Detailed Narrative
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%.
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.
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.
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.
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.
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.