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    Rathi Steel

    504903
    Capital Goods·3 Jun 2026
    Management Summary

    Rathi Steel reported a strong Q4 and full year FY26, driven by robust demand and operational efficiencies. The company achieved significant growth in total income and PAT, with improved margins. Key operational highlights include a 117% YoY volume growth in the Rolling Mill division and progress in sustainable manufacturing initiatives like direct charging and GreenPro certification. Management is focused on further capacity utilization and debt optimization.

    Highlights

    5

    • Total Income for FY26 grew 41.7% YoY to INR 716 crores.

    • PAT for FY26 increased 39.24% YoY to INR 12.87 crores.

    • Q4 FY26 Total Income surged 63.3% YoY and 52.7% QoQ to INR 244.57 crores.

    • Q4 FY26 PAT margin improved by 185 basis points sequentially to 3%.

    • Rolling Mill division production volumes increased 117% YoY to 1,02,000 tons in FY26.

    Concerns

    3

    • Current cost of borrowing is high at 16%.

    • Global steel volatility, elevated fuel costs, and geopolitical uncertainties impacting the industry.

    • Pressure from competitively priced imports and regional supply on margins.

    Key financials

    Metrics

    7

    Periods

    2

    Q4 FY26

    4
    • Total Income
      ₹244.57 Cr
      YoY+63.3%QoQ+52.7%
    • EBITDA
      ₹9.89 Cr
      YoY+22%QoQ+54%
    • PAT
      ₹7.45 Cr
    • PAT Margin
      3%
      QoQ+1.8%

    FY26

    3
    • Total Income
      ₹716 Cr
      YoY+41.7%
    • EBITDA
      ₹28.9 Cr
      YoY+18.8%
    • PAT
      ₹12.87 Cr
      YoY+39.2%

    Capital allocation

    2
    medium confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Debt disclosed

    Cost 16.0%

    Guidance & targets

    7
    CategoryTargetPriority
    Growth
    Average Growth Momentum
    20% to 25%
    		Medium
    Growth
    CAGR
    20%
    		Medium
    Capacity Utilization
    Rolling Mill Utilization
    65% to 70%
    		High
    Capacity Utilization
    Steel Melting Shop Utilization
    nearly 80%
    		Medium
    Cost Savings
    Direct Charging Savings (Rolling Division)
    INR 3,000 to INR 4,000 per ton
    		High
    Cost Savings
    Direct Charging Savings (% of TMT selling price)
    6% to 7%
    		High
    Capacity
    Rooftop Solar Capacity
    1 to 2 megawatts
    		Low

    What to watch in Q1 FY27

    4

    Rolling Mill Utilization

    this year
    Current51-52%
    Target65-70%

    Why it matters

    Increased utilization is key to improving operational efficiencies and overall margins.

    And now we are so this 51% with the current run rate, I think we are hoping to improve this utilization to close to 65% to 70% in this year. (Page 9)

    Risks & concerns

    4
    RiskSeverity

    Global steel volatility and elevated fuel costs

    Industry experiencing global steel volatility, elevated fuel costs, geopolitical uncertainties, and increasing pressure from competitively priced imports. Iran war problem causing hike in fuel costs. — Management acknowledged

    medium

    Competitively priced imports

    India temporarily transitioned into a net importer in certain steel categories due to influx of competitively priced imports. While direct impact on their specific region/products is less, indirect industry-wide pressure exists. — Management acknowledged

    medium

    High cost of borrowing

    Current cost of borrowing is 16% from a single lender, which management is actively trying to refinance at a lower rate. — Management acknowledged

    medium

    GST department disputes

    Disputes relate to alleged issues with input ITC; management believes they are not sustainable and are at various stages of adjudication, with some stays from higher courts. — Management downplayed

    low

    Q&A highlights

    8

    “So, I don't have a specific number for the separate volumes for TMT and stainless steel, but there was an overall growth of almost 117% in the overall production volumes of the TMT bar of the Rolling Mill division.”

    Analyst sought specific volume and spread data for key product segments, but management provided only overall rolling mill volume growth.

    asked by Raj Shah

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Financial Performance in FY26

    Rathi Steel reported a robust financial performance for FY26, with Total Income reaching INR 716 crores, marking a significant year-on-year growth of 41.7%. EBITDA stood at INR 28.9 crores, growing by 18.8%, and PAT increased by 39.24% to INR 12.87 crores. The fourth quarter of FY26 was particularly strong, with Total Income rising to INR 244.57 crores (63.3% YoY, 52.7% QoQ) and PAT margin improving by 185 basis points sequentially to 3%.

    02

    Operational Excellence and Capacity Utilization

    The company achieved a 117% year-on-year volume growth in its Rolling Mill division, reaching 1,02,000 tons in FY26. Current utilization for the Rolling Mill is 51-52%, with a target to increase it to 65-70% this year. The Steel Melting Shop is operating at 50-52% utilization, with plans to ramp it up to nearly 80%. Management highlighted significant headroom for further capacity utilization without major capex.

    03

    Focus on Sustainable Manufacturing and Green Steel

    Rathi Steel is actively pursuing sustainable manufacturing initiatives. Green power sourced through open access contributed to over one-fourth of the company's total power consumption. The company also received the prestigious GreenPro Type-1 Ecolabel certification for its Rathi Powertech branded 550 grade TMT bars, reinforcing its commitment to environmentally responsible steel production. Implementation of direct charging technology for the TMT division is underway, expected to yield 6-7% savings on the selling price of TMT bars.

    04

    Market Dynamics and Product Strategy

    India's steel demand remains healthy, driven by government spending on infrastructure and urban development. The domestic market has shown resilience despite global volatility🌐 and import pressures. Rathi Steel is focusing on increasing the share of high-margin stainless steel products and strengthening its presence in premium 550D grade TMT bars, catering to premium residential and infrastructure projects. The company's TMT bars are primarily sold in the NCR region, while stainless steel products are supplied across multiple states.

    05

    Capital Structure and Debt Management

    The company's current cost of borrowing stands at 16% from a single lender. Management is actively engaged in discussions with the existing lender and exploring new lenders to refinance this debt at a lower cost and secure additional facilities. This initiative aims to improve the overall financial health and reduce finance costs. Capex incurred for restarting the TMT rebar mill in FY25 was approximately INR 5-7 crores, with an additional INR 20 crores for replacement and debottlenecking.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.