Surya Roshni Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Surya Roshni reported a stable Q3 FY26 with consolidated revenue up 3% YoY to Rs. 1,927 crores, driven by strong performance in Lighting and Consumer Durables. The Steel segment faced margin pressure from inventory losses and API degrowth but showed sequential improvement. The company remains zero-debt with a healthy cash surplus and is focused on capacity expansion, export diversification, and achieving ambitious growth targets for FY27, particularly in the Steel division.

Highlights

  • Consolidated Revenue for Q3 FY26 increased by 3% year-on-year to Rs. 1,927 crores.

  • Lighting and Consumer Durable segment revenue grew 6% year-on-year to Rs. 476 crores in Q3 FY26.

  • The company is zero-debt with a net cash surplus of Rs. 245 crores as of December 31, 2025.

  • Export volume grew almost 10% year-on-year in Q3 FY26, accounting for 19% of total volume.

  • Net working capital cycle was 61 days and ROCE was 17.57% in Q3 FY26.

Concerns

  • Consolidated EBITDA for Q3 FY26 stood at Rs. 148 crores with margins of 7.7%, impacted by elevated input costs and category mix.

  • Steel Pipe & Strip segment EBITDA margins were impacted by a one-time inventory loss of around Rs. 500 per tonne due to sharp steel price correction in Oct-Nov 2025.

  • The API segment experienced a drastic 35% degrowth in Q3 FY26, contributing to a volume shortfall against initial targets.

  • Overall FY26 volume target for Steel Pipe is revised down to 9,35,000 - 9,40,000 tonnes from an initial expectation of 1,100,000 tonnes.

Key financials

  1. Consolidated Revenue ₹1,927 Cr +3%YoY
  2. Consolidated EBITDA ₹148 Cr
  3. Consolidated EBITDA Margin 7.7%
  4. Consolidated PAT ₹80 Cr
  5. Net Cash Surplus ₹245 Cr
  6. Net Working Capital Cycle 61 days
  7. ROCE 17.6%
  8. ROE 12.7%

What they filed

Q1 FY27: revenue up 27.5%, net profit up 76.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,529 1,868 2,146 1,605 1,845 +21%1,927 +3%2,163 +1%2,046 +27%
EBITDA76 150 202 70 118 +55%145 −3%154 −24%112 +60%
Net profit34 90 130 34 74 +118%80 −11%98 −25%60 +76%
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

Share of Revenue (Q3 FY26)
₹1,927 Cr Total
  • Steel Pipe and Strip ₹1,451 Cr 75.3%
  • Lighting and Consumer Durable ₹476 Cr 24.7%

Order book

high confidence

Total value

₹650 Cr

as of 2025-12-31 quantified

Execution

Lighting B2B order book has an execution timeline of 3-4 months.

Composition

Mix 2 segments
  • Steel division 76.9%
  • Lighting 23.1%

Share of order book by segment

Order book of Rs. 500 crores for Steel division and Rs. 150 crores for Lighting as of Q3 end, with Lighting B2B orders having a 3-4 month execution timeline.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹250 Cr
    • Internal projects ₹160 Cr
    • New work orders ₹100 Cr
    • Capacity expansion in existing plants ₹250 Cr
    • Increasing capacity for Wire business in Lighting division
    One is that the government has a budget for spending. And the other is that we already have our internal projects worth Rs 160 crores and we are going to issue a work order of about Rs 100 crores within the next week or 10 days. So, we have a CAPEX of around Rs 250 crores in the existing plants.
  • Debt Net cash ₹245 Cr
    We are a zero-debt company with a net cash surplus of Rs. 245 crores as of December 31, 2025.
  • Liquidity Cash ₹245 Cr Company has a net cash surplus, indicating strong liquidity and no need to run a bank.
    We are a zero-debt company with a net cash surplus of Rs. 245 crores as of December 31, 2025.

