3. 03PAT₹3.48 Cr+84.5%YoY
    4. 04PAT Margin1.8%
    5. 05Total Volumes28,372 metric tons+30%YoY

    Segment breakdown

    VolumesRevenue Mix Share
    TMT Bar Segment18,677 metric tons45%
    Stainless Steel Segment—55%
    Heatmap· 2 shared metrics

    Order Book

    low confidence

    "The company manages its raw material procurement based on existing order books and maintains flexibility in product mix to respond to changing demand conditions."

    Source:
    Inferred

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹4 crores this quarter · ₹15 crores (FY27) planned

    largely from internal accruals

    Debt

    Debt disclosed

    Liquidity

    Liquidity disclosed

    Working capital requirements largely met from existing working capital cycle and extending credit periods from suppliers. Seeking to enhance bank limits for working capital.

    Guidance & targets

    6
    CategoryTargetPriority
    Volume
    Q1 momentum
    maintain the same momentum as what we achieved in Q1
    		Medium
    Capacity
    Rolling mill utilization
    in excess of 60%
    		High
    Capacity
    Melt shop utilization for expansion consideration
    more than around 70% to 75%
    		Medium
    Revenue
    CAGR growth
    over a 20%
    		High
    Margin
    EBITDA margin improvement
    2% to 3%
    		Medium
    Operations
    TMT 550D direct charging system commercial operations
    full throttle commercial operations
    		Medium

    What to watch in Q2 FY27

    4

    Rolling mill utilization

    FY27
    Current51-52% in FY26
    Targetin excess of 60% for FY27

    Why it matters

    Achievement of this target is crucial for operational efficiency and overall volume growth.

    So yes, we are still maintaining our guidance of what we have spoken earlier of achieving the utilization in excess of 60% for the rolling mill, as far as the rolling mill utilization is concerned for this, for this financial year. And we seem to be on track for that as of now.

    Risks & concerns

    5
    RiskSeverity

    Softer steel realizations

    Broader operating environment characterized by softer steel realizations. — Management acknowledged

    medium

    Volatile energy prices and global commodity cycles

    Continued volatility across energy markets and global commodity cycles remains a concern. — Management acknowledged

    medium

    Geopolitical uncertainties and fluctuating demand

    Geopolitical uncertainties and fluctuating demand across certain end-user industries, impacting stainless steel volumes. — Management acknowledged

    medium

    Monsoon season and regulatory restrictions

    Rainy season (July-August) and pollution-related construction halts in NCR (Q3) can hamper steel product usage and construction activities. — Management acknowledged

    low

    Increased competitive supply in stainless steel

    Some IBC acquisitions in the stainless steel sector have led to increased competitive supply, causing demand-supply mismatch. — Management acknowledged

    medium

    Q&A highlights

    8

    “I can't comment really on the exact numbers because we have not disclosed the same in public domain so far. But yes, we hope to maintain the same momentum as what we achieved in Q1. This is of course subject to a certain sort of Q2 has is sort of rainy season, July-August, it rains quite a bit, which of course hampers my end-use sort of applications and the usage of steel products.”

    Analyst sought current operational run rates post-Q1, but management provided a qualitative outlook, citing seasonal factors and diversification as balancing elements.

    asked by Keval Gala

    3 min read6 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance Overview

    Rathi Steel and Power Ltd. reported a healthy start to FY27, with total income reaching ₹193.67 crores, a 24.6% increase year-on-year. EBITDA also saw a significant rise of 24.83% to ₹7.77 crores. Profit after tax (PAT) demonstrated robust growth, surging by 84.5% to ₹3.48 crores, leading to a 58 basis points improvement in PAT margins to 1.8%. This performance was supported by strong volume growth and an improved product mix.

    02

    Product Mix and Volume Growth

    Total sales volumes for the quarter increased by approximately 30% year-on-year, reaching 28,372 metric tons. A key driver was the TMT bar segment, which saw its volumes more than double to 18,677 metric tons compared to the previous year. The company's revenue mix is almost equally split between TMT bars (45-48%) and stainless steel products (50-52%). While TMT bars primarily cater to the real estate sector, stainless steel products serve B2B applications in engineering and household sectors. Stainless steel volumes, however, were softer, declining by 10-12% YoY due to geopolitical disruption🌐s and high ocean freight.

    03

    Operational Efficiency and Cost Management

    The company continues to emphasize quality, operational discipline, and continuous process improvement. Rolling mill utilization reached 51-52% in FY26 and is on track to exceed 60% in FY27. Management aims for 70-75% melt shop utilization before considering further expansion. The focus remains on margin-accretive products, with 80-90% of stainless steel production being the 200 series, which offers better margins. The company also procures 90-95% of its raw materials domestically to mitigate currency fluctuations and price volatility.

    04

    Capital Expenditure and Funding

    For FY27, Rathi Steel anticipates a capital expenditure (capex) of approximately ₹15 crores, with ₹4-5 crores already incurred in Q1. This capex is primarily for upgrading facilities, replacing old equipment, debottlenecking, and modernization. The funding for these investments is largely sourced from internal accruals. The company is also actively exploring refinancing options with existing lenders to reduce the cost of borrowing and enhance working capital limits, which is expected to positively impact margins.

    05

    Market Dynamics and Geographic Focus

    The company's operations are predominantly focused on the NCR region, with 80-90% of sales coming from this area. This regional strategy is attributed to the scrap-based manufacturing route, which makes pan-India supply less viable due to higher freight costs. Despite competitive pressures and volatile market conditions, the company believes there is sufficient demand in the NCR to support its growth. The GreenPro certification provides a competitive advantage in securing orders, particularly with large builders.

    06

    Strategic Initiatives and Future Outlook

    Rathi Steel aims to achieve a 20% CAGR growth over the next two to three years, building on its current manufacturing-focused sales. Key levers for margin improvement include ramping up capacity, optimizing working capital through refinancing, and integrating TMT 550D operations. Trial runs for the TMT direct charging system are complete, and full-throttle commercial operations are expected by Q4 FY27, contingent on the monsoon season and regulatory environment. The company is also assessing the feasibility of a rooftop solar initiative to enhance energy efficiency.

    This is an AI-generated summary of a publicly available earnings call transcript.