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Rathi Steel & Power Ltd — Q1 FY27 earnings call

Call held 18 Aug 2026

Company page: Rathi Steel & Power share price, financials & guidance record

Management summary

Rathi Steel reported a strong Q1 FY27, with total income up 24.6% and PAT surging 84.5% YoY, driven by a 30% increase in total volumes, particularly a doubling of TMT bar volumes. Despite challenges like softer steel realizations and geopolitical uncertainties impacting stainless steel, the company maintained healthy growth and improved PAT margins by 58 bps to 1.8%. Management highlighted flexibility in product mix and ongoing efforts in operational efficiency and cost discipline.

Highlights

  • Total income for Q1 FY27 stood at ₹193.67 crores, registering a year-on-year growth of 24.6%.

  • EBITDA for the quarter was ₹7.77 crores, reflecting growth of 24.83% on a year-to-year basis.

  • Profit after tax stood at ₹3.48 crores, registering a strong year-to-year growth of 84.5%.

  • PAT margins improved to 1.8%, representing an expansion of 58 basis points over the corresponding period last year.

  • Total volumes increased by approximately 30% on a year-to-year basis to 28,372 metric tons.

  • TMT bar volumes grew by more than double to approximately 18,677 metric tons from approximately 8,200 metric tons in the corresponding quarter last year.

Concerns

  • The broader operating environment remained characterized by softer steel realizations, volatile energy prices, geopolitical uncertainties, and fluctuating demand across certain end-user industries.

  • Stainless steel volumes were softer, down approximately 10-12% YoY, due to geopolitical disruptions and high ocean freight impacting export-oriented applications.

  • Monsoon season (July-August) and regulatory restrictions due to pollution in NCR can hamper construction activities and steel product usage.

Key financials

  1. Total Income ₹193.67 Cr +24.6%YoY
  2. EBITDA ₹7.77 Cr +24.8%YoY
  3. PAT ₹3.48 Cr +84.5%YoY
  4. PAT Margin 1.8%
  5. Total Volumes 28,372 metric tons +30%YoY

What they filed

Q1 FY27: revenue up 24.5%, net profit up 84.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue121 104 150 155 156 +29%160 +53%244 +63%193 +25%
EBITDA5 3 8 6 6 +21%6 +110%10 +24%8 +23%
Net profit7 1 4 2 2 −77%2 +260%7 +96%3 +84%
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

SegmentVolumesRevenue Mix Share
TMT Bar Segment18,677 metric tons45%
Stainless Steel Segment—55%

Order book

low confidence
The company manages its raw material procurement based on existing order books and maintains flexibility in product mix to respond to changing demand conditions.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹4 Cr this quarter · ₹15 Cr (FY27) planned largely from internal accruals
    • Upgrading facilities, replacing old equipment, debottlenecking and modernization
    I'm expecting a capex spend of close to INR15 crores plus this year as well. And this is all largely going to be from, so far, we've been doing larger part of capex from internal accruals and we'll continue to do so.
  • Debt Debt disclosed
    • Refinance Looking at refinancing options with existing lenders to bring down the cost of borrowing
    • New borrowing Looking at enhancing limits with banks for working capital facilities
    And now of course we've performed well over the last few years, we performed exceedingly well with our existing lenders also. So once the sort of the borrowing cost comes down, I am looking at raising need-based working capital from the lenders.
  • Liquidity Liquidity disclosed Working capital requirements largely met from existing working capital cycle and extending credit periods from suppliers. Seeking to enhance bank limits for working capital.
    So obviously steel is a very working capital intensive industry. But we are, whatever working capital additional requirements have been required, have largely been met out from our working capital cycle which is maintained from, by extending credit periods from our raw material suppliers.

Guidance & targets

Volume

  • Q1 momentum Volume · going forward · Medium confidence maintain the same momentum as what we achieved in Q1
    I can't comment really on the exact numbers because we have not disclosed the same in public domain so far. But yes, we hope to maintain the same momentum as what we achieved in Q1.

    — Udit Rathi

Capacity

  • Rolling mill utilization Capacity · FY27 · High confidence in excess of 60%
    So yes, we are still maintaining our guidance of what we have spoken earlier of achieving the utilization in excess of 60% for the rolling mill, as far as the rolling mill utilization is concerned for this, for this financial year. And we seem to be on track for that as of now.

    — Udit Rathi

  • Melt shop utilization for expansion consideration Capacity · soon · Medium confidence more than around 70% to 75%
    So that gives us a flexibility to improve the capacity utilization in the melt shop also. And once, once we are able to achieve more than around 70% to 75%, then we'll be looking at expanding it further.