Guidance & targets

Volume

  • Steel Pipe Volume Volume · FY26 · High confidence 9,35,000 - 9,40,000 tonnes
    So, I think we have done 6,45,000 tonnes so far and we will do around 2,90,000 tonnes - 3,00,000 tonnes in Q4. And I think we will close at 9,35,000 tonnes - 9,40,000 tonnes in the whole year.

    — Raju Bista

  • Steel Pipe Volume Volume · FY27 · High confidence 1,100,000 tonnes
    then next year we have a minimum budget of 11, 00,000 tonnes for FY 2026 and we will have a growth of approximately 17% - 18% in that also.

    — Raju Bista

Profitability

  • Steel Division EBITDA per tonne Profitability · FY27 · High confidence minimum Rs. 5,000 per ton
    And I would like to give confidence to our Investors and Shareholders that our EBITDA per tonne will be a minimum of Rs 5,000 per ton in FY 2026 next year

    — Raju Bista

  • Steel Division EBITDA Profitability · FY27 · High confidence Rs. 540-550 crores
    and we will generate an EBITDA of Rs 540 crores Rs. 550 crores in the Steel division alone.

    — Raju Bista

  • Lighting Division EBITDA Profitability · FY27 · High confidence around Rs. 200 crores
    And in the Lighting division alone, we will also touch the figures of an EBITDA of Rs 200 croress.

    — Raju Bista

  • Overall EBITDA Profitability · FY27 · High confidence Rs. 750 crores

    From Rs. 580-600 crores (over 2-3 years) today

    And we believe that after delivering EBITDA of Rs 580 crores- Rs. 600 crores over 2-3 years, we will have an EBITDA of Rs 750 crores in next year i.e. FY 2027.

    — Raju Bista

  • Overall EBITDA Profitability · Q4 FY26 · High confidence Rs. 200-210 crores
    So, in Q4, our EBITDA will be around Rs. 200 crores Rs. 210 crores including Lighting and Steel division together.

    — Raju Bista

  • Overall EBITDA Profitability · FY26 · High confidence Rs. 585-590 crores
    Otherwise overall, as we did around Rs. 608 crores last year, this year also we will do EBITDA of Rs. 585 crores - Rs. 590 crores for the whole year.

    — Raju Bista

Revenue

  • Lighting Division Revenue Revenue · FY26 · High confidence around Rs. 1,800 crores plus
    Similarly, on the Lighting front, we are making a sale of Rs 1,800 crores plus for the first time.

    — Raju Bista

  • Lighting Division Revenue Revenue · FY27 · High confidence around Rs. 2,100 crores
    And next year, we are assuming a growth of 15% and our overall turnover will be around Rs 2,100 croress.

    — Raju Bista

What to watch in Q4 FY26

API Segment Volume Recovery

Next quarter (Q4 FY26) and Q1 FY27
Current 35% degrowth in Q3 FY26
Target Recovery in Q4 FY26 or Q1 FY27, supported by new ONGC orders

Why it matters

API segment degrowth significantly impacted Q3 volumes and EBITDA; recovery is key for overall Steel division performance.

And hopefully from Q1, next year, the API demand will also come because it is natural API's demand will come because almost 35 years have been completed for the life of those pipes. So, the government has to work on all of them.

Risks & concerns

  • Raw Material Price Volatility

    medium

    Near-term volatility persists, particularly on raw material price, impacting margins.

    Management acknowledged

  • Inventory Loss due to Steel Price Correction

    medium

    Steel segment faced a one-time inventory loss of ~Rs. 500 per tonne in Q3 FY26 due to sharp price correction in Oct-Nov 2025.

    Management acknowledged

  • API Segment Degrowth

    medium

    Drastic 35% degrowth in the API segment in Q3 FY26 impacted overall volumes.

    Management acknowledged

  • EU Quotas and CBAM on Exports

    medium

    Headwinds from EU quotas and Carbon Border Adjustment Mechanism impacting steel exports to Europe, leading to a disadvantage of 1,000 tonnes/month.

