SG Mart Limited

SG Mart reported its best quarter in Q4 FY26 with revenue upwards of INR 1,800 crores and EBITDA of INR 56 crores, which included INR 6 crores from inventory gain. For the full fiscal year 2026, the company achieved an EBITDA of INR 137 crores, representing a 35% growth, and a reported ROCE of 15%. The company generated INR 300 crores in operating cash flow for FY26, which funded INR 250 crores of capex, resulting in a net cash position of INR 750 crores on its balance sheet.

The company has streamlined its four running verticals, with a strong focus on value-added businesses. While B2B sales volumes were lower in Q4 due to steel supply shortages and the Middle East crisis, service center volumes increased by over 10% to 190,000 tons in Q4, primarily driven by new additions. The new profiles business, launched in Q4, contributed around 7,000 tons with good margins, leveraging the APL Apollo brand and group distribution network.

SG Mart incurred INR 525 crores in capex for FY26, with INR 125 crores specifically in Q4, mainly directed towards service centers and the acquisition of new land parcels. Looking ahead, the company has approved a minimum of INR 600 crores for capex over the next two years (FY27 and FY28). This capex will be allocated approximately one-third for building service centers, half for new land parcels, and 15-20% for profile machines, indicating aggressive expansion plans.

Management is confident that the Q4 business EBITDA of INR 50 crores will continue to rise throughout FY27, reiterating previous guidance for INR 300-350 crores of annualized EBITDA for FY27. Despite PAT growth lagging EBITDA due to higher depreciation from heavy investments in new assets, the focus on more profitable value-added verticals is expected to drive over 50% EBITDA growth in FY27. Per-ton EBITDA ranges from INR 700-1,000 for B2B to INR 5,000-8,000 for the profile business, with puff panel margins expected at 5-8%.

For FY27, the company targets renewable structures volume of 130,000-150,000 tons and other profile structures volume exceeding 100,000 tons. The service center network is projected to expand to 11-12 centers by the end of FY27. Over the next three years, service centers are expected to contribute around 2 million tons of volume, solar business around 250,000 tons, and steel profile structures around 300,000 tons, reflecting a 50% CAGR in bottom-line growth.

The Middle East crisis significantly impacted Dubai operations and B2B sales in Q4, leading to a profitability hit, though management expects recovery once the situation normalizes. A shortage of specialized coated steel due to gas issues from steel mills also affected renewable structures, with management anticipating supply improvement within the next one to two months. Despite these challenges, the company's diversified verticals are expected to drive overall performance.