    — Udit Rathi

Revenue

  • CAGR growth Revenue · next two, three years · High confidence over a 20%
    We gave a guidance of over a 20% CAGR growth then for the we mentioned that we would aspire to grow at 20% CAGR over the next two, three years. And I think that target looks quite, we, it looks quite achievable for considering FY25 as the base.

    — Udit Rathi

Margin

  • EBITDA margin improvement Margin · overall going forward · Medium confidence 2% to 3%
    But if I look at sort of peers, they, they operate, they, if I look at their numbers, I think there should be a maybe a 2% to 3% improvement overall going forward. That is what we are looking at.

    — Udit Rathi

Operations

  • TMT 550D direct charging system commercial operations Operations · Q4 · Medium confidence full throttle commercial operations
    And on a full throttle basis, I would expect sort of that to pick up, to be picked up by Q4. Reason being that this, Q2 right now is monsoons and Q3 in the NCR region, the, the construction activities get halted because of the rising pollution.

    — Udit Rathi

What to watch in Q2 FY27

Rolling mill utilization

FY27
Current 51-52% in FY26
Target in excess of 60% for FY27

Why it matters

Achievement of this target is crucial for operational efficiency and overall volume growth.

So yes, we are still maintaining our guidance of what we have spoken earlier of achieving the utilization in excess of 60% for the rolling mill, as far as the rolling mill utilization is concerned for this, for this financial year. And we seem to be on track for that as of now.

Risks & concerns

  • Softer steel realizations

    medium

    Broader operating environment characterized by softer steel realizations.

    Management acknowledged

  • Volatile energy prices and global commodity cycles

    medium

    Continued volatility across energy markets and global commodity cycles remains a concern.

    Management acknowledged

  • Geopolitical uncertainties and fluctuating demand

    medium

    Geopolitical uncertainties and fluctuating demand across certain end-user industries, impacting stainless steel volumes.

    Management acknowledged

  • Increased competitive supply in stainless steel

    medium

    Some IBC acquisitions in the stainless steel sector have led to increased competitive supply, causing demand-supply mismatch.

    Management acknowledged

  • Monsoon season and regulatory restrictions

    low

    Rainy season (July-August) and pollution-related construction halts in NCR (Q3) can hamper steel product usage and construction activities.

    Management acknowledged

Q&A highlights

7 direct
Monthly dispatch run rate and Q1 momentum sustainability Partial
I can't comment really on the exact numbers because we have not disclosed the same in public domain so far. But yes, we hope to maintain the same momentum as what we achieved in Q1. This is of course subject to a certain sort of Q2 has is sort of rainy season, July-August, it rains quite a bit, which of course hampers my end-use sort of applications and the usage of steel products.

Analyst sought current operational run rates post-Q1, but management provided a qualitative outlook, citing seasonal factors and diversification as balancing elements.

Asked by Keval Gala

Stainless steel volumes performance and Q2 trends Direct
So, my stainless-steel volumes was a little softer as compared to Q1 '26. Just to give you a broad idea, I think we did about 9,000, approximately it was soft to the extent of approximately around 10% or so, 10% to 12% as compared to corresponding figures of last year. So, this had a majority of reasons. So, basically because of the geopolitical disruptions, my end-users of stainless steel have a lot of applications which, -- few of my end-users have an export-oriented application.

Management acknowledged a decline in stainless steel volumes due to external factors, indicating a challenge in a key product segment.

Asked by Keval Gala

Rolling mill utilization target for FY27 and current status Direct
So, I think there was a remarkable improvement between 25- 26. '26 we achieved almost the utilization of close to 51%, 52%. And currently also, we are -- there is an improvement of what we achieved last year going forward. So yes, we are still maintaining our guidance of what we have spoken earlier of achieving the utilization in excess of 60% for the rolling mill, as far as the rolling mill utilization is concerned for this, for this financial year. And we seem to be on track for that as of now.

Management confirmed being on track for their FY27 utilization target, providing confidence in operational efficiency and capacity utilization.

Asked by Keval Gala

Utilization level for existing operations before committing to additional melting capacity Direct
And once, once we are able to achieve more than around 70% to 75%, then we'll be looking at expanding it further.

This sets a clear internal benchmark for future capacity expansion, indicating a disciplined approach to capital allocation.

Asked by Keval Gala

Strategy for achieving 20% CAGR given historical revenue volatility Direct
So volume pick up. So that particular year that you're talking about, we've already disclosed earlier, we've already clarified earlier, it's there in the balance sheet that a certain portion of that was trading sales. So right now all my sales that are being done is almost all related to the manufacturing that we're doing. And the strategy is very clear. So there is enough headroom. So my rolling mills are operating at 50, approximately 50% as on '26. And we sort of want to ramp it up to close to 60% this year.

