Detailed Narrative
Q3 FY26 Performance and Inventory Impact
SG Mart reported a Q3 FY26 EBITDA of ₹17 crores, which was below expectations. This was primarily due to an inventory loss of ₹20 crores caused by a sharp correction in steel prices of ₹2,500-3,000 per ton. Despite this, the underlying business EBITDA stood at ₹40 crores, and sales volume increased by 9% quarter-on-quarter, indicating a ramp-up in both B2B Metal Trading and renewable structure businesses.
Q4 FY26 Outlook and Business Segment Projections
Management is confident in achieving a business EBITDA of ₹60 crores in Q4 FY26. This is expected to be driven by improved EBITDA spreads in Service Centre business (₹2,000 per ton) and B2B Metal Trading (₹900-1,000 per ton). Renewable Structures volume is projected to increase to 25,000 tons (from 17,000 tons in Q3) with an EBITDA spread of ₹4,000 per ton. Additionally, new structures for residential rooftop, cable trays, and purlins are expected to contribute 10,000 tons of volume with high EBITDA of ₹6,000-7,000 per ton in Q4.
FY27 Growth Strategy and Financial Targets
SG Mart targets a full-year EBITDA of ₹350 crores+ for FY27, with a quarterly run rate of ₹80-85 crores. This growth will be fueled by the expansion of service centers, with 5 new centers becoming operational in H1 FY27, contributing to a total of 750,000 tons volume and ₹150 crores EBITDA from India. The Dubai service center is expected to contribute ₹50 crores EBITDA. B2B Metal Trading is projected to yield ₹50 crores EBITDA from 500,000 tons volume. Renewable and other structures are targeted to contribute ₹120-150 crores EBITDA from 350,000-400,000 tons volume.
Capital Structure and Liquidity Management
The company's short-term borrowings have significantly reduced from ₹700 crores in FY25 to ₹130 crores by December 2025, with gross debt on books at ₹134 crores. Interest cost for Q3 FY26 was ₹17 crores, with 50% attributed to bill discounting and 40% to steel imports. SG Mart maintains a healthy cash balance of ₹787-790 crores, which generates ₹15-17 crores in quarterly interest income. This liquidity is being utilized for CAPEX, including land acquisition and machinery for new service centers.
Service Center Expansion and Product Diversification
SG Mart plans to have 20 service centers in India and 1 in Dubai by end of FY28/early FY29. Five new service centers (Punjab, Jaipur, Kolkata, Indore, Ahmedabad) will start contributing from H1 FY27. The company is also diversifying its product offerings beyond HR coils to include cut-to-length metal sheets, embossed specialized checkered sheets, and new structures like residential rooftop, cable trays, slotted angles, and purlins, leveraging its distribution network and APL Apollo brand for strong margins.
Risk Mitigation and Market Dynamics
Management acknowledges the risk of steel price volatility, which caused a ₹20 crore inventory loss in Q3. Their strategy to mitigate this is to maintain minimum inventory levels and avoid speculating on price movements. They believe that as the absolute EBITDA grows (targeting ₹350 crores+ in FY27), the impact of steel price fluctuations on the P&L will diminish. The company also noted that the Indian government's anti-dumping duties on steel have reduced reliance on imports for India, with Dubai operations being the primary importer.