💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue reached INR 1,528 Cr in Q2 FY26, representing a 32% YoY growth. The energy segