MSPL - MSP Steel & Pow.

📊 NSE: MSPL 🏢 Steel - Medium / Small 📅 Last Updated: 12/14/2025 10:03

💰 Financial Performance

Revenue Growth by Segment

Total Operating Income (TOI) reached INR 2,905.51 Cr in FY25, a marginal growth of 1.09% YoY from INR 2,875.33 Cr in FY24. While specific segment percentages are not disclosed, growth was driven by increased sales volumes in pellets, sponge iron, billets, and TMT bars, offsetting a moderation in average sales realizations.

Geographic Revenue Split

The company primarily operates in Eastern India, specifically Chhattisgarh and Odisha. While exact regional percentages are not disclosed, its proximity to mineral-rich states allows it to serve the infrastructure and housing sectors in these hubs efficiently.

Profitability Margins

Operating margin (PBILDT) improved from 4.41% in FY24 to 4.60% in FY25 due to a sharper decline in raw material costs relative to finished goods prices. However, the company reported a net loss margin of -0.99% in FY25 (INR 28.71 Cr loss) compared to a profit margin of 0.50% in FY24 (INR 14.39 Cr profit), primarily due to a one-time MAT balance write-off of INR 26.49 Cr.

EBITDA Margin

EBITDA margin stood at 4.60% in FY25 (INR 133.75 Cr), up from 4.41% (INR 126.89 Cr) in FY24. This 19 bps improvement reflects better absorption of fixed costs and improved operational efficiency despite market volatility.

Capital Expenditure

No major debt-funded capex is planned for the medium term. The company is focusing on liquidity, with a planned payment of INR 43 Cr for the 'right of recompense' to lenders by September 2025, funded through INR 35 Cr in promoter infusions and internal accruals.

Credit Rating & Borrowing

Ratings were upgraded in September 2025 to CARE BBB; Stable (Long-term) and CARE A3+ (Short-term). Borrowing costs have significantly decreased following the conversion of INR 357.26 Cr of OCDs into equity, which improved the interest coverage ratio from 1.45x in FY24 to 4.39x in Q1FY26.

⚙️ Operational Drivers

Raw Materials

Iron ore and Coal are the primary raw materials, collectively accounting for approximately 85% of the total cost of sales in FY25.

Import Sources

Raw materials are sourced domestically from the mineral-rich states of Odisha and Jharkhand.

Key Suppliers

Procurement is managed through the open market, government-led e-auctions, and private traders, as the company lacks captive mines for iron ore and coal.

Capacity Expansion

Current operations include a 87.5 MW captive power plant (comprising 24 MW waste heat recovery and 52-63.5 MW thermal units) and a fly ash brick unit with a capacity of 48,600 TPA. No immediate expansion of primary steel capacity is disclosed.

Raw Material Costs

Raw material costs represent 85% of total sales costs. Profitability is highly sensitive to these inputs; for instance, the PBILDT margin improved in FY25 because raw material price reductions outpaced the decline in steel realizations.

Manufacturing Efficiency

Capacity utilization has improved, contributing to a 12.74% revenue growth in FY24. The semi-integrated nature of the plant allows for the conversion of intermediate sponge iron and billets into higher-value TMT bars.

Logistics & Distribution

Logistics are optimized via the captive railway siding, which reduces distribution lead times and costs for transporting heavy steel products to customers in Eastern India.

📈 Strategic Growth

Expected Growth Rate

12.74%

Growth Strategy

Growth is targeted through the significant deleveraging of the balance sheet (reducing debt from INR 1,020 Cr to INR 333 Cr), which lowers interest burdens and frees up cash flow. The strategy focuses on increasing capacity utilization of existing semi-integrated facilities and enhancing the sales volume of value-added products like TMT bars and structural steel.

Products & Services

The company sells pellets, sponge iron, MS billets, TMT bars, structural steel products, and fly ash bricks.

Brand Portfolio

MSP Steel & Power.

Market Expansion

Focus remains on strengthening the market position in Eastern India, leveraging the proximity to raw material sources and existing logistics infrastructure.

Market Share & Ranking

Not disclosed; however, it is identified as a key player in the secondary steel segment in Chhattisgarh.

Strategic Alliances

The company operates two subsidiaries: MSP Cement Ltd (100% holding) and Prateek Mines & Minerals Private Limited (63.69% holding), though both currently have negligible operations.

🌍 External Factors

Industry Trends

The Indian secondary steel industry is growing but remains highly fragmented and cyclical. There is an increasing trend toward semi-integration (like MSPL's captive power and railway siding) to survive margin pressures from unorganized players.

Competitive Landscape

Intense competition from a large number of unorganized players in the secondary steel segment, leading to thin margins and high price sensitivity.

Competitive Moat

The company's moat lies in its semi-integrated operations and logistics (railway siding), which provide a cost advantage over non-integrated competitors. This is sustainable as long as captive power generation remains cheaper than grid power.

Macro Economic Sensitivity

Highly sensitive to GDP growth and inflation, as steel demand is directly linked to government infrastructure spending and the health of the real estate sector.

Consumer Behavior

Demand is shifting toward branded and certified TMT bars for construction, favoring organized players like MSPL over smaller unorganized mills.

Geopolitical Risks

Geopolitical tensions and trade barriers are monitored as they can disrupt the global supply-demand balance of steel and raw material pricing.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to environmental pollution norms and mining regulations governing the procurement of iron ore and coal from Odisha and Jharkhand.

Environmental Compliance

The company operates a 24 MW waste heat recovery plant, which serves as an ESG-compliant power source by utilizing industrial exhaust to generate electricity.

Taxation Policy Impact

The company transitioned to a new tax regime in FY25, resulting in a one-time write-off of MAT credit amounting to INR 26.49 Cr, which caused the reported net loss.

Legal Contingencies

The company is obligated to pay INR 43 Cr as 'right of recompense' to lenders following its exit from Corporate Debt Restructuring (CDR), with payments scheduled by September 2025.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the volatility of raw material prices (85% of costs) and the cyclical nature of the steel industry, which can swing the company from profit to loss rapidly.

Geographic Concentration Risk

High geographic concentration with manufacturing facilities located solely in Raigarh, Chhattisgarh, making it vulnerable to local regulatory or industrial relations issues.