Steelcast — Q3 FY26 earnings call

Call held 30 Jan 2026

Management summary

Steelcast reported a mixed Q3 FY26, with revenue degrowth of 3.08% to INR 97.4 crores attributed to geopolitical uncertainties and softer demand in export markets. Despite this, the company achieved robust margin expansion, with EBITDA margin increasing by 297 bps to 32.04% and PAT margin by 202 bps to 21.14%. Management expressed confidence in sustaining a 20% CAGR over the next three years, driven by new product development and geographic diversification, and has an order book of INR 115 crores for Q4 FY26.

Highlights

  • EBITDA grew 6.81% to INR 31.21 crores in Q3 FY26.

  • EBITDA margin expanded by 297 basis points to 32.04%.

  • PAT grew 7.17% to INR 20.59 crores, with margin expanding by 202 basis points to 21.14%.

  • Company confident of sustaining ~20% CAGR over the next 3 years.

  • Order book of INR 115 crores executable in Q4 FY26.

Concerns

  • Revenue from operations saw a moderate degrowth of 3.08% to INR 97.4 crores in Q3 FY26.

  • Q3 was relatively softer due to moderation in demand and near-term geopolitical uncertainties, particularly arising from disruptions in certain export markets.

Key financials

  1. Revenue from Operations ₹97.4 Cr -3.1%YoY
  2. EBITDA ₹31.21 Cr +6.8%YoY
  3. EBITDA Margin 32%
  4. PBT ₹27.89 Cr +8%YoY
  5. PBT Margin 28.6%
  6. PAT ₹20.59 Cr +7.2%YoY
  7. PAT Margin 21.1%

What they filed

Q1 FY27: revenue up 16.8%, net profit up 20.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue75 102 120 107 107 +43%97 −5%112 −7%125 +17%
EBITDA19 28 38 27 30 +58%28 +0%29 −24%32 +19%
Net profit13 19 27 20 23 +77%21 +11%23 −15%24 +20%
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

  • Revenue Mix Q3 FY26
    63% Exports37% Domestic

Order book

high confidence

Total value

₹115 Cr

as of 2025-12-31 quantified

Execution

executable in the current quarter (Q4 FY26)

The current order book of INR 115 crores is executable in Q4 FY26.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹35 Cr
    • New space requirement for handling more output
    • Balancing equipment required for new product mix
    For the financial year FY '27, we will do about INR35 crores by way of new space requirement for handling more output and some balancing equipment required for take care of the new product mix.
  • Liquidity Cash ₹110 Cr Free reserves currently at INR 110 crores, expected to increase to INR 125-130 crores by year-end, which will be used for future capex once 75% utilization is reached.
    And we have free reserves parked into government securities and fixed deposits as we speak, about INR110 crores, which will keep accumulating and this number might go up to INR125 crores, INR130 crores by the current year-end, but we will not venture into moving into capex till we hit annual rate of 75%.

Guidance & targets

Revenue

  • FY26 Revenue Growth Revenue · FY26 · High confidence 11%
    Accordingly, we remain confident of delivering 11% growth in FY '26 over FY '25, supported by ongoing execution and a healthier demand outlook towards the end of the year.

    — Rushil Tamboli

  • CAGR Revenue · next 3 years · High confidence 20%
    Over the last 4 years, the company has delivered a 24% CAGR, and we are confident of sustaining around 20% CAGR over the next 3 years.

    — Rushil Tamboli

Profitability

  • Margins Profitability · ongoing · High confidence stable at current levels
    Margins are expected to remain stable at current levels, reflecting disciplined cost management and operational efficiency.

    — Rushil Tamboli

Capacity

  • Capacity Utilization Capacity · next financial year · High confidence 58%
    Sir, it will be 58%.

    — Umesh Bhatt

  • Capacity Utilization Capacity · FY29 · High confidence 90% (~26,000 tons)

    Previously 80% by FY28 → 90% (~26,000 tons)

    As we speak, we believe we should be able to do 90% in FY '28*, which is about 26,000 tons. *Note: Subsequent clarification from management indicates that the reference to FY'28 was inadvertent. The correct timeline for achieving ~90% capacity utilization (~26,000 tons) is FY'29.

    — Chetan Tamboli

Exports

  • Exports to EU Exports · next financial year · High confidence 20%

    Previously 15% → 20%

    In the next financial year, we are targeting about 20%.

    — Chetan Tamboli

Margin

  • Overall Margin Margin · longer period of time (1-3 years) · Medium confidence 27.5-28%

    Previously 30% → 27.5-28%

    So when you speak about overall margin scenario, you might see instead of 30%, you might see between 27.5%, 28% over a longer period of time.

    — Chetan Tamboli

What to watch in Q4 FY26

FY26 Revenue Growth

by FY26 end
Current 3.08% degrowth in Q3 FY26
Target 11% growth over FY25

Why it matters

To verify if the company can achieve its full-year revenue growth guidance despite a softer Q3.

Accordingly, we remain confident of delivering 11% growth in FY '26 over FY '25, supported by ongoing execution and a healthier demand outlook towards the end of the year.

Risks & concerns

  • Geopolitical Uncertainties and Export Market Disruptions

    medium

    Q3 FY26 revenue degrowth was attributed to moderation in demand and geopolitical uncertainties, particularly from disruptions in certain export markets.

    Management acknowledged

  • U.S. Tariffs

    medium

    Additional impact of 50% from U.S. tariffs, but management is not prepared to give discounts, and customers have agreed, indicating product competitiveness.

    Management acknowledged but managed

Q&A highlights

8 direct
Current Capacity Utilization Direct
This quarter, utilization was about – Sharma ji, is it about 48%? ... Sir, it is 46%.

Provides a key operational metric for the reported quarter, indicating current production levels relative to capacity.

Asked by Parikshit Gujrati

Geographic Diversification Strategy Direct
As of now, we are focusing on 2 countries. And we are hopeful of doing this in the coming 60 to 90 days' time. So we now export to about 16 countries. We should be then doing 18 countries.

Highlights the company's proactive strategy to mitigate risks from U.S. tariffs by expanding into new export markets.

Asked by Parikshit Gujrati

Drivers for Future Capacity Utilization Jump Direct
If you I just said a little while ago that in FY '25, we developed 56 parts. In the current year FY '26, we have developed 46 parts. In the next financial FY '27, we will develop 42 parts. All put together is about 144 parts. All this will converge into serial supplies. And that's why we are confident of reaching 90% in FY '28*.

Explains the underlying drivers for the ambitious long-term capacity utilization target, linking it to new product development and serial supplies.

Asked by Parikshit Gujrati

Raw Material Cost Pass-Through Mechanism and Alang Impact Direct
And as you know, in Steelcast, we are we have a system of sales price variation formula. If the input costs go down, we give reduction. And if the input cost goes up, we get a price increase. So this will be a pass-through mechanism. ... we use Alang connected scrap maybe only 20%, 25%.

Clarifies the company's ability to maintain margins despite raw material price volatility and addresses concerns about potential scrap shortages from Alang.

Asked by Harshil Solanki

U.S. Market and Tariff Impact on Pricing Direct
And as far as the U.S. tariffs are concerned, their additional impact is 50%. Even if they ask us, what can we give, maybe 1%, 1.5%. So far, they have agreed, and we believe it's unlikely they may chase us for a discount. And even if they ask us for a discount, we as a company are not prepared to give in anything.

Demonstrates management's firm stance on pricing despite tariff pressures, indicating confidence in product competitiveness and customer relationships.

Asked by Chirag Shah

Long-Term Margin Outlook with Higher Volumes Direct
Yes. But when volume goes up, there will be many components at relatively lower profit margins. So when you speak about overall margin scenario, you might see instead of 30%, you might see between 27.5%, 28% over a longer period of time.

Provides a more nuanced and realistic long-term margin expectation, explaining that increased volume might include lower-margin products, tempering expectations from operating leverage alone.

Asked by Chirag Shah

Trigger for New Capex Direct
We will take a call when we hit the annual rate of 75%, whichever that quarter is and whichever that month is. ... but we will not venture into moving into capex till we hit annual rate of 75%.

Outlines the specific operational trigger for future capacity expansion, providing clarity on the company's disciplined capital allocation strategy.

Asked by Chirag Shah

FY27 Capex Plan Direct
For the financial year FY '27, we will do about INR35 crores by way of new space requirement for handling more output and some balancing equipment required for take care of the new product mix.

Details the specific capex plans for the upcoming financial year, indicating investment in operational efficiency and new product capabilities.

Asked by Rajeev Ray

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Steelcast reported a moderate degrowth in revenue from operations by 3.08% to INR 97.4 crores in Q3 FY26, compared to INR 100.5 crores in Q3 FY25, primarily due to softer demand and geopolitical uncertainties in export markets. Despite this, the company demonstrated strong profitability, with EBITDA growing 6.81% to INR 31.21 crores and EBITDA margin expanding by 297 basis points to 32.04%. PAT also increased by 7.17% to INR 20.59 crores, achieving a margin of 21.14%.

Strategic Diversification and New Product Development

To de-risk the business and drive future growth, Steelcast is actively pursuing geographic and sectoral diversification. The company has developed 56 new parts in FY25, 46 in FY26, and plans 42 more in FY27, totaling 144 new parts expected to transition to serial supplies. Initial orders for new components in Ground Engaging Tools and Construction segments commenced in Q2 FY26, and the company is working with an Israeli firm on combat vehicle parts, expecting serial supplies soon.

Capacity Utilization and Long-Term Growth Outlook

Current capacity utilization for Q3 FY26 stood at 46%. Management projects this to increase to 58% in FY27 and aims for approximately 90% utilization (26,000 tons) by FY29, driven by the new parts coming online. The company is confident of sustaining a 20% CAGR over the next three years, building on a 24% CAGR achieved over the past four years, and expects to deliver 11% growth in FY26 over FY25.

Margin Stability and Cost Management

Despite revenue fluctuations, Steelcast expects margins to remain stable at current levels, with a long-term sustainable margin of 27.5-28%. This is supported by a sales price variation formula that ensures pass-through of raw material cost changes and ongoing internal cost reduction programs. These programs, along with forex gains and purchase price variance, contributed INR 3.41 crores to profitability in Q3 FY26.

Capital Expenditure and Liquidity Strategy

Steelcast plans a capex of INR 35 crores in FY27 for new space and balancing equipment to support new product mix and increased output. The company also has a 2.4-megawatt hybrid power plant project expected to be commissioned by June 30, 2026, projected to save INR 3.5-4 crores annually. With free reserves of INR 110 crores, expected to grow to INR 125-130 crores by year-end, the company will decide on further capex for 90% utilization once the annual utilization rate reaches 75%.

Export Market Dynamics and U.S. Tariff Response

While Q3 FY26 saw moderation in the U.S. market due to tariffs, Steelcast's products remain competitive, being 5-13% more cost-effective than Chinese offerings in key categories. The company is not reducing prices due to U.S. tariffs, which have an additional impact of 50%, and is actively diversifying its export base. It is targeting two new countries to expand its reach from 16 to 18 countries, with EU exports targeted at 20% for the next financial year.

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