Rajratan Global Wire Limited

The Chennai facility saw increased capacity utilization in Q4 FY25, contributing to improved results compared to Q3. Despite this, the plant incurred a loss of approximately ₹11-12 crores in FY25, which impacted the company's bottom line. Management expects Chennai to achieve breakeven by the next quarter (Q1 FY26), specifically by May-June, and project it to be profitable at the PBT level for FY26. The plant is targeted to produce and sell 20,000 tons in FY26, including exports, leveraging approvals from major tire companies like MRF, Apollo, and BKT.

Rajratan is diversifying into the wire rope business with a pilot project, investing ₹50 crores to create a 10,000-ton capacity. This investment is split 50% for core plant and machinery and 50% for building and infrastructure at Pithampur. The company has acquired a used plant from Continental Tyres in Europe, which will be shifted to Pithampur, with production expected to start in about one year. This initiative is projected to generate ₹100 crores in revenue and offers better profitability and value addition compared to black wire, utilizing existing expertise and spare capacity.

Thailand operations experienced a muted Q4 FY25, including a major breakdown in March that led to a loss of about 1,000 tons in sales. However, management anticipates a growth of 5,000-6,000 tons in volume for FY26, with EBITDA margins improving to 10-11%. The company is focusing on shifting its customer profile towards those offering better realizations and expects increased exports to Europe and America from Thailand. The reported EBITDA per kilo for Thailand was clarified to be ₹20-21, not ₹5 as an analyst calculated.

Rajratan is projecting at least 15% overall volume growth for FY26, driven by 5,000 tons growth in Thailand and 15,000-18,000 tons growth in India. This includes an additional 7,000 tons in exports from Indian ports to the US and Europe. While the company's market share in bead wire is already high (around 40%), management acknowledges the maturity of this segment and the need for diversification. The growth in India is partly attributed to the overall growth in the tire industry and gaining larger share from existing customers.

The company plans a total investment of ₹50 crores for the new wire rope business in FY26. Previously, ₹240 crores were invested in the Chennai facility. The cost of funds is approximately 8-8.2%, with a standalone debt of around ₹150 crores. Current maturities for the financial year stand at ₹38 crores. The increase in working capital cycle by 15 days to 63 days is primarily due to larger export volumes, which involve longer material transit times (45 days) and a one-month payment cycle.

US tariffs on China have created a positive competitive advantage for Rajratan. While India faces a 25% tariff, China's tariffs have increased to 59-57% (from 30-32%), making Chinese products significantly more expensive in the US market. This is expected to increase Rajratan's export volumes to the US. Management also noted that while bead wire is not directly affected, indirect effects on tire tariffs could impact end customers. The company is cautiously managing competition from new capacities in India and low-priced Chinese imports in Thailand.