Analyst questioned the feasibility of CAGR guidance given past fluctuations. Management clarified that current sales are purely manufacturing and outlined a strategy based on volume growth, capacity utilization, and integration.

Asked by Priya Jain

Geographic expansion beyond NCR/North India Direct
No, no. So the business model is such, if you look at all the local TMT manufacturers, except for those who are situated in Eastern India, wherein they are making the rebars at a completely integrated setup starting from iron ore. So they are the ones who are supplying pan-India. Otherwise, all the scrap-based route or the recycling route or the green steel route, whosoever is making is mainly a regional play because of a higher freight element. And there is enough demand here in the NCR region to be able to cater to.

Management explained the strategic rationale for their regional focus, attributing it to the scrap-based manufacturing route and freight economics, indicating no immediate plans for pan-India expansion.

Asked by Priya Jain

Top 2-3 levers for gross/EBITDA margin improvement Direct
So number one would be to ramp up the capacity and maintain a CAGR growth of in excess we've given a guidance of 20%. But so if last next two years if we are able to achieve 20% was... Trigger number two will be that access to the right kind of requirements for working capital... And third would be that integrating the TMT 550D operations.

Management clearly articulated the key strategic pillars for margin improvement, providing a roadmap for investors to track.

Asked by Deepak Poddar

Direct charging system for TMT mill - trial run completion and commercial operations timeline Direct
And right now it's, the, the, the season is also, it's like monsoon season, so the demand of the TMT bars is also a little subdued. And on a full throttle basis, I would expect sort of that to pick up, to be picked up by Q4. Reason being that this, Q2 right now is monsoons and Q3 in the NCR region, the, the construction activities get halted because of the rising pollution.

Management provided a specific timeline for the full commercial operation of the integrated TMT system, linking it to seasonal and regulatory factors.

Asked by Keval Gala

3 min read 6 chapters

Detailed narrative

Q1 FY27 Performance Overview

Rathi Steel and Power Ltd. reported a healthy start to FY27, with total income reaching ₹193.67 crores, a 24.6% increase year-on-year. EBITDA also saw a significant rise of 24.83% to ₹7.77 crores. Profit after tax (PAT) demonstrated robust growth, surging by 84.5% to ₹3.48 crores, leading to a 58 basis points improvement in PAT margins to 1.8%. This performance was supported by strong volume growth and an improved product mix.

Product Mix and Volume Growth

Total sales volumes for the quarter increased by approximately 30% year-on-year, reaching 28,372 metric tons. A key driver was the TMT bar segment, which saw its volumes more than double to 18,677 metric tons compared to the previous year. The company's revenue mix is almost equally split between TMT bars (45-48%) and stainless steel products (50-52%). While TMT bars primarily cater to the real estate sector, stainless steel products serve B2B applications in engineering and household sectors. Stainless steel volumes, however, were softer, declining by 10-12% YoY due to geopolitical disruptions and high ocean freight.

Operational Efficiency and Cost Management

The company continues to emphasize quality, operational discipline, and continuous process improvement. Rolling mill utilization reached 51-52% in FY26 and is on track to exceed 60% in FY27. Management aims for 70-75% melt shop utilization before considering further expansion. The focus remains on margin-accretive products, with 80-90% of stainless steel production being the 200 series, which offers better margins. The company also procures 90-95% of its raw materials domestically to mitigate currency fluctuations and price volatility.

Capital Expenditure and Funding

For FY27, Rathi Steel anticipates a capital expenditure (capex) of approximately ₹15 crores, with ₹4-5 crores already incurred in Q1. This capex is primarily for upgrading facilities, replacing old equipment, debottlenecking, and modernization. The funding for these investments is largely sourced from internal accruals. The company is also actively exploring refinancing options with existing lenders to reduce the cost of borrowing and enhance working capital limits, which is expected to positively impact margins.

Market Dynamics and Geographic Focus

The company's operations are predominantly focused on the NCR region, with 80-90% of sales coming from this area. This regional strategy is attributed to the scrap-based manufacturing route, which makes pan-India supply less viable due to higher freight costs. Despite competitive pressures and volatile market conditions, the company believes there is sufficient demand in the NCR to support its growth. The GreenPro certification provides a competitive advantage in securing orders, particularly with large builders.

Strategic Initiatives and Future Outlook

Rathi Steel aims to achieve a 20% CAGR growth over the next two to three years, building on its current manufacturing-focused sales. Key levers for margin improvement include ramping up capacity, optimizing working capital through refinancing, and integrating TMT 550D operations. Trial runs for the TMT direct charging system are complete, and full-throttle commercial operations are expected by Q4 FY27, contingent on the monsoon season and regulatory environment. The company is also assessing the feasibility of a rooftop solar initiative to enhance energy efficiency.

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