💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue was INR 1,046.5 Cr in FY2024, representing a 21.7% decline from INR 1,336.8 Cr in FY2023. However, H1 FY2023 saw a 78% YoY growth reaching INR 587.2 Cr, driven by volume expansion in steel tubes.

Geographic Revenue Split

The company is pan-India with units in North, South, and West. It is expanding globally via the UAE (Automech acquisition) to target GCC and European markets. Nigeria operations previously contributed but faced disruptions impacting working capital.

Profitability Margins

PAT margins were 1.9% in FY2023, improving to 2.8% in FY2024, but softened to 2.1% in 9M FY2025. Operating profit margins (OPBDIT/OI) fluctuated from 3.8% (FY23) to 5.7% (FY24) and dropped to 2.7% in 9M FY2025 due to steel price volatility.

EBITDA Margin

Core EBITDA margins stood at 5.7% in FY2024, up from 3.8% in FY2023. The company targets 12-13% EBITDA margins for its new 30,000 MTPA value-added product line at Khopoli, compared to the 5-5.5% average for standard products.

Capital Expenditure

The company is investing in a 30,000 MTPA value-added line at Khopoli. It has a target to scale total capacity to 0.5 million tons by the end of FY2025, requiring significant ongoing investment in manufacturing infrastructure.

Credit Rating & Borrowing

ICRA maintains a Stable outlook but notes liquidity pressure. Fund-based limits were reduced from INR 125 Cr to INR 80 Cr (a 36% reduction), further constraining the liquidity buffer.

⚙️ Operational Drivers

Raw Materials

Steel coils and sheets represent the primary raw material cost, accounting for the bulk of the cost of goods sold. Steel prices dropped 10-12% in Q2 FY2023, leading to inventory losses.

Import Sources

Sourced primarily from domestic Indian steel producers for India operations; UAE operations (Automech) source locally in the Middle East to serve GCC and European regions.

Key Suppliers

Not specifically named in the documents, but the company maintains high advances to suppliers to secure raw material flow.

Capacity Expansion

Current installed capacity is 2,94,000 MTPA as of September 2024. The company plans to expand this to 5,00,000 MTPA (0.5 million tons) by the end of FY2025, a 70% increase.

Raw Material Costs

Raw material costs are highly volatile; a 10-12% drop in steel prices in Q2 FY2023 negatively impacted margins due to a 45-day inventory holding period.

Manufacturing Efficiency

The company is increasing its SKU count from 1,300 to 2,500 (a 92% increase) to improve market penetration and manufacturing flexibility.

Logistics & Distribution

Strategically located plants in Sahibabad (UP), Khopoli (Maharashtra), and Anantpur (AP) provide a pan-India reach and help minimize freight costs as a percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

100%

Growth Strategy

Growth will be achieved by scaling capacity to 0.5 million MTPA by FY2025, acquiring a 21.62% stake in Automech (UAE) for AED 64 million to enter GCC/Europe, and increasing the share of high-margin value-added products to 30-40% of the portfolio.

Products & Services

ERW Steel Tubes (Black and Galvanized), MS Pipes, GI Pipes, Substation Structures, Cold Rolled Coils, and Sheets.

Brand Portfolio

RAMA STEEL

New Products/Services

New 30,000 MTPA value-added product line at Khopoli for export and domestic markets, expected to contribute 12-13% EBITDA margins.

Market Expansion

Geographical expansion into UAE, GCC, and European regions through the Automech acquisition. Targeting 100% export for specific value-added lines.

Market Share & Ranking

One of the pioneers in the Indian steel tube industry with a four-decade track record; operates in a highly fragmented market with significant pricing pressure.

Strategic Alliances

Acquisition of 21.62% stake in Automech (UAE) for AED 64 million; previously held an association with Hagar Mega Mart (ceased March 2024).

🌍 External Factors

Industry Trends

The steel pipe industry is growing but remains fragmented. There is a shift toward value-added precision engineering and structural products for solar and defence sectors.

Competitive Landscape

Highly competitive with numerous large established players and unorganized local manufacturers causing significant pricing pressure.

Competitive Moat

Moat is based on a 40-year brand legacy, pan-India manufacturing footprint, and a massive library of 1,300+ SKUs which are difficult for unorganized players to replicate.

Macro Economic Sensitivity

Highly sensitive to global steel price cycles and domestic infrastructure spending (e.g., Jal Jeevan Mission).

Consumer Behavior

Increased government and industrial demand for galvanized and specialized ERW pipes for infrastructure and water management projects.

Geopolitical Risks

Disruptions in Nigerian operations have previously impacted working capital; expansion into UAE/GCC introduces regional geopolitical exposure.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to BIS standards for steel pipes and environmental norms for galvanizing units. Compliance with SEBI and Companies Act 2013 for equity-based acquisitions.

Environmental Compliance

Undertakes waste management and sanitation initiatives; manufacturing process is subject to carbon emission and chemical discharge monitoring.

⚠️ Risk Analysis

Key Uncertainties

Volatility in raw material prices (steel) can impact margins by 2-3% rapidly. Success of diversification into solar and defence is yet to be proven.

Geographic Concentration Risk

Pan-India presence reduces domestic risk, but Nigerian subsidiary disruptions show risks of international concentration in volatile regions.

Third Party Dependencies

High dependency on primary steel producers; liquidity is tied to advances given to these suppliers.

Technology Obsolescence Risk

Low risk in core steel piping, but the company is upgrading to precision engineering and cold-rolled products to stay competitive.

Credit & Counterparty Risk

Exposure to state government departments (e.g., HP Jal Shakti Vibhag) for large-scale orders (INR 150 Cr), which typically involves longer receivable cycles.