AARON - Aaron Industries

📊 NSE: AARON 🏢 Engineering 📅 Last Updated: 12/13/2025 17:42

💰 Financial Performance

Revenue Growth by Segment

Total income for FY 2024-25 was INR 78.15 Cr, representing a growth of 23.32% YoY from INR 63.37 Cr. In Q2 FY26, revenue from operations grew by 15.60% QoQ and 21.59% YoY. The steel business segment typically generates margins between 15-20%, while the elevator door segment yields 20-25%.

Geographic Revenue Split

The company primarily operates in the domestic Indian market but is actively expanding into international markets, specifically Kenya, where it is participating in exhibitions to secure continuous business within a 6-7 month timeline.

Profitability Margins

Gross margins improved from 35.7% to 37.8% (up 110 basis points). Net Profit after Tax for FY 2024-25 was INR 8.24 Cr, a 30.2% increase from INR 6.33 Cr in the previous year. Profit Before Tax stood at INR 11.86 Cr compared to INR 8.50 Cr YoY.

EBITDA Margin

The EBITDA margin for FY 2024-25 was 19.29%, up from 17.82% in the previous year. For Q2 FY26, the EBITDA margin was 18.78%, with an absolute EBITDA of INR 4.18 Cr, reflecting a 27.80% YoY increase.

Capital Expenditure

The company is currently onboarding a new plant (Unit 3) and land to increase capacity. Specific INR values for planned Capex were not disclosed in the available documents.

⚙️ Operational Drivers

Raw Materials

Stainless steel (domestic and imported) is the primary raw material. Fluctuations in steel prices directly impact the company's cost structure and margins.

Import Sources

The company sources stainless steel from both domestic markets and international imports, though specific countries were not named.

Capacity Expansion

The company is scaling up through its new Unit 3 facility and additional land acquisition. Management aims to reach an EBITDA margin of 22-23% as utilization of this new capacity increases.

Raw Material Costs

Raw material costs are a significant driver; management noted that increased volumes from contract manufacturing help in bulk procurement and better machine utilization to offset margin pressure.

Manufacturing Efficiency

Management is focusing on automation and productivity improvements to drive EBITDA margins from the current ~19% toward a target of 22-23%.

📈 Strategic Growth

Expected Growth Rate

25%

Growth Strategy

The company plans to achieve its 25% growth target through contract manufacturing for Tier 1 players, expanding its presence in Tier 2 and Tier 3 cities, and entering the Kenyan export market. Automation at the new Unit 3 facility is expected to enhance operational efficiency and margins.

Products & Services

Finished stainless steel sheets, elevator doors, and specialized steel products for specific infrastructure projects.

Brand Portfolio

Aaron Industries Limited.

New Products/Services

Specialized steel products for specific large-scale projects and contract manufacturing services for major national players.

Market Expansion

Targeting the African market, specifically Kenya, with a timeline of 6-7 months to establish continuous business flow.

Strategic Alliances

The company has entered into contract manufacturing arrangements with Tier 1 national players in the steel and elevator segments.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward automation and higher quality standards in stainless steel processing. Aaron is positioning itself as a specialized player to avoid the 'commodity trap' of standard steel products.

Competitive Landscape

Intense competition exists from both local unorganized players and large international manufacturers.

Competitive Moat

The company's moat is built on its ability to produce specialized, project-specific steel products and its integrated manufacturing process (Unit 3), which allows for better margin control than standard players.

Macro Economic Sensitivity

Global economic growth is projected at 2.7% to 3.3% in 2025. The company is sensitive to domestic industrial growth and infrastructure spending.

Consumer Behavior

Increased demand for modern elevator infrastructure in Tier 2 and Tier 3 cities is driving the elevator door segment.

Geopolitical Risks

General exposure to international economic risks and supply chain disruptions for imported materials.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Companies Act 2013 and SEBI Listing Obligations. The company complies with mandatory Secretarial Standards issued by ICSI.

Environmental Compliance

The company identifies environmental risk as a business concern and maintains systems to ensure compliance with applicable laws.

Taxation Policy Impact

The effective tax rate for FY 2024-25 was approximately 30.5% (INR 3.62 Cr tax on INR 11.86 Cr PBT).

Legal Contingencies

No instances of fraud were reported by statutory or internal auditors during FY 2024-25. No sexual harassment complaints were received.

⚠️ Risk Analysis

Key Uncertainties

Volatility in steel prices and project execution delays due to extended monsoons are the primary uncertainties, potentially impacting the 25% annual growth guidance.