ELECTHERM - Electrotherm(I)

📊 NSE: ELECTHERM 🏢 Steel - Medium / Small 📅 Last Updated: 12/13/2025 21:47

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for H1 FY26 was INR 1,648.31 Cr, a 12.0% decline from INR 1,873.06 Cr in H1 FY25. Segment-wise: Special Steel Division fell 17.8% to INR 1,124.12 Cr; Engineering & Technologies Division decreased 0.7% to INR 510.76 Cr; Electric Vehicle Division grew 82.5% to INR 21.94 Cr.

Geographic Revenue Split

Not explicitly disclosed in available documents, though the company operates a wholly-owned subsidiary, Jinhua Indus Enterprise Limited, in the Republic of China, suggesting international operations or sourcing.

Profitability Margins

Net Profit Margin collapsed from 8.98% in H1 FY25 to 0.37% in H1 FY26. Profit Before Tax (PBT) fell 96.9% YoY to INR 5.27 Cr from INR 168.19 Cr, primarily due to the Special Steel Division swinging from a profit of INR 140.42 Cr to a loss of INR 4.92 Cr.

EBITDA Margin

Operating Profit before working capital changes was INR 37.06 Cr in H1 FY26, representing a 2.25% margin, down significantly from 10.5% (INR 196.64 Cr) in H1 FY25.

Capital Expenditure

Not disclosed in available documents; however, the company reported depreciation and amortization of INR 21.11 Cr for H1 FY26, suggesting a stable asset base.

Credit Rating & Borrowing

CRISIL suspended ratings (previously BBB/Negative and P3+) due to non-cooperation. Current finance costs were INR 15.37 Cr in H1 FY26, a 39.4% reduction from INR 25.35 Cr in H1 FY25, following debt settlements.

⚙️ Operational Drivers

Raw Materials

Raw materials include steel scrap, sponge iron, and alloys for the Special Steel and Engineering divisions. Cost of materials consumed was INR 1,235.64 Cr in H1 FY26, representing 74.9% of total revenue.

Import Sources

The company has a wholly-owned subsidiary in China (Jinhua Indus Enterprise Limited), indicating significant sourcing or manufacturing links to the Chinese market.

Raw Material Costs

Raw material costs as a percentage of revenue increased to 74.9% in H1 FY26 compared to 68.8% in H1 FY25. Total material consumption was INR 1,235.64 Cr.

Manufacturing Efficiency

The Engineering & Technologies Division maintained relatively stable revenue (INR 510.76 Cr) but saw PBIT margins drop from 11.3% to 6.2%, indicating rising operational costs or lower pricing power.

Logistics & Distribution

Other expenses, which include distribution and administrative costs, were INR 329.80 Cr in H1 FY26, accounting for 20% of revenue.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

The company is pivoting toward the Electric Vehicle Division, which saw 82.5% YoY growth. Strategy includes settling legacy debts (Rare Asset Reconstruction settlement) to clean the balance sheet and focusing on high-tech engineering services.

Products & Services

Induction furnaces, casting machines, special steel products (billets/bars), and electric two-wheelers (EVs).

Brand Portfolio

Electrotherm, YObykes (implied by EV division).

New Products/Services

Expansion of the Electric Vehicle portfolio is expected to be a major contributor, currently contributing 1.3% of revenue but growing at 82.5%.

Strategic Alliances

The company operates a Joint Venture which contributed a small profit of INR 0.12 Cr in H1 FY26.

🌍 External Factors

Industry Trends

The industry is shifting toward green mobility; Electrotherm's EV division growth of 82.5% aligns with this, though it remains a small portion of the INR 1,648 Cr total revenue.

Competitive Landscape

Competes with large-scale steel producers and emerging EV startups.

Competitive Moat

The company has a legacy 'pioneer' status in induction melting, but the negative 'Other Equity' of INR 580.67 Cr suggests a weak financial moat and high vulnerability to credit shocks.

Macro Economic Sensitivity

Highly sensitive to industrial CAPEX and steel cycles. The 12% revenue drop reflects broader cooling in heavy engineering demand.

Consumer Behavior

Shift toward electric two-wheelers is driving the 82.5% growth in the EV segment.

Geopolitical Risks

Operations in China via Jinhua Indus Enterprise Limited expose the company to trade policy shifts and geopolitical tensions between India and China.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to steel quality standards and EV FAME-II or similar subsidy regulations, though specific impacts are not quantified.

Taxation Policy Impact

The company recorded a deferred tax credit of INR 0.74 Cr in H1 FY26.

Legal Contingencies

The company successfully settled a major default with Rare Asset Reconstruction Limited (assignee of Dena Bank), paying a final interest settlement of INR 3.19 Cr in Q1 FY26.

⚠️ Risk Analysis

Key Uncertainties

The most critical risk is the negative equity of INR 580.67 Cr, indicating the company is technically insolvent without continued support or massive profit turnaround.