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    SG Mart

    512329
    Metals & Mining·19 May 2025
    Management Summary

    SG Mart reported strong full-year FY25 results, marking its first year of full operations with significant revenue and profitability. The company outlined aggressive growth targets for FY26 and FY27, driven by expansion in B2B metal trading, service centres, solar structures, and distribution businesses. Management emphasized a focus on domestic sourcing, efficient capital allocation, and a robust business model designed to be resilient against market fluctuations.

    Highlights

    6

    • Achieved INR 5,800 crores in revenue for FY25, with INR 103 crores in EBITDA and Net Profit.

    • Serviced 2,257 customers and procured from 225 suppliers in FY25.

    • Guided for EBITDA of INR 200 crores in FY26 and INR 400 crores in FY27, targeting a minimum 25% ROCE.

    • Working capital cycle, which stretched to 30 days in March 2025, is expected to normalize to 10-15 days by June 2025.

    • Capex for service centres (INR 30-40 crores per centre) will be 100% funded from internal cash flows.

    • TMT distribution business shifted to a royalty-based model, with royalty at INR 500 per ton, expected to increase to INR 750-1,000 per ton.

    What Changed2

    vs Q1 FY26

    Guidance items11 → 21 (+10)Risks discussed5 → 4 (-1)

    Key financials

    Single quarter

    05 metrics
    1. 01Revenue₹5,800 Cr
    2. 02EBITDA₹103 Cr
    3. 03Net Profit₹103 Cr
    4. 04Customers2,257 count
    5. 05Suppliers225 count

    Segment breakdown

    B2B Metal Trading
    50,000 tons Monthly Volume
    Service Centres
    5 count Operational Centres8,000 tons Monthly Volume per Centre2,000 Rs EBITDA per Ton
    Solar Structures
    50,000 tons Order Visibility (FY26)
    Distribution (TMT)
    11,000 tons Monthly Volume33,000 tons Q4 FY25 Volume1,07,000 tons FY25 Volume500 Rs Royalty per Ton
    Distribution (Non-TMT)
    ₹40 Cr Monthly Run Rate₹500 Cr Annual Sales Run Rate₹130 Cr Q4 FY25 Revenue₹380 Cr FY25 Revenue
    List

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹150 crores

    100% funded from operating cash flows

    Debt

    Debt disclosed

    Liquidity

    Cash ₹110 crores

    Includes INR 110 crores cash balance in Dubai entity and INR 250 crores expected from warrant conversion.

    Guidance & targets

    21
    CategoryTargetPriority
    Profitability
    EBITDA
    INR 200 crores
    		High
    Profitability
    EBITDA
    INR 400 crores
    		High
    Profitability
    Return on Capital Employed (ROCE)
    minimum 25%
    		High
    Profitability
    TMT Royalty per Ton
    INR 750-1,000
    		Medium
    Profitability
    TMT EBITDA Margin
    4-5%
    		Medium
    Profitability
    Service Centre EBITDA (from 5 centres)
    INR 100 crores
    		High
    Profitability
    Service Centre EBITDA (from additional 5 centres)
    INR 100 crores
    		High
    Profitability
    Non-TMT Distribution EBITDA Margin
    2-2.5%
    		High
    Profitability
    B2B Metal Trading EBITDA per Ton
    INR 750-1,000
    		High
    Profitability
    Service Centre EBITDA per Ton
    INR 2,000
    		High
    Profitability
    Q1 FY26 EBITDA
    near INR 50 crores
    		High
    Profitability
    PAT Growth
    Match EBITDA growth
    		High
    Volume
    B2B Metal Trading Volume Growth
    50%
    		High
    Volume
    Solar Structures Order Visibility
    50,000 tons
    		High
    Volume
    Solar Structures Order Visibility Growth
    100%
    		High
    Volume
    TMT Distribution Volume Growth
    50%
    		High
    Capacity
    Service Centres Operational
    10
    		High
    Capacity
    Solar Capacity
    200,000 tons/year
    		High
    Revenue
    Non-TMT Distribution Revenue
    INR 1,000 crores
    		High
    Efficiency
    Working Capital Cycle
    10-15 days
    		High
    Other
    NSE Listing
    Process ongoing
    		High

    Working Capital Cycle Normalization

    June quarter
    Current30 days (March 2025)
    Target10-15 days

    Why it matters

    Normalization of working capital is key to improving cash flow and operational efficiency, as it was a point of concern this quarter.

