Concall AI

SG Mart — Q4 FY26 earnings call

Call held 4 May 2026

Management summary

SG Mart delivered a robust Q4 FY26 performance with strong revenue and EBITDA growth, driven by a strategic shift towards higher-margin, value-added verticals. Despite headwinds from geopolitical events and steel supply constraints, the company achieved significant improvements in working capital and cash flow. Management outlined aggressive capex plans for capacity expansion and expects continued strong EBITDA growth, with PAT anticipated to catch up as depreciation normalizes.

Highlights

SG Mart reported a strong Q4 FY26 with revenue upwards of ₹1,800 crores and EBITDA of ₹56 crores, contributing to a 35% YoY EBITDA growth for the full year, reaching ₹137 crores.
The company significantly improved its working capital cycle to 20 days and generated ₹300 crores in operating cash flow for FY26, which funded its capex.
The annualized ROCE for Q4 FY26 stood at 25%, reflecting the true business model, and the company closed the year with a healthy net cash position of ₹750 crores.
New value-added verticals like steel profiles were successfully launched, contributing 7,000 tons in Q4 with good margins, and the service center business saw a 10%+ volume increase to 190,000 tons.

Concerns

The Middle East crisis and steel supply shortages led to lower B2B volumes and impacted Dubai operations, causing a profitability hit in that region.
A shortage of specialized coated steel due to gas issues from steel mills resulted in a slight dip in renewable structures volume during Q4.
PAT growth (10-11%) significantly lagged EBITDA growth (30%+) for FY26, primarily due to high depreciation from heavy investments in new capacities.

Key financials

5 periods

Headline

Revenue
₹1,800 Cr
Working Capital Days
20 days

Q4

EBITDA
₹56 Cr

FY26

EBITDA
₹137 Cr
YoY +35%
ROCE
15%
Operating Cash Flow
₹300 Cr

FY26 End

Net Cash
₹750 Cr

Annualized Q4

ROCE
25%

What they filed

Q1 FY27: revenue up 14.4%, net profit up 43.8% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,793	1,335	1,595	1,144	1,704 −5%	1,644 +23%	1,823 +14%	1,309 +14%
Expenses	1,778	1,313	1,558	1,108	1,676	1,628	1,767	1,250
EBITDA	15	22	37	36	28 +87%	17 −23%	56 +51%	59 +64%
Margin	1%	2%	2%	3%	2%	1%	3%	5%
Other income	20	26	20	20	19	18	12	10
Interest	13	10	14	12	12	17	10	6
Depreciation	0	0	1	2	2	4	4	4
Profit before tax	22	37	42	43	33 +50%	14 −62%	54 +29%	58 +35%
Tax rate	26%	25%	21%	24%	20%	21%	23%	22%
Net profit	16	28	33	32	27 +69%	11 −61%	41 +24%	46 +44%
EPS	1.42	2.50	2.95	2.56	2.11	0.85	3.29	3.62

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.

Segment breakdown

Service Centers
1,90,000 tons Q4 Volume1,63,000 tons Q3 Volume37,000 tons Dubai Q4 Volume
New Profiles
7,000 tons Q4 Volume5,000 tons/month April Run Rate
Renewable Structures
5,000 tons/month Q4 Average Monthly Volume60,000 tons FY26 Run Rate Volume
Business EBITDA (Q4)
₹50 Cr EBITDA
Inventory Gain (Q4)
₹6 Cr Gain

Capital allocation

high confidence

Capex ₹125 Cr this quarter · ₹525 Cr (FY26) planned funded by operating cash flow generation of INR300 crores for the full year
- Service centers
- Acquisition of new land parcels
- Profile machines
This resulted in operating cash flow generation of INR300 crores for the full year, which funded the large capex of upward of INR250 crores
Debt Net ₹750 Cr

And we closed our balance sheet with net cash of INR750 crores.
Liquidity Cash ₹750 Cr Net cash on books will be deployed for capacity building and incremental working capital requirements over the next 2-3 years.

Krunal, right now, the cash on books is INR750 crores, not INR1,000 crores. That is point number one. Now, like whatever cash flow generation will be there, okay, for the next two to three years, we're going to deploy in capacity building. Plus, the existing cash on books might get utilized for incremental working capital requirements as the business scales up pretty quickly.

Guidance & targets

EBITDA

Annualized EBITDA EBITDA · FY27 · Medium confidence ₹300-350 crores

But in our last earnings call, we did guide for INR300 crores to INR350 crores of annualized EBITDA for FY27.

— Anubhav Gupta
EBITDA Growth EBITDA · FY27 · High confidence >50%

So even if there is no 50% growth in revenue, my EBITDA can still grow more than 50% because whatever new business vertical I'm adding, it is more profitable.

