Rathi Steel — Q4 FY25 earnings call

Call held 2 Jun 2025

Management summary

Rathi Steel and Power Ltd. reported a strong Q4 FY25 with significant revenue and EBITDA growth, driven by improved realizations and operational efficiencies. The company recommenced its TMT mill operations and is focused on increasing capacity utilization across its steel melting and rolling divisions. Strategic initiatives include product diversification into stainless steel rebars and plant modernization, positioning the company for future growth despite global trade challenges.

Highlights

  • Q4 FY25 revenue increased by 26% YoY to ₹149.5 crores.

  • Q4 FY25 EBITDA doubled to ₹7.90 crores, with margin improving by 194 bps to 5.28%.

  • Full year FY25 revenue stood at ₹503.15 crores, with EBITDA at ₹22.03 crores and margin at 4.38%.

  • PAT for Q4 FY25 was ₹3.80 crores, and for FY25 was ₹13.95 crores.

  • Recommenced commercial operations of the TMT mill division, targeting 60-70% utilization in the next two years.

  • Aims to ramp up steel melting shop capacity utilization from 60% to 75-80%.

  • Received BIS licenses for stainless steel and mild steel TMT bars, enhancing market reach.

Concerns

  • Inflow of cheaper Chinese steel and dumping

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹149.5 Cr
    YoY +26%
  • EBITDA
    ₹7.9 Cr
    YoY +100%
  • EBITDA Margin
    5.3%
  • PAT
    ₹3.8 Cr
  • EPS
    ₹0.44

FY25

  • Revenue
    ₹503.15 Cr
  • EBITDA
    ₹22.03 Cr
  • EBITDA Margin
    4.4%
  • PAT
    ₹13.95 Cr
  • EPS
    ₹1.62

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

medium confidence

Total value

54,000 metric tons

as of 2025-03-31 quantified

Inflow this quarter

16,500 metric tons

Execution

TMT plant utilization targeted at 60-70% over a 2-year scenario (FY26 and FY27). Steel melting shop utilization targeted at 75-80%.

Composition

  • Stainless Steel Long Products (product) 95%
As a steel manufacturer, the company primarily reports sales volume and capacity utilization rather than a traditional signed order book. The focus is on increasing production and market penetration for both stainless steel and newly recommenced TMT bar segments.

Source: Prepared remarks

Guidance & targets

Capacity

  • Steel Melting Shop Capacity Utilization Capacity · Future · High confidence 75-80%

    From 60% today

    Looking ahead, we plan to ramp up the capacity utilization of our steel melting shop, which is presently operating at about 60% as on FY '25 to about 80%.

    — Udit Rathi

  • TMT Bar Mill Capacity Utilization Capacity · FY26 and FY27 · High confidence 60-70%

    From 25% today

    Restarting of the TMT bar mill also enables us to substantially improve the capacity utilization of our rolling mill division, a part of which remained idle as I explained earlier, substantially from presently about 25% because of part being idle close to 60%-70% in years to come.

    — Udit Rathi

Revenue

  • TMT Bars Revenue Addition Revenue · FY26 · Medium confidence ₹150 crores
    if you assume then we should add close to around Rs. 150 crores from TMT bars this year.

    — Udit Rathi

Product Mix

  • Stainless Steel Segment Performance Product Mix · Future · Low confidence at least remain the same if not better
    We definitely aspire to at least remain the same if not better, right.

    — Udit Rathi

What to watch in Q1 FY26

Steel Melting Shop Capacity Utilization

next quarter
Current 60% (FY25)
Target Progress towards 75-80%

Why it matters

Indicates operational efficiency and potential for increased output and revenue.

we plan to ramp up the capacity utilization of our steel melting shop, which is presently operating at about 60% as on FY '25 to about 80%.

Risks & concerns

  • Inflow of cheaper Chinese steel and dumping

    high

    The US' renewed tariffs against Chinese imports are leading to an influx of cheaper Chinese steel into India, adversely impacting domestic pricing. The government's 12% payback duty is not considered sufficient, and stronger trade protection measures are needed.

    Management acknowledged

  • Raw material price volatility

    medium

    The Indian steel industry faces a dynamic environment shaped by global trade shifts and raw material price volatility, though efficiency measures helped offset impact in FY25.

    Management acknowledged

  • Volatile market conditions for stainless steel segment

    medium

    While the company aspires for the stainless steel segment to remain stable or improve, 'a lot of factors like market conditions etc., will play a role'.

    Management acknowledged

Q&A highlights

7 direct
Capacity utilization for steel melting shop and rolling mill Direct
So, our steel melting shop, which produces basic steel, which is further rolled into various products, has the installed capacity of around 90,000 tons per annum... This steel melting shop is operating at about 60% as on FY '25 and the rolling capacity was at a very low level because one of the plants was idle, the TMT plant which we recommended later this year.

Clarifies current and target capacity utilization rates for key manufacturing units, indicating growth potential.

Asked by Mehul

Volatility in net profit over the last 5 years Partial
So, basically, you should be looking at what we have been achieving over the last 4-5 years or 3-4 years at an EBITDA level. When we talk of the PAT level, various of these years have an exceptional or an extraordinary item which relates to basically our settlement and restructuring with the lenders.

Explains that PAT volatility is due to exceptional items related to lender settlements, suggesting EBITDA is a more stable indicator of operational performance.

Asked by Mehul

Lenders holding shares and their current status Direct
So, the lenders who are currently holding, the banks who are holding, they are not my lenders anymore... It is purely a market driven purchase that they may have made. And the lenders, sorry, they are not lenders anymore, the scheduled banks who are currently holding shares are no longer my lenders.