    So, in the June quarter, we are confident that the working capital will come back to 10 to 15 days, which has always been our target.

    How to verify

    capital_allocation.debt.actions

    Risks & concerns

    4
    RiskSeverity

    Working capital stretch

    Working capital stretched to 30 days in March 2025 due to advance payments to steel mills and high sales, but expected to normalize by June 2025. — Management acknowledged

    medium

    Reliance on imports

    Imports are considered opportunistic and not a basis for a sustainable business model; focus is on domestic tie-ups. — Management downplayed

    low

    Steel price fluctuations

    NSR (Net Sales Realization) keeps changing with steel prices, impacting percentage margins, but EBITDA per ton remains intact. — Management acknowledged

    low

    Higher other expenses

    Other expenses are temporarily high due to service centre expansion, expected to be nullified as income from these centres ramps up. — Management acknowledged

    low

    Q&A highlights

    8

    “So as far as SG Mart is concerned, it is not impacting the business model as such because our business model is standing on the thesis that in India itself, the existing six steel mills are increasing capacities a lot. And we want to capture that volume rather than relying on imports where the sustainable supply is always a challenge.”

    Clarifies that the company's strategy of focusing on domestic sourcing mitigates risks from import tariffs, aligning with India's increasing steel production capacity.

    asked by Rohan Baranwal

    2 min read6 chapters

    Detailed Narrative

    01

    FY25 Performance and Growth Outlook

    SG Mart concluded its first full year of operations in FY25, reporting a revenue of INR 5,800 crores, with both EBITDA and Net Profit at INR 103 crores. The company served 2,257 customers and sourced from 225 suppliers. Management expressed confidence in achieving an EBITDA of INR 200 crores in FY26 and INR 400 crores in FY27, targeting a minimum Return on Capital Employed (ROCE) of 25%.

    02

    Strategic Vertical Expansion and Volume Targets

    The company's growth strategy is built on four verticals. B2B metal trading currently handles 50,000 tons per month and is projected to grow by 50% in FY26. The service centre business, with five operational centres, plans to add five more, with each centre now capable of processing 8,000-10,000 tons monthly. The solar structures vertical has secured 50,000 tons of order visibility for FY26, expected to double in FY27, and the distribution business aims for 50% growth in TMT volume (to 180,000 tons) and INR 1,000 crores in non-TMT revenue for FY26.

    03

    Working Capital and Capital Expenditure Management

    SG Mart experienced a temporary stretch in its working capital cycle to 30 days in March 2025 due to advance payments to steel mills and high sales volumes, but anticipates normalization to 10-15 days by June 2025. The company has board approval for INR 600 crores in capex over the next 3-5 years, with an annual spend of INR 150-200 crores primarily for service centres. All capex will be 100% funded through internal cash flows, with minimal investment required for the solar business.

    04

    Shift to Royalty Model in TMT Distribution

    The TMT distribution business has transitioned from a revenue-based model to a royalty-based model. Under this new model, SG Mart charges a royalty of INR 500 per ton, which is expected to increase to INR 750-1,000 per ton as the brand strengthens. This shift aims to improve EBITDA margins, with an eventual target of 4-5% for the TMT segment, by leveraging partners' utilization and brand premium without booking material costs or revenue.

    05

    Profitability and Margin Dynamics

    While the overall EBITDA for FY25 was INR 103 crores, the company provided specific EBITDA per ton targets for its segments: INR 750-1,000 for B2B metal trading and INR 2,000 for service centres. The non-TMT distribution business is expected to achieve a 2-2.5% EBITDA margin. Management noted that rising interest costs, due to the utilization of fixed deposit funds, impacted Q4 margins, but assured that PAT growth would align with EBITDA growth in the future.

    06

    Market Positioning and Future Initiatives

    SG Mart positions itself as a major trading house, focusing on long-term tie-ups with domestic steel mills to capitalize on increasing Indian steel capacities. The company is also exploring new innovative products for the solar sector and plans to expand its service centre network to key locations like Jaipur, Kanpur, and Indore. An NSE listing process is currently underway, which is expected to enhance market visibility and investor participation.

    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.