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    SG Mart

    512329
    Metals & Mining·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

    4

    • 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

    3

    • 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

    Metrics

    8

    Periods

    5

    Headline

    2
    • Revenue
      ₹1,800 Cr
    • Working Capital Days
      20 days

    Q4

    1
    • EBITDA
      ₹56 Cr

    FY26

    3
    • EBITDA
      ₹137 Cr
      YoY+35%
    • ROCE
      15%
    • Operating Cash Flow
      ₹300 Cr

    FY26 End

    1
    • Net Cash
      ₹750 Cr

    Annualized Q4

    1
    • ROCE
      25%

    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
    List

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹125 crores this quarter · ₹525 crores (FY26) planned

    funded by operating cash flow generation of INR300 crores for the full year

    Debt

    Net ₹750 crores

    Liquidity

    Cash ₹750 crores

    Net cash on books will be deployed for capacity building and incremental working capital requirements over the next 2-3 years.

    Guidance & targets

    15
    CategoryTargetPriority
    EBITDA
    Annualized EBITDA
    ₹300-350 crores
    		Medium
    EBITDA
    EBITDA Growth
    >50%
    		High
    Service Centers
    Number of Service Centers
    11-12
    		High
    Service Centers
    Number of Service Centers
    20
    		High
    Service Centers
    Annual Volume
    2 million tons
    		High
    Renewable Structures
    Annual Volume
    130,000-150,000 tons
    		Medium
    Renewable Structures
    Annual Volume
    250,000 tons
    		High
    Other Steel Profile Structures
    Annual Volume
    100,000+ tons
    		Medium
    Other Steel Profile Structures
    Annual Volume
    300,000 tons
    		High
    Capex
    Total Capex
    ₹600 crores
    		High
    Puff Panels
    Margins
    5-8%
    		High
    EBITDA per ton
    B2B Business
    ₹700-1,000 per ton
    		High
    EBITDA per ton
    Service Center Business
    ₹1,700-2,000 per ton
    		High
    EBITDA per ton
    Solar Business (Renewable)
    ₹3,000-5,000 per ton
    		High
    EBITDA per ton
    Profile Business
    ₹5,000-8,000 per ton
    		High

    Steel Supply Normalization

    Next quarter (May/June 2026)
    CurrentOverall shortage due to gas issues
    TargetImproved 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.

    How to verify

    key_financials.segment_breakdown[name='B2B Sales'].metrics[label='Volume']

    Risks & concerns

    3
    RiskSeverity

    Middle East Crisis Impact

    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

    medium

    Steel Supply Shortage

    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

    medium

    PAT Lagging EBITDA Growth

    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

    low

    Q&A highlights

    7

    “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

    2 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    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.