    Both acknowledged

  • Geopolitical Scene and General Elections

    low

    External factors like general elections and geopolitical scene are not under company control and can impact targets.

    Management acknowledged

Q&A highlights

8 direct
Volume Shortfall in Q3 FY26 Direct
So, mainly, in the API segment, the Oil and Gas segment, there is a 35% degrowth. That is the main reason in the volume. And secondly, if I go to see in the rest of the things, there is growth in Galvanizing and all others.

Analyst questioned the company's inability to meet volume targets, and management provided specific reasons for the shortfall, primarily API segment degrowth and destocking due to price falls.

Asked by Viraj

Q4 FY26 EBITDA Projection Direct
The overall EBITDA will be around Rs. 4,800 - Rs. 4,900 per tonne for overall year. And the stock gain in Q4 will impact our EBITDA will be around Rs. 5,600 - Rs. 5,700 per tonne. ... So, in Q4, our EBITDA will be around Rs. 200 crores Rs. 210 crores including Lighting and Steel division together.

Analyst sought confirmation on Q4 EBITDA, including the impact of inventory gains, and management provided a clear range for the quarter's profitability.

Asked by Viraj

Market Share Loss Concerns Direct
Look, we are not losing the market share because I have the data of all the peers. And if I compare it with everyone, we are not losing in volume. And in the particular segment where there is growth, we are also increasing the CAPEX.

Analyst expressed concern about potential market share loss, which management directly refuted by comparing performance with peers and highlighting strategic CAPEX in growth areas.

Asked by Viraj

Shareholder Returns (Demerger/Buyback) Direct
No, you are absolutely right. We will keep both your points in mind. Demerger is also a valid suggestion of yours. And subsequently, whatever CAPEX we need, apart from that, we do not need to run a bank, so we always say this to the management. That is why we keep giving something in the form of interim dividends. So, we will try to give the advantage of this to the shareholders throughout the year.

Analyst pushed for higher shareholder returns (demerger/buyback) given the company's cash surplus, and management acknowledged the suggestion and committed to considering it.

Asked by Viraj

Export Headwinds from EU Quotas and CBAM Direct
See to counter this, one thing is that two FTAs have recently been signed by the country with the EU and the US. One thing is that the Steel is kept separate in both the FTAs. Generally, Steel is kept separate but there is a problem with the quota system in the EU, it gradually reduces. So, it has an impact but we are already doing two or three things in it. For example, since we have a good volume in the Middle East, we are increasing the quantity over there. We have also added some new African countries and I this we have seen that the export of Hollow Sections is also reviving from India.

Analyst inquired about the impact of EU trade barriers on exports, and management detailed their strategy of diversifying to Middle East and African markets to offset potential losses.

Asked by Shyam Sampat

API Pipe Volume Crash and ONGC Opportunity Direct
See, for us particularly, for Surya Roshni's case, there is a very big opportunity. Till now, ONGC used to use a Seamless Pipe only. And Surya Roshni is the first company in India which has approved its ERW. So, this is a silver lining for us. I cannot tell you much in detail about this. But you are right, if this market particularly converts towards Seamless, then it will be beneficial for the country as well and companies like Surya Roshni will also get a big advantage in the future, in terms of volume and overall margins as well.

Analyst asked about the temporary nature of API degrowth and the significance of ONGC's approval for ERW pipes, which management confirmed as a major opportunity and 'silver lining'.

Asked by Shyam Sampat

FY27 Volume Target and Government Dependency Direct
See, we will consider it as a bonus. Our sales whatever you see in the Lighting and Steel division, B2G is equal to nothing, we do B2B and in Pipe, we deal with the ONGC, oil sector, etc. We do not supply directly to the government.

Analyst questioned the dependency of ambitious FY27 volume targets on government programs, and management clarified their B2B focus and minimal direct reliance on government orders.

