💰 Financial Performance

Revenue Growth by Segment

Total revenue grew 16.4% YoY to INR 123.03 Cr in H1 FY26. The manufacturing segment's contribution increased to 70% of total revenue (up from 66-67% in FY25), while the trading segment's contribution decreased to 30% (down from 32-33% in FY25).

Geographic Revenue Split

The company currently operates primarily in East India (Howrah, West Bengal) and North India (Jhajjar, Haryana). Management noted a lack of presence in the South Indian market, which they plan to address with a new facility in FY27.

Profitability Margins

Profit After Tax (PAT) grew 5.9% YoY to INR 6.48 Cr in H1 FY26. PAT margins are approximately 5.26%. Segment-wise EBITDA margins are: Flux-Cored wires (20-25%), specialized MIG wires (18-22%), general MIG wires (10%), electrodes (8-10%), and trading (2-3%).

EBITDA Margin

EBITDA margin for H1 FY26 stood at approximately 9%, a decrease from 11% in H2 FY25 due to seasonal monsoon impacts. However, management expects to end FY26 with double-digit EBITDA margins as high-margin Flux-Cored wire production scales.

Capital Expenditure

The company invested INR 1.5 Cr from IPO proceeds for de-bottlenecking and automation at Unit 1. Plans are in place to establish a new manufacturing facility in South India (Nagpur or Chennai) during FY27, though the specific investment amount is not yet disclosed.

Credit Rating & Borrowing

The company is utilizing IPO proceeds to repay existing debt to reduce interest costs. Specific credit ratings and interest rate percentages were not disclosed in the documents.

⚙️ Operational Drivers

Raw Materials

Wire rods represent the primary raw material and key risk factor, though the specific percentage of total cost was not disclosed.

Import Sources

Raw materials are sourced domestically within India, specifically through MoUs with major steel producers.

Key Suppliers

Steel Authority of India Limited (SAIL) is a primary supplier of wire rods via MoUs.

Capacity Expansion

Current capacities: Electrodes at 10,600 MTPA, MIG wires at 8,600 MTPA (5,000 MT at Unit 1 and 3,600 MT at Unit 2), and Flux-Cored wire at 1,800 MTPA. Automation at Unit 1 has already increased wire drawing output by 20-25%.

Raw Material Costs

Raw material costs are managed through pass-through provisions in most orders, allowing the company to safeguard margins against price fluctuations.

Manufacturing Efficiency

Current machinery utilization is 65-70%, with a target to reach 75-77% by the end of FY26. Automation has improved production efficiency by 25% per day.

Logistics & Distribution

The company uses a mix of direct sales and selected distributors to cater to large and SME clients.

📈 Strategic Growth

Expected Growth Rate

20%

Growth Strategy

Growth will be driven by scaling the high-margin Flux-Cored wire segment (targeting INR 30 Cr extra revenue at 70-80% utilization), increasing manufacturing's share of revenue to 85%+, and expanding geographically into South India by FY27. Automation at Unit 1 is expected to increase overall output by 25%.

Products & Services

Welding consumables including mild-steel and stainless-steel electrodes, specialized heat-input electrodes, cutting and gauging electrodes, MIG wires (MS and SS), and Flux-Cored wires.

Brand Portfolio

Classic Electrodes.

New Products/Services

Flux-Cored wire launched in September 2025, expected to contribute INR 25-30 Cr annually at full capacity with 20-25% EBITDA margins.

Market Expansion

Planning a new manufacturing facility in South India (Nagpur or Chennai) in FY27. Exploring export markets in the UAE and Africa through exhibitions and seminars.

Strategic Alliances

Maintains MoUs with Steel Authority of India (SAIL) for raw material supply.

🌍 External Factors

Industry Trends

The welding consumables industry is shifting toward higher-efficiency products like Flux-Cored wires. The domestic market is expected to grow at a 16-17% CAGR in line with national steel production targets.

Competitive Landscape

Competes with other welding consumable manufacturers, but differentiates through specialized high-margin grades and a complete product portfolio.

Competitive Moat

Moat is built on a comprehensive product basket (10/10 products required by customers) and technical expertise in specialized MIG wire grades with 18-22% margins, which are difficult for competitors to replicate.

Macro Economic Sensitivity

Highly sensitive to the Indian steel industry; the government projects crude steel production to double to 300 million tons by 2030-2032, representing a 16-17% CAGR for the sector.

Consumer Behavior

Customers are increasingly seeking one-stop-shop suppliers who can provide electrodes, MIG, and Flux-Cored wires simultaneously.

Geopolitical Risks

Potential trade barriers in target export markets like UAE and Africa could impact future growth plans.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to quality certifications for welding consumables and standard manufacturing regulations; specific pollution or pricing controls were not detailed.

Taxation Policy Impact

The company reported a Profit Before Tax of INR 8.46 Cr and Profit After Tax of INR 6.48 Cr for H1 FY26, implying an effective tax rate of approximately 23.4%.

Legal Contingencies

No pending court cases or legal disputes were disclosed in the provided documents.

⚠️ Risk Analysis

Key Uncertainties

Raw material price volatility and changes in government infrastructure policies are the primary risks, with potential margin impacts if pass-through clauses are not honored.

Geographic Concentration Risk

High concentration in North and East India; 100% of current manufacturing is domestic.

Third Party Dependencies

Significant dependency on SAIL for wire rod procurement under MoUs.

Technology Obsolescence Risk

The company is mitigating technology risks by upgrading to automated wire drawing machines and introducing advanced Flux-Cored wire lines.

Credit & Counterparty Risk

Receivables are expected to increase in line with revenue growth; the company maintains a standard credit term resulting in a 90-110 day working capital cycle.