— Anubhav Gupta

Service Centers

Number of Service Centers Service Centers · FY27 exit · High confidence 11-12

We're going to add three more during this year, okay. I mean the exit service center, number of service centers should be around 11 to 12 for FY'27.

— Anubhav Gupta
Number of Service Centers Service Centers · in 3 years · High confidence 20

Sure. So, in three years, I mean, we may have around 20 service centers

— Anubhav Gupta
Annual Volume Service Centers · in 3 years · High confidence 2 million tons

So around 2 million ton of volume is coming from service centers, okay, on annualized basis.

— Anubhav Gupta

Renewable Structures

Annual Volume Renewable Structures · FY27 · Medium confidence 130,000-150,000 tons

So put together, we should be around 130,000 to 150,000 tons for the full year, okay, in terms of renewable structures.

— Anubhav Gupta
Annual Volume Renewable Structures · in 3 years · High confidence 250,000 tons

Then for solar business, renewable structure business in three years, we should be doing around 250,000 ton, okay, 15, 20.

— Anubhav Gupta

Other Steel Profile Structures

Annual Volume Other Steel Profile Structures · FY27 · Medium confidence 100,000+ tons

So here also we can expect like 100,000 tons plus annual volume.

— Anubhav Gupta
Annual Volume Other Steel Profile Structures · in 3 years · High confidence 300,000 tons

And similarly, 300,000 ton of volume from the other steel profile structures.

— Anubhav Gupta

Capex

Total Capex Capex · next 2 years (FY27 & FY28) · High confidence ₹600 crores

Going forward, I think we already have taken approval of around INR600 crores of capex for two years.

— Anubhav Gupta

Puff Panels

Margins Puff Panels · ongoing · High confidence 5-8%

As of now, we do expect like 5% to 8% margins.

— Anubhav Gupta

EBITDA per ton

B2B Business EBITDA per ton · FY27 · High confidence ₹700-1,000 per ton

The B2B business is INR700 to INR1,000 per ton.

— Anubhav Gupta
Service Center Business EBITDA per ton · FY27 · High confidence ₹1,700-2,000 per ton

The service center business is INR1,700 to INR2,000 per ton.

— Anubhav Gupta
Solar Business (Renewable) EBITDA per ton · FY27 · High confidence ₹3,000-5,000 per ton

The solar business is INR3,000 to INR5,000 per ton

— Anubhav Gupta
Profile Business EBITDA per ton · FY27 · High confidence ₹5,000-8,000 per ton

and the profile business is INR5,000 to INR8,000 per ton.

— Anubhav Gupta

What to watch in Q1 FY27

Steel Supply Normalization

Next quarter (May/June 2026)

Current Overall shortage due to gas issues

Target Improved supply, better volumes for B2B and renewables

Why it matters

Improved steel supply is crucial for B2B sales and renewable structures, which are key growth drivers for the company.

I think in the month of May it should be better. Then, in June, it will further improve.

Risks & concerns

Middle East Crisis Impact
medium

The Middle East crisis led to a challenging March, impacting B2B sales and causing a profitability hit in Dubai operations, which contribute 10% of service center volume.

Management acknowledged
Steel Supply Shortage
medium

A shortage of steel, particularly specialized coated steel due to gas issues from steel mills, affected B2B volumes and renewable structures, though improvement is expected in 1-2 months.

Management acknowledged
PAT Lagging EBITDA Growth
low

PAT growth (10-11%) was significantly lower than EBITDA growth (30%+) due to high depreciation from heavy investments in new service centers and value-added verticals, but this is considered a temporary effect of growth capex.

Management acknowledged

Q&A highlights

6 direct

PAT vs EBITDA Growth Discrepancy Direct

So, over the last year, what we have done is that we have started investing heavily into the creation of a network of new service centers, plus we are also going heavily into building capacities for renewable structures and other steel profiles, right. So, it does require investment into a fixed block, a fixed gross block. That's why the depreciation levels are high.

This question addressed the significant divergence between the company's strong EBITDA growth (30%+) and much lower PAT growth (10-11%), clarifying that it's a temporary effect of heavy growth-oriented capex leading to higher depreciation.

Asked by Garvit Goyal

Capital Allocation for Cash on Books Direct

Krunal, right now, the cash on books is INR750 crores, not INR1,000 crores. That is point number one. Now, like whatever cash flow generation will be there, okay, for the next two to three years, we're going to deploy in capacity building. Plus, the existing cash on books might get utilized for incremental working capital requirements as the business scales up pretty quickly.

The analyst inquired about the company's plan for its significant cash balance, and management clarified the exact amount and its strategic deployment towards capacity expansion and working capital for future growth, deferring dividend considerations.

