RAJRATAN - Rajratan Global

📊 NSE: RAJRATAN 🏢 Steel - Medium / Small 📅 Last Updated: 12/14/2025 11:33

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 20% YoY to INR 294.17 Cr in Q2 FY26. Standalone India business saw a 21% volume growth, while the Thailand subsidiary recorded a 4.6% volume growth in the same period. For FY25, total revenue grew 5% to INR 935 Cr.

Geographic Revenue Split

Approximately 63.3% of sales volume is generated from India (20,816 MT) and 36.7% from Thailand (12,071 MT) as of Q2 FY26. Exports to Sri Lanka, Vietnam, Finland, Sweden, and Indonesia contribute 20% of total revenue.

Profitability Margins

Gross margins fluctuate between 38-42%. Net Profit Margin (PAT) stood at 6.99% in Q2 FY26, a decline of 78 basis points YoY from 7.77%. Operating margins declined from 14.55% in FY24 to 13.58% in FY25 due to delayed stabilization of the Chennai plant.

EBITDA Margin

EBITDA margin was 13.60% in Q2 FY26, down 184 basis points YoY from 15.44%. Core EBITDA for Q2 FY26 was INR 40.02 Cr, representing a 5.6% YoY increase but a significant 29.3% QoQ recovery from Q1 FY26.

Capital Expenditure

The group is executing a large greenfield capex in Chennai with a total planned capacity of 60,000 MTPA. Maintenance capex for de-bottlenecking in Thailand and Indore is estimated at INR 20-25 Cr annually.

Credit Rating & Borrowing

Long-term rating is CRISIL A+ with the outlook recently revised from Stable to Negative due to weakened interest coverage and higher debt. Short-term rating is reaffirmed at CRISIL A1. Interest coverage ratio moderated to 4.56x in FY25.

⚙️ Operational Drivers

Raw Materials

Steel, copper, and zinc are the primary raw materials, collectively accounting for 60% of the total cost of manufacturing.

Import Sources

Not specifically disclosed in the documents, though the company operates manufacturing units in India (Madhya Pradesh, Tamil Nadu) and Thailand.

Capacity Expansion

Current total capacity includes 60,000 TPA in Pithampur (India), 60,000 TPA in Thailand (recently expanded from 40,000 TPA), and 30,000 TPA in Chennai (Phase I). Total bead wire capacity is expanding toward a target of 180,000-190,000 TPA within three years.

Raw Material Costs

Raw material costs represent 60% of revenue. The company faces a 3-month lag in passing on price increases to customers, making margins susceptible to short-term volatility in steel and base metal prices.

Manufacturing Efficiency

Industry breakeven requires 60-65% capacity utilization; Rajratan maintains higher utilization than peers, some of whom are operating at only 15% capacity.

Logistics & Distribution

The Chennai plant was strategically located to reduce logistics costs for exports and to better serve South Indian tyre manufacturers.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be driven by the ramp-up of the Chennai greenfield plant (60,000 MTPA total), increasing wallet share with existing global tyre OEMs, and expanding exports from both India and Thailand. The company aims for a top line of INR 2,000 Cr within three years by reaching 180,000-190,000 MT in sales volume.

Products & Services

Tyre Bead Wire (TBW) used in all types of pneumatic tyres and High Carbon Steel Wire used in bed mattresses and other industrial applications.

Brand Portfolio

Rajratan

New Products/Services

Expansion into wire rope balancing equipment at the Indore location and specialized bead wire for premium multinational tyre brands.

Market Expansion

Targeting increased exports from the Chennai port to global markets, aiming for 1,000 tons per month of exports from India and 1,200 tons from Thailand.

Market Share & Ranking

Leading manufacturer of TBW in India with a sizeable market share and the sole manufacturer of TBW in Thailand.

🌍 External Factors

Industry Trends

The industry is characterized by high entry barriers due to a 2-3 year product approval phase and high capital intensity. Current trends show a shift toward consolidated players as smaller, unviable competitors (operating at <15% utilization) exit the market.

Competitive Landscape

Key Indian peers include Tata Steel, Bansal, and Aarti. Rajratan maintains a competitive edge through its sole-supplier status in Thailand and its new capacity in Chennai.

Competitive Moat

The moat is sustained by the 'safety-critical' nature of bead wire, which requires rigorous, multi-year testing by tyre OEMs before a supplier is approved, creating high switching costs and a significant time barrier for new entrants.

Macro Economic Sensitivity

Highly sensitive to the cyclicality of the automotive industry and global GDP growth, as tyre demand is directly linked to vehicle production and replacement cycles.

Consumer Behavior

Increased demand for vehicle safety and high-performance tyres is driving the need for consistent, high-quality bead wire from established players.

Geopolitical Risks

Geopolitical conflicts have disrupted supply chains and impacted demand in the Thailand unit due to its export dependency.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to international safety standards for automotive components and trade/tariff restrictions on steel and wire products across India and SE Asia.

Taxation Policy Impact

The company expects a reduction in income tax liability in the near term due to claiming full depreciation on the new Chennai plant operations.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the stabilization and ramp-up of the Chennai plant; any time or cost overruns could impact the debt-to-EBITDA ratio, which CRISIL monitors at a 1.75x threshold.

Geographic Concentration Risk

Significant concentration in India and Thailand, with Thailand's performance being highly sensitive to global export demand.

Third Party Dependencies

High dependency on steel suppliers, as raw materials constitute 60% of manufacturing costs.

Technology Obsolescence Risk

Low risk of obsolescence for bead wire, but manufacturing efficiency and fixed-cost absorption are critical for maintaining the 13-15% EBITDA margin target.