Asked by Kiran D

Long-term EBITDA Stagnation and Volume Guidance Direct
And I feel, even in Steel, the price correction kept on continuing, for a long time. That was a big measure. And the improvements we made in SAP and IT over here, I think, in the Steel division, in the Steel segment, we had to bear a loss due to our requirement of100% accuracy. But see, I think this is the specialty that a strong balance sheet is there and it is a cash surplus company. And in the whole year, we are continuously doing EBITDA of Rs. 585 crores – Rs. 600 crores.

Analyst challenged management on the lack of EBITDA growth over the past three years and revised volume targets, prompting management to explain the impact of steel price corrections and internal system improvements.

Asked by Keshav Garg

3 min read 6 chapters

Detailed narrative

Q3 FY26 Consolidated Performance and Financial Health

Surya Roshni reported a consolidated revenue of Rs. 1,927 crores for Q3 FY26, marking a 3% year-on-year growth. EBITDA stood at Rs. 148 crores with a margin of 7.7%, and PAT was Rs. 80 crores. For the nine-month period, revenue reached Rs. 5,377 crores, EBITDA Rs. 371 crores, and PAT Rs. 188 crores. The company maintains a strong financial position as a zero-debt entity with a net cash surplus of Rs. 245 crores as of December 31, 2025, alongside a net working capital cycle of 61 days, ROCE of 17.57%, and ROE of 12.65%.

Lighting & Consumer Durable Segment Growth Drivers

The Lighting and Consumer Durable segment delivered a stable operating performance in Q3 FY26, with revenue growing 6% year-on-year to Rs. 476 crores and a strong sequential growth of nearly 10% over Q2 FY26. This growth was primarily fueled by festival season demand, healthy volume across consumer lighting categories, and robust performance in professional lighting, including infrastructure-led applications. Despite elevated input costs, the segment maintained an EBITDA margin of approximately 8.8%.

Steel Pipe & Strip Segment: Inventory Loss and Strategic Focus

The Steel Pipe and Strip segment recorded revenue of Rs. 1,451 crores in Q3 FY26, with a dispatch volume of 2.37 lakh tonnes. EBITDA for the segment was Rs. 106 crores, with margins of 7.3%. Profitability was notably impacted by a one-time inventory loss of around Rs. 500 per tonne due to a sharp correction in steel prices during October and November. However, EBITDA improved sequentially by about 4% quarter-on-quarter, and the company is focusing on capacity expansion and new DFT lines for sustained growth in hollow section and structural pipes.

Export Market Diversification and ONGC Opportunity

Exports contributed significantly to Q3 FY26, accounting for almost 19% of total volume and growing nearly 10% year-on-year. To mitigate headwinds from EU quotas and the Carbon Border Adjustment Mechanism, Surya Roshni is actively expanding into Middle Eastern and African markets. A significant opportunity has emerged in the API segment, with ONGC approving Surya Roshni's ERW pipes as an alternative to Seamless pipes, a first for an Indian company, with an initial 4,500-tonne order already dispatched.

Ambitious Growth Targets for FY27

Management has set ambitious targets for FY27, projecting a minimum Steel Pipe volume of 1,100,000 tonnes, representing 17-18% growth. The Steel division's EBITDA is targeted at Rs. 540-550 crores for FY27, with an EBITDA per tonne of at least Rs. 5,000. For the Lighting division, revenue is expected to reach around Rs. 2,100 crores (15% growth) with an EBITDA of approximately Rs. 200 crores. Overall company EBITDA is projected to reach Rs. 750 crores by FY27.

Capital Allocation and Shareholder Value

The company is undertaking CAPEX of around Rs. 250 crores in existing plants, including Rs. 160 crores for internal projects and Rs. 100 crores for new work orders. Management acknowledged analyst suggestions regarding demerger and buybacks, confirming their commitment to providing shareholder advantages, including interim dividends, and will place the buyback suggestion to the Board. The focus remains on disciplined execution and optimal capital allocation to drive future growth.

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