Detailed Narrative
Strong Half-Yearly Financial Performance
Sambhv Steel Tubes delivered its strongest ever half-yearly performance in H1 FY26, with total sales volume, revenue, EBITDA, and PAT growing by 51%, 76%, 94%, and 109% respectively. Revenue for H1 FY26 reached ₹1,139 crores, with EBITDA at ₹133 crores (11.7% margin) and PAT at ₹63 crores (5.6% margin). Q2 FY26 also saw robust YoY growth, with revenue up 83% to ₹580 crores, EBITDA up 168% to ₹60 crores, and PAT surging 446% to ₹30 crores, demonstrating significant quarterly improvement.
Major Greenfield Capacity Expansion in Stainless Steel
The company is establishing a greenfield project at Kesda for a fully integrated facility with a total finished product capacity of 1.2 million tons per annum over 4-5 years, with Phase-1 targeted for commissioning by Q4 FY27. Phase-1 involves an investment of ₹935 crores for 3,60,000 tons per annum of stainless-steel coil with backward integration (₹810 crores) and an additional 25 MW power plant (₹125 crores). Funding will be a mix of debt (max ₹600 crores) and internal accruals, with ₹200 crores already spent as of September 30, 2025.
Strategic Shift Towards High-Margin Stainless Steel Products
Sambhv is strategically moving towards high-margin, value-added products like CRFH pipes, stainless steel CR coils, and galvanized coils. The decision to focus Phase-1 of the greenfield project entirely on stainless steel is driven by fast-growing demand, reduced imports due to BIA standards, and attractive margins in the segment. Management noted that while per-ton margins are higher in SS (₹14,000-₹15,000) compared to pipes (₹6,000-₹7,000), the percentage EBITDA margin is similar (12-13%) across both, justifying the strategic focus.
Operational Performance & Capacity Utilization
For H1 FY26, value-added product production reached 2.5 lakh tons per annum, with sales volume up 59% to 1.7 lakh tons per annum. Capacity utilization in the Pre-Galvanized Division improved to 89% and Stainless Steel Division to 86%. The company aims to increase pipe/galvanizing utilization from 85% to 95% next quarter and SS utilization by another 10% this quarter. Post-commissioning of the new SS capacity, management expects to achieve 70% utilization within 6-9 months, indicating a clear ramp-up strategy.
EBITDA Margin Dynamics and Outlook
Q2 FY26 EBITDA margins were lower QoQ by approximately 2.5% due to the rainy season, which increased moisture content in raw materials (iron ore and coal), reducing recovery margins. Despite this, management believes a 13% EBITDA margin is sustainable for the coming quarter and targets a maintainable EBITDA margin of ₹7,000 per ton on a yearly basis. The financial cost also dropped significantly by 46% QoQ due to long-term debt repayment, contributing positively to the bottom line.
Long-Term Revenue and Product Mix Targets
Post the full implementation of the additional CAPEX by FY28, the company projects revenue to reach around ₹4,500 crores with a margin in the 10-13% range. The revenue split is expected to be approximately 60-65% from the stainless steel division and 35-40% from the GP and ERW pipe divisions. The company is also developing multiple SS grades (304, 316, 316L, N grade, SN grade) and plans to explore consumer products in the future, currently focusing on B2B sales.