Clarifies that previous lenders holding shares are no longer creditors, and their holdings are market-driven, addressing concerns about debt-to-equity conversions.

Asked by Mehul Panjwani

Outlook for TMT bar market in NCR and surrounding areas Direct
So, basically our target market is NCR and because of the reality boom here, the way Gurgaon, the way regions at Haryana are expanding or various projects coming up in UP, also Noida, so we are quite bullish on the demand front with respect to coming in from these basically realty segment.

Highlights the company's bullish outlook on TMT bar demand in the NCR region, driven by real estate and infrastructure development.

Asked by Rakesh Roy

Launch of stainless steel rebars (8-32 MM/SS bar) production Direct
So, it is a product which is evolving... we are contemplating to either outsource it or build it up in-house. That is a little bit that of a time, but we are expecting now with the approvals in order. We are expecting it to sort of launch it soon.

Provides an update on the strategic launch of stainless steel rebars, indicating a decision point on manufacturing strategy and an imminent launch.

Asked by Rakesh Roy

Reason for restarting the TMT unit Direct
So, we basically restarted it, number one to sweat out, we took a call that we wanted to sweat out our existing idle assets to the fullest... And second, the idea was as a strategic point of view, we are looking at rolling out the stainless-steel rebars.

Explains the dual rationale behind restarting the TMT unit: optimizing idle assets and strategically supporting the rollout of stainless steel rebars.

Asked by Sagar Shah

Impact of proposed import duty on steel industry for FY26 Direct
India is a ready market for all the steel majors to dump in material because we are the only large economy in which, in spite of the problems worldwide, the demand for steel continues to grow at a very good pace here... this safeguard duty was imperative, but it looks from our discussions with the larger producers, that it doesn't seem to be sufficient to sort of really boost up the industry here and it is required.

Addresses the critical issue of steel imports and dumping, indicating that current safeguard duties may be insufficient and further measures are needed to protect domestic industry.

Asked by Sagar Shah

Promoter history and current management structure Direct
But I think it is driven at the promoter level, it is largely my father, Mr. Pradeep Rathi and myself Udit Rathi, so the day-to-day operations and the overall company being managed by professionals who are very experienced and they are all very sort of, they have been there with the organization for a pretty long time.

Clarifies the promoter involvement and the professional management structure, highlighting the experience of the team and the promoter's strategic guidance.

Asked by Mehul

3 min read 5 chapters

Detailed narrative

Q4 & FY25 Financial Performance Overview

Rathi Steel and Power Ltd. reported a robust Q4 FY25, with revenue increasing by 26% year-on-year to ₹149.5 crores, driven by improved realizations from SS/MS billets. EBITDA for the quarter doubled to ₹7.90 crores, and the EBITDA margin expanded by 194 basis points to 5.28%. For the full fiscal year 2025, the company achieved a revenue of ₹503.15 crores, slightly up from ₹493.19 crores in the previous year, despite lower volumes due to planned shutdowns. Full-year EBITDA stood at ₹22.03 crores, with a margin of 4.38%, reflecting a 9 basis point improvement. PAT for Q4 FY25 was ₹3.80 crores, and for FY25 was ₹13.95 crores, with EPS of ₹0.44 for Q4 and ₹1.62 for FY25.

Strategic Initiatives and Capacity Expansion

The company has recommenced commercial operations of its TMT mill division, which had been idle for several years. This strategic move aims to utilize idle assets and complement the stainless-steel portfolio, with a target to achieve 60-70% capacity utilization for the TMT plant within the next two years. The steel melting shop, currently operating at 60% capacity as of FY25, is targeted to reach 75-80% utilization. Modernization initiatives, including a temporary shutdown in April 2025 for revamping critical equipment, have been undertaken to improve efficiency. The company also received BIS licenses for its entire range of stainless steel and mild steel TMT bars, enhancing market reach across North India.

Product Portfolio and Technology Upgrades

Rathi Steel's product portfolio primarily comprises stainless steel billets and long products like wire rods, with over 95% of FY25 sales coming from the stainless steel segment. The company is actively working on rolling out stainless steel rebars in the retail space, a product currently evolving and primarily project-driven in coastal areas. Efforts are underway to either outsource or build in-house the necessary treatment facilities for these rebars. Cost optimization and energy efficiency measures, including a billet charging facility for stainless steel billets to wire rods, have been implemented, contributing to improved margins.

Market Outlook and Industry Challenges

The Indian steel industry faces a dynamic environment, with domestic demand driven by government infrastructure and CAPEX in sectors like roads and urban development. However, global headwinds, including US tariffs against Chinese imports, are leading to an influx of cheaper Chinese steel into India, impacting domestic pricing. Management noted that the current 12% payback duty is insufficient to safeguard the industry, and further trade protection measures are required. Despite these challenges, India remains a growing market for steel, and the company is focused on improving capacity utilization and expanding its value-added stainless steel products.

Clarification on Past Volatility and Shareholdings

Management addressed analyst concerns regarding the volatility in net profit over the past five years, clarifying that it was primarily due to exceptional or extraordinary items related to lender settlements and restructuring, rather than operational performance. They emphasized that EBITDA levels have been relatively range-bound. Regarding shares held by former lenders like Canara Bank and Bank of Baroda, management stated that these entities are no longer lenders and their shareholdings are purely market-driven purchases, not related to debt conversion or company placements.

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

More Capital Goods earnings calls