Rathi Steel — Q3 FY26 earnings call

Call held 18 Feb 2026

Management summary

Rathi Steel and Power Ltd reported strong financial performance for Q3 and nine months FY26, driven by improved capacity utilization, cost efficiencies, and a balanced product mix. The company is focused on sustainable manufacturing, expanding its stainless-steel portfolio, and leveraging government infrastructure spending. Efforts are underway to reduce debt costs and enhance operational efficiency through capex for direct billet charging.

Highlights

  • Q3 FY26 Total income stood at INR160.09 crores, marking a 51% YoY increase.

  • EBITDA for Q3 FY26 grew by 38% YoY to INR6.41 crores.

  • PAT for Q3 FY26 surged by 262% YoY to INR1.91 crores.

  • For the nine months FY26, total income reached INR472 crores, a 32.67% growth over the prior year.

  • Nine months FY26 EBITDA was INR19 crores (up 16.96%) and PAT was INR5.42 crores.

  • The company achieved its highest ever monthly sales of INR77.45 crores from the Ghaziabad facility.

  • Current steel melting capacity utilization is 60-65%, with a target to increase to 80-85%.

Key financials

2 periods

Q3 FY26

  • Total Income
    ₹160.09 Cr
    YoY +51%
  • EBITDA
    ₹6.41 Cr
    YoY +38%
  • PAT
    ₹1.91 Cr
    YoY +262%

9M FY26

  • Total Income
    ₹472 Cr
    YoY +32.7%
  • EBITDA
    ₹19 Cr
    YoY +17%
  • PAT
    ₹5.42 Cr

What they filed

Q4 FY26: revenue up 63.4%, net profit up 96.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ1 FY25Q2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26
Revenue128 121 104 150 155 +22%156 +29%160 +53%244 +63%
EBITDA6 5 3 8 6 +3%6 +21%6 +110%10 +24%
Net profit3 7 1 4 2 −30%2 −77%2 +260%7 +96%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

low confidence

Composition

Mix 2 client types
  • Repeat Stainless Steel Clients 90%
  • Repeat TMT Bar Clients (Developers/Suppliers) 70%

Share of order book by client type· categories overlap, and sum to 160%

Management indicated strong sales and no issues with product selling, highlighting high repeat customer rates for both Stainless Steel products (90-95%) and TMT bars (70%).

Source: Inferred

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Capex for direct charging of hot billets for TMT mill
    See as I told you that that we are in the process of doing direct charging of hot billets for my TMT mill also. Now we have direct charging of hot billets for Stainless Steel Mill. So now we are in the process of completing the capex plan for direct charging of hot billets for TMT mill. So that that process will be completed by -- in this quarter or early next quarter.
  • Debt Gross ₹43.5 Cr
    • Rate reset Cost of debt is going down, efforts to reduce further by approaching other lenders for lower interest rates.
    Now as on date the gross debt with me is INR43.50 crores. Right. And the cost of debt is going down and we are making all efforts to go down further.

Guidance & targets

Revenue

  • CAGR Growth Revenue · yearly basis · High confidence 20%
    We expect to grow at a CGR of 20% on yearly basis.

    — Rajesh Jain

  • Turnover doubling Revenue · next five years · Medium confidence Double current turnover
    Next five years, I think my turnover will definitely be double to what I am achieving today.

    — Rajesh Jain

Capacity

  • Capacity Utilization Capacity · High confidence 80-85%

    From 60-65% today

    Capacity utilization is in the range of 60% to 65%. And we propose to increase it to 80% to 85%.

    — Rajesh Jain

Profitability

  • EBITDA Margin Profitability · Medium confidence Much higher
    Once we once we will move to 75% to 80% capacity utilization, EBITDA margin will definitely much higher subject to market conditions.

    — Rajesh Jain

What to watch in Q4 FY26

Completion of TMT mill direct billet charging capex

this quarter or early next quarter
Current In process
Target Completed

Why it matters

This capex is crucial for increasing capacity utilization to 80-85% and improving operational efficiency.

So that that process will be completed by -- in this quarter or early next quarter. Once that process gets complete.so my capacity utilization will be much higher.

Q&A highlights

4 direct
Product-wise revenue and volume breakup, and mix evolution Partial
Good afternoon, sir. We will send you the details which is not I mean, the bifurcation is not with us right now. And we will definitely send you the detailed bifurcation in terms of carbon steel as well as stainless steel.

Analyst sought detailed segment-wise financial data, which management stated was not immediately available but would be provided, indicating a lack of immediate transparency on product mix performance.

Asked by Hrudaynath Kolani

EBITDA margin closing for FY26 and sustainable band for FY27/FY28 Partial
If there will be better utilization and the market is conducive, then it will definitely go up. Because we are making various changes in our existing plant, by which, we are trying to reduce our direct cost. So it will be much, suppose subject to market conditions, this will be higher. And with the higher capacity utilization the margins will definitely be higher.

Management linked margin improvement directly to capacity utilization and market conditions, without providing specific numerical targets for future margins, suggesting reliance on external factors.

Asked by Hrudaynath Kolani

Increase in other expenses YoY Direct
Yes, if you track our company, in December 2024, we were not operating the TMT mill. But in December 25 quarter we have restarted the TMT mill operations in April 2025. So when we restart the mill, there is always a power cost, there is always a consumable cost which was not there in 2024. So that's the reason in absolute terms it is higher as compared to 2024.

