Detailed Narrative
Q4 FY26 Performance and Market Dynamics
Rajratan Global Wire Limited achieved its highest ever sales tonnage in Q4 FY26, with a consolidated sales volume increase of 18% year-on-year, totaling over 133,000 tons. Despite this, the targeted EBITDA margin was not met due to a sudden INR10,000 per ton increase in steel prices from January to March, which could not be immediately passed on to customers. Energy price and availability issues also contributed to the margin pressure. However, management confirmed that these price increases have been successfully passed on in the current quarter (Q1 FY27), and robust demand continues across India, Thailand, and global markets.
Capacity Expansion and Utilization
The company's Chennai plant utilized 85-90% of its capacity in March 2026. To meet growing demand, Rajratan is investing INR25 crores to double Chennai's capacity to 60,000 tons per year, expected to be operational by Q2 FY27. The Indore plant continues to operate at 90% capacity utilization, and Thailand's plant also saw 85-90% utilization in Q4 FY26. Overall, the company aims for a consolidated total sales volume of 155,000 tons in FY27, representing a 17-18% growth.
Export Market Performance and Strategy
Exports from India grew by 250% in FY26, with a volume of approximately 9,000 tons. For FY27, the company targets to increase India's export volume to 15,000 tons. Regionally, Rajratan plans for 30% growth in North America and 50% in Europe (from a low base), while Southeast Asia is projected to grow by 10-15%. Shipping disruptions, particularly from Thailand, have been noted, but overall export market development remains robust, with new customer approvals in Europe and strong demand in the American market.
Capital Expenditure and New Vertical Development
Rajratan is investing INR70 crores in a new steel cord project, with INR50 crores already invested and INR20 crores remaining. This plant will have a capacity of 10,000 tons per year and a peak revenue potential of INR150 crores, expected to be reached within two years. Production trials for the steel cord project are anticipated to begin in Q2 FY27. This new vertical, while similar to existing wire drawing products, represents an effort to identify new growth areas and expand the product portfolio into niche markets like conveyor belts.
Taxation, Working Capital, and Debt Management
The company's effective tax rate was low due to income tax exemptions in Thailand for sales exceeding 36,000 tons, resulting in a 13.9% effective rate for its BOI privileged company. The receivable cycle has increased due to US exports, as the US subsidiary's payment terms extend to 30-60 days after material receipt, impacting working capital. Rajratan repaid INR50 crores of term loan in the current year and expects long-term borrowing to be less than INR50 crores, while working capital borrowing will continue at 7-7.5%.
PLI Scheme and Margin Outlook
The company is facing uncertainty regarding benefits from the PLI scheme, as it missed production targets in the first two years and is currently negotiating for changes. If approved, the PLI scheme could provide INR40-50 crores over five years, based on 8% of incremental sales. Despite competitive intensity and raw material volatility, management is confident in maintaining a consolidated EBITDA margin of 13.5-14% safely, noting that competitors are already operating at lower profitability levels.