Asked by Krunal Shah

Puff Panels Market Opportunity and Confidence Direct

Puff panels, see, I mean, it's a highly fragmented industry as of now. And as more and more, what we are seeing is that there is a very strong demand which is going to come up over the next five years. All the new factories and warehouses that are getting built up, okay, they are all moving from standard sheets to puff panels.

This question probed management's confidence in targeting a large share of the puff panels market, revealing their view on the market's fragmentation and strong demand growth driven by a shift from traditional steel sheets in new construction.

Asked by Nikhil Porwal

Dubai Operations Profitability Hit Direct

So Dubai has, so see, I mean Dubai, the, I mean in month of March, there was hardly any business, okay, because of like what happened there. So that fixed cost etcetera, led to like, you know, profitability hit. But things are becoming better, okay. Teams have started traveling there. Okay. So you will see this getting recovered in a month or so.

The analyst highlighted a profitability decline in the subsidiary, leading management to explain the impact of the Middle East crisis on Dubai operations in March and their expectation for recovery.

Asked by Nikhil Porwal

Steel Supply Shortage and Normalization Direct

So yes, see, I mean there is overall shortage of steel as a commodity in the in the country. And things will improve as the gas supply to steel mills improves. I mean, everyone says that in a month or so, things will get better. So, we also hope that things will get better in a month or so.

This question addressed a key operational constraint impacting B2B volumes and renewable structures, with management providing a timeline for expected improvement in steel supply due to gas issues.

Asked by Rahul Kumar

Inorganic Growth Strategy Partial

I mean, we keep on evaluating such assets, okay. But then the quality of such assets also should match the SG Mart profile. Okay. So, we haven't come across any such asset where we can go and actually finish the transaction.

The analyst inquired about inorganic growth opportunities, and management confirmed active evaluation but indicated difficulty in finding suitable targets that align with the company's quality and business profile.

Asked by Krunal Shah

ESOP Plan Exercise Price Direct

So this ESOP price was locked one and a half years ago. Okay. And at that point in time, the current price, which was around INR367, will be the exercise price.

The analyst sought clarification on the exercise price of the announced ESOP plan, which management confirmed to be INR367, based on a previous approval.

Asked by Rahul Kumar

2 min read 6 chapters

Detailed narrative

Strong Q4 and FY26 Performance Despite Headwinds

SG Mart reported a robust Q4 FY26 with revenue upwards of INR1,800 crores and EBITDA of INR56 crores. For the full fiscal year, EBITDA grew by 35% to INR137 crores, achieving a 15% ROCE on reported numbers, with an annualized Q4 ROCE of 25%. This performance was delivered despite a challenging March due to the Middle East crisis and steel supply shortages, which impacted B2B sales and Dubai operations.

Strategic Shift to Value-Added Verticals Driving Profitability

The company is strategically focusing on higher-margin, value-added verticals, including service centers, renewable structures, and new steel profiles, while scaling down the B2B business. This shift is expected to drive EBITDA growth exceeding 50% for FY27, even if revenue growth is not as high, as new verticals are inherently more profitable. The new profiles business, launched in Q4, contributed 7,000 tons with good margins.

Aggressive Capex Plans for Capacity Expansion

SG Mart invested INR525 crores in capex for FY26, with INR125 crores in Q4, primarily directed towards new service centers and land acquisition. Looking ahead, the company plans a minimum of INR600 crores in capex over the next two years (FY27 and FY28). This investment will be allocated to building new service centers (one-third), acquiring new land parcels (one-half), and profile machines (15-20%) to support future growth.

Volume Growth Targets Across Key Segments

Management provided ambitious volume targets for its growth segments. Service centers are projected to reach approximately 2 million tons of annual volume in three years, up from 190,000 tons in Q4 FY26. Renewable structures are targeted to achieve 130,000-150,000 tons annually for FY27, and other steel profile structures are expected to exceed 100,000 tons annually for FY27, ramping up to 300,000 tons in three years.

Impact of External Factors and Expected Normalization

The Middle East crisis led to a significant business disruption in Dubai during March, impacting profitability for the Dubai service center, which accounts for 10% of the segment's volume. Additionally, an overall shortage of steel in the country, caused by gas supply issues to steel mills, affected B2B sales and renewable structures. Management anticipates these issues to normalize, with steel supply expected to improve by May-June 2026.

PAT Lagging EBITDA Due to Depreciation from Growth Investments

While EBITDA grew by 35% in FY26, PAT growth was only 10-11%. This discrepancy is attributed to high depreciation resulting from the company's heavy investments in fixed assets for new service centers, renewable structures, and steel profiles. Management views this as a temporary effect of growth-oriented capex, expecting cash profit growth to align with EBITDA growth, and PAT to catch up within approximately a year as these assets become fully operational.

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