Management provided a clear operational reason for the increase in other expenses, attributing it to the restart of TMT mill operations and associated power/consumable costs.

Asked by Hrudaynath Kolani

Operational constraints to reach 80-85% steel melting utilization Direct
See as I told you that that we are in the process of doing direct charging of hot billets for my TMT mill also... So that that process will be completed by -- in this quarter or early next quarter. Once that process gets complete.so my capacity utilization will be much higher.

Management identified the completion of capex for direct billet charging in the TMT mill as the key enabler for achieving higher capacity utilization, providing a clear timeline for this critical operational improvement.

Asked by Raj Shah

Engagement with defense contractors, rail infrastructure, or public sector EPC firms Partial
Not yet. We are we are first focusing to sweat out all our assets. And thereafter of course when we have we after completion all our existing projects, I mean, with like, the conveying system with our TMT mill and all. After that, of course, we will again focus on the other areas.

Management indicated a phased approach to market expansion, prioritizing current asset optimization before targeting more specialized and stringent sectors like defense or rail infrastructure.

Asked by Raj Shah

Working capital limit reduction as utilization stabilizes or higher volumes require larger base Direct
No. You know on a last year turnover of INR500 crores, we have a working capital of only INR35 crores, which in our size company is much lower side. So as and when the volume will increase, we will definitely be looking for higher working capital. And we are trying to reduce the cost of debt also.

Management clarified that higher volumes would necessitate an increase in working capital, indicating a proactive approach to funding growth while simultaneously working to reduce the cost of debt.

Asked by Raj Shah

Scope for moving further downstream into fabricated or semi-finished products Partial
As of now to we are focusing on consolidating our existing business. Once that get consolidated and my capacity utilization will be maximized then we will definitely think for that.

Management outlined a strategic priority to first consolidate existing business and maximize capacity utilization before exploring downstream value-added products, indicating a focus on core operations.

Asked by Yash Rathod

Raw material import strategy and reasons for past imports Direct
If you if you compare with the percentage, I mean the percentage of raw material imported versus my sales or my purchase, it would be hardly 7% to 10%. So whenever we found it suitable to import the material we will do so but in there is a lot of formalities and time involved for the import. Presently we are focusing mainly on domestic raw materials. But as and when the conditions will be conducive, we will definitely go in for imports.

Management explained their flexible raw material sourcing strategy, prioritizing domestic procurement due to logistical complexities of imports, but open to imports when conditions are favorable, clarifying past import figures.

Asked by Anish Garg

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Rathi Steel and Power Ltd demonstrated robust financial growth in Q3 FY26, with total income reaching INR160.09 crores, a significant 51% year-over-year increase. EBITDA for the quarter stood at INR6.41 crores, growing by 38%, while Profit After Tax (PAT) saw a remarkable 262% surge to INR1.91 crores. For the nine months ended December 31, 2025, total income was INR472 crores, up 32.67%, with EBITDA at INR19 crores (16.96% growth) and PAT at INR5.42 crores. This performance was attributed to improved capacity utilization, cost efficiencies, and a balanced product mix.

Strategic Focus and Operational Highlights

The company's strategy centers on credibility, metallurgical excellence, and sustainability. Its integrated facility in Ghaziabad boasts a steel melting capacity of 85,000 tons per annum and a rolling capacity of 2 lakh tons per annum. A key technological differentiator is direct billet charging in Stainless Steel Wire Rod manufacturing, enhancing energy efficiency and cost competitiveness. The diversified portfolio includes Stainless Steel Billets, Wire Rods, Bright Bars, and TMT Bars, with a strong focus on green steel and recycling-based circular steel making.

Capacity Expansion and Efficiency Initiatives

Current steel melting capacity utilization is in the range of 60-65%, with a target to increase to 80-85%. This improvement is contingent on the completion of a capex plan for direct charging of hot billets for the TMT mill, which is expected by the current or early next quarter. Management anticipates that higher utilization will lead to significantly improved EBITDA margins. The company also reported its highest ever monthly sales of INR77.45 crores from the Ghaziabad facility, indicating strong demand and execution.

Debt Management and Working Capital

The company's gross debt as of the reporting period was INR43.50 crores, a significant reduction from two years ago when it was in debt restructuring. Management is actively working to further reduce the cost of debt by approaching new lenders for lower interest rates. With a working capital of INR35 crores on a turnover of INR500 crores, the company acknowledges this is on the lower side for its size and expects to seek higher working capital as volumes increase.

Green Steel and Sustainability Initiatives

Green steel remains central to Rathi Steel's strategy, with its recycling-based circular steel making model significantly lowering carbon intensity. The company holds CBAM certification and has applied for GreenPro certification from CII, expected in the current or early next quarter. They are also exploring the installation of rooftop solar to shift power consumption towards renewable sources, reinforcing their commitment to India's decarbonization priorities and ESG standards.

Market Outlook and Demand Drivers

The Union Budget 2026's allocation of INR12.2 lakhs crore towards capital expenditure is expected to strengthen demand across railways, infrastructure, energy, and urban development. The company is primarily focusing on real estate developers in the NCR for its TMT products, while Stainless Steel Wire Rods are sold B2B. Trade frameworks like the India-EU FTA and recalibrated India-US trade framework are expected to enhance competitiveness and stimulate domestic demand for high-grade steel products.

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