NMSTEEL - Newmalayalam

📊 NSE: NMSTEEL 🏢 Steel - Medium / Small 📅 Last Updated: 12/14/2025 10:31

💰 Financial Performance

Revenue Growth by Segment

Total revenue for H1 FY26 reached INR 162.24 Cr, representing a 5.21% YoY growth compared to INR 154.21 Cr in H1 FY25. On a half-yearly basis (HoH), revenue grew 8.20% from INR 149.95 Cr in H2 FY25. Segment-specific percentage growth is not explicitly broken down, but the company is expanding into prefabricated steel structures via its 60% stake in Prime NMS Private Limited.

Geographic Revenue Split

The company's operations are largely confined to Kerala, which represents the vast majority of revenue. This geographic concentration is identified as a key risk, as performance is tied to the regional economy of a single state.

Profitability Margins

Net Profit (PAT) Margin for H1 FY26 stood at 2.60%, a significant recovery from -0.52% in H2 FY25 (up 312 bps) but a slight decline from 3.37% in H1 FY25 (down 77 bps). The Operating Profit ratio for FY25 was 2.41%, down from 2.68% in FY24 due to raw material costs rising faster than sales prices.

EBITDA Margin

EBITDA Margin for H1 FY26 was 3.76%, showing a recovery of 316 bps from 0.60% in H2 FY25, though it remains lower than the 5.54% recorded in H1 FY25. EBITDA for H1 FY26 was INR 6.10 Cr, a 583.17% increase HoH from INR 0.89 Cr.

Capital Expenditure

Tangible fixed assets increased to INR 27.27 Cr in Sept 2025 from INR 19.56 Cr in March 2025. Capital Work in Progress (CWIP) stood at INR 1.76 Cr in Sept 2025, down from INR 8.30 Cr in March 2025, indicating the capitalization of recent expansion projects.

Credit Rating & Borrowing

The company maintains a 'Stable' outlook from CARE Ratings. Interest coverage ratio improved to 5.02x in H1 FY25 from 2.98x in FY24. Total finance costs for H1 FY26 were INR 0.99 Cr, down from INR 1.81 Cr in H1 FY25, reflecting reduced debt levels post-IPO.

⚙️ Operational Drivers

Raw Materials

The primary raw materials are steel coils and sheets used for manufacturing galvanized pipes and tubes. Cost of Materials Consumed in H1 FY26 was INR 152.88 Cr, representing approximately 94.2% of total revenue.

Import Sources

Not specifically disclosed, though the company operates an established supplier base within Kerala and is exposed to global steel price volatility.

Key Suppliers

Not disclosed in available documents, but the company is noted for having a well-established network of suppliers in the Kerala region.

Capacity Expansion

Current annual installed capacity is 90,000 MT at the Mala, Thrissur unit. The company is expanding into prefabricated steel structures and PEB through its new subsidiary, Prime NMS Private Limited, incorporated in November 2025.

Raw Material Costs

Raw material costs accounted for INR 152.88 Cr in H1 FY26. The company faces margin pressure when steel prices rise faster than finished goods prices, as seen in the FY25 operating profit ratio decline of 10.5% compared to FY24.

Manufacturing Efficiency

Inventory turnover ratio improved to 8.31 in FY25 from 7.42 in FY24, indicating more efficient conversion of inventory into sales and better working capital management.

Logistics & Distribution

Not disclosed as a specific percentage of revenue, but the company utilizes a well-established network of dealers across Kerala for distribution.

📈 Strategic Growth

Expected Growth Rate

5-7.3%

Growth Strategy

Growth will be driven by the acquisition of a 60% stake in Prime NMS Private Limited to enter the high-growth Pre-Engineered Building (PEB) and prefabricated structures market. The company is also leveraging its IPO proceeds (INR 37.38 Cr net worth increase) to fund working capital and reduce debt-to-equity to 0.23, providing the financial flexibility to scale volumes and diversify geographically beyond Kerala.

Products & Services

ISI Marked Galvanized Steel Pipes, Steel Tubes, Galvanized Steel Sheets, and newly added prefabricated steel structures, PEB, mezzanine floors, and sandwich panels.

Brand Portfolio

DEMAC

New Products/Services

New products include prefabricated steel structures, sandwich panels for roofs/walls, cold room panels, and rain water gutters through the Prime NMS subsidiary.

Market Expansion

The company aims to diversify its geographical presence beyond Kerala to mitigate regional concentration risk, as suggested by CARE Ratings' positive rating sensitivity factors.

Strategic Alliances

Acquired a 60% stake (6,000 shares) in Prime NMS Private Limited to expand product offerings into the industrial warehouse and PEB sectors.

🌍 External Factors

Industry Trends

The steel sector is shifting toward modernization and energy efficiency. Demand is cyclical and sensitive to interest rates and seasonal changes in construction activity. The company is positioning itself for this by moving into value-added PEB structures.

Competitive Landscape

Operates in a fragmented industry with high competition from both organized and unorganized players in the steel pipe and tube segment.

Competitive Moat

The company's moat is built on the 'DEMAC' brand and a decade of promoter experience in the Kerala market. However, this is a 'thin margin' commodity business, making cost leadership and efficient supply chain management the primary sustainable advantages.

Macro Economic Sensitivity

Highly sensitive to the Indian economy and construction cycles; industry growth is projected at 5% to 7.3% annually.

Consumer Behavior

Demand is driven by industrial and infrastructure growth, with a rising trend toward pre-engineered and prefabricated steel buildings for warehouses.

Geopolitical Risks

Exposed to global steel trade dynamics and price fluctuations, though specific trade barrier impacts are not quantified.

⚖️ Regulatory & Governance

Industry Regulations

Operations must comply with ISI marking standards for galvanized steel products. The company is subject to standard manufacturing and environmental norms for the steel industry.

Taxation Policy Impact

The effective tax rate for H1 FY26 was approximately 26.8% (INR 1.55 Cr tax on INR 5.77 Cr PBT).

⚠️ Risk Analysis

Key Uncertainties

Raw material price volatility is the primary uncertainty, as materials constitute over 90% of costs. A 5% increase in steel prices without a corresponding increase in sales price could wipe out the current 3.76% EBITDA margin.

Geographic Concentration Risk

High risk with nearly 100% of manufacturing and a majority of sales concentrated in Kerala.

Third Party Dependencies

Dependent on a network of regional dealers for sales and steel suppliers for raw materials; however, no single supplier is named as a critical dependency.