💰 Financial Performance

Revenue Growth by Segment

Total revenue from TMT bar manufacturing reached INR 585.32 Cr in FY25. However, H1 FY26 revenue declined by 40.9% to INR 184.47 Cr compared to INR 312.40 Cr in H1 FY25, primarily due to a 40-day plant shutdown and a shift in the business model.

Geographic Revenue Split

The company operates primarily out of its manufacturing facility in Rajkot, Gujarat, with a significant portion of sales distributed through the Kamdhenu network across Western India. Specific regional percentage splits are not disclosed in available documents.

Profitability Margins

Operating margins have been volatile, recorded at 3.11% in FY24 and 3.4% in FY25. Margins moderated to 2.79% in H1 FY26 due to lower capacity utilization and fixed cost under-absorption during the plant shutdown.

EBITDA Margin

Operating profit margin was reported at 6.12% for FY25, a slight improvement from 5.77% in FY24. However, net profit margin remains thin at 1.59% for FY25, reflecting the high-volume, low-margin nature of the steel rolling industry.

Capital Expenditure

The company raised INR 45.88 Cr through an IPO in September 2024 to strengthen its capital base. Planned capex includes the installation of a captive solar power plant to reduce energy costs, though specific INR values for the solar project were not detailed.

Credit Rating & Borrowing

Ratings were downgraded in November 2025 to 'CRISIL BBB-/Negative/CRISIL A3' from 'CRISIL BBB/Stable/CRISIL A3+'. The downgrade reflects weakened debt protection metrics, with interest coverage falling to 1.40 times in H1 FY26 from 2.65 times in FY25.

⚙️ Operational Drivers

Raw Materials

Sponge iron and mild steel scrap are the primary raw materials, accounting for the bulk of the cost of production. Volatility in these commodities directly impacts the cost of TMT bar manufacturing.

Import Sources

Raw materials are primarily sourced from local suppliers within India, particularly from the Gujarat region to minimize logistics costs for the Rajkot plant.

Key Suppliers

Procurement is handled through a mix of local suppliers; however, specific company names of raw material vendors are not disclosed in the documents.

Capacity Expansion

Current installed capacity is 1,08,000 metric tons (MT) per annum for TMT bars. The company focuses on improving efficiency through a captive solar plant rather than immediate volume expansion.

Raw Material Costs

Cost of materials consumed stood at INR 418.87 Cr in FY25, representing approximately 71.5% of total revenue. Fluctuations in scrap prices can swing margins by 50-100 basis points due to limited pricing power.

Manufacturing Efficiency

Efficiency was severely impacted in H1 FY26 by a 40-day plant shutdown, leading to a decline in operating efficiency and a subsequent drop in PAT to INR 0.60 Cr from INR 5.20 Cr YoY.

Logistics & Distribution

Distribution is primarily handled through the Kamdhenu network, which allows for minimal debtor levels (7-10 days credit), though logistics costs are embedded in manufacturing and 'other' expenses.

📈 Strategic Growth

Expected Growth Rate

16-17%

Growth Strategy

Growth is targeted through the stabilization of the new business model, leveraging the 'Kamdhenu' and 'Kay2 Xenox' brand equity, and improving cost structures via the captive solar plant. The company aims to capitalize on the 20% projected increase in infrastructure and real estate demand.

Products & Services

The company manufactures and sells TMT (Thermo-Mechanically Treated) Bars used in civil construction, real estate, and infrastructure projects.

Brand Portfolio

Kamdhenu (under license), Kay2 Xenox.

New Products/Services

The company is focusing on high-strength TMT variants under the Kay2 Xenox brand to cater to premium construction requirements, expected to contribute to higher realizations.

Market Expansion

Expansion is focused on deepening penetration within the Gujarat and Western India markets through the established retail license user agreement with Kamdhenu Metallic Industries Limited.

Strategic Alliances

Retail License User Agreement with Kamdhenu Metallic Industries Limited for the use of the Kamdhenu brand name.

🌍 External Factors

Industry Trends

The steel industry is inherently cyclical. Current trends show a shift toward branded TMT bars and a focus on green energy (solar) in manufacturing to meet ESG norms and reduce costs.

Competitive Landscape

Competes with both large integrated steel players and numerous secondary steel re-rollers in the fragmented TMT market.

Competitive Moat

The primary moat is the association with the 'Kamdhenu' brand, which provides immediate market access and consumer trust. This is sustainable as long as the license agreement remains active and the brand maintains its market position.

Macro Economic Sensitivity

Highly sensitive to GDP growth and infrastructure spending. A decline in government infra-budgeting would directly reduce demand for TMT bars.

Consumer Behavior

Increased preference for branded, certified TMT bars over unbranded local scrap-based bars due to safety concerns in high-rise construction.

Geopolitical Risks

Indirect exposure through global steel price cycles which are influenced by Chinese production levels and international iron ore prices.

⚖️ Regulatory & Governance

Industry Regulations

Subject to Bureau of Indian Standards (BIS) norms for TMT bar quality and environmental regulations regarding furnace emissions in the Rajkot industrial cluster.

Environmental Compliance

The company is investing in a captive solar plant to comply with renewable energy goals and reduce its carbon footprint in the energy-intensive steel sector.

Taxation Policy Impact

Effective tax expense for FY25 was INR 1.76 Cr on a profit before tax of INR 11.09 Cr.

Legal Contingencies

The company has significant contingent liabilities of INR 71.37 Cr as of March 31, 2025, primarily in the form of corporate guarantees provided to a group company, VMS TMT Pvt Ltd. Crystallization of this could severely impact the networth of INR 88.6 Cr.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the potential crystallization of the INR 71.37 Cr corporate guarantee, which represents nearly 80% of the company's networth.

Geographic Concentration Risk

High concentration in Gujarat, with the single manufacturing unit in Rajkot making the company vulnerable to regional economic shifts or local regulatory changes.

Third Party Dependencies

Heavy reliance on Kamdhenu Metallic Industries Limited for brand licensing and distribution network access.

Technology Obsolescence Risk

Low risk for the product (TMT bars), but high risk in process efficiency; failure to adopt cost-saving technologies like captive power could lead to uncompetitive pricing.

Credit & Counterparty Risk

Receivables are generally well-managed with a 20.20 turnover ratio, but the increase in inventory days to 70 days suggests potential counterparty or demand-side pressure.