Surya Roshni Limited

Surya Roshni delivered a robust Q2 FY26, with consolidated revenue growing 21% year-on-year to INR 1,845 crores. EBITDA saw a significant increase of 69% to INR 141 crores, with the margin improving to 7.6%. Net profit more than doubled, rising 117% year-on-year to INR 74 crores, driven by better realization, product mix, and operating leverage. The company also reported a healthy ROCE of 16.46% and ROE of 11.90% for the quarter.

The Steel Pipe and Strip business reported a 24% year-on-year revenue growth, primarily fueled by strong exports which increased by 45%. This segment achieved its highest ever Q2 volumes, with capacity utilization at 80%. EBITDA for the segment more than doubled to INR 102 crores, and profitability per ton improved significantly by 73% year-on-year to INR 5,013. Management noted that despite some pressure from falling steel prices in July, a notional inventory loss of INR 500 per ton was largely offset by higher operating efficiencies.

The Lighting and Consumer Durable business continued its steady growth trajectory, with revenue up 10% year-on-year to INR 434 crores. This growth was supported by festive demand and double-digit volume growth in LED lamps, batten, and street light segments. The segment's margin expanded to 9% from 7.7% in Q1, reflecting better mix efficiency gains and cost control. Professional Lighting business also maintained strong momentum, growing 25% in Q2 FY26, with an order book of over INR 150 crores.

Surya Roshni is actively pursuing capacity expansion across its operations. Investments include INR 35 crores in the Bahadurgarh cold rolling plant (adding 36,000 tons/year) and INR 50 crores in the Gwalior spiral plant (adding 60,000 tons/year). An additional INR 50 crore investment is ongoing at Bhuj, and greenfield projects at Hindupur and another location, totaling INR 500 crores, are expected to add 5 lakh tons capacity, with 25% coming online next year and full installation within 1.5 years. The company targets a total capacity of 1.25 million tons by end of FY26/Q1 FY27 and 1.95 million tons in the next 1.5-2 years.

The company maintains a strong financial position as a zero-debt entity with a net cash surplus of INR 246 crores as of September 30, 2025. The Board of Directors declared an interim dividend of INR 2.5 per share, reflecting a commitment to shareholder value creation. Management emphasized that capital is allocated to ongoing capex, working capital needs, and returning benefits to shareholders, indicating a balanced approach to growth and investor returns.

For FY26, the company maintains its Lighting and Consumer Durable top-line guidance of INR 1,900 crores and EBITDA of INR 180-185 crores, with H2 expected to contribute significantly due to festive season and new wire business. The full-year steel volume guidance was prudently recalibrated downwards from 10.5 lakh tons to 9.8 lakh tons. Total EBITDA guidance for FY26 was revised to INR 620-625 crores from an original target of INR 700 crores, reflecting a balanced outlook.

Management acknowledged challenges such as the impact of extended monsoon and delayed government fund releases on GI pipe demand, and past notional inventory losses due to falling steel prices. However, they expressed confidence in managing these through efficient operations and product mix. They also noted a 10-12% price increase for fans, effective January 1, 2026, due to BE transition, which has already been passed on to the market. Regarding import content in lighting (30%), management highlighted diversification of sourcing and long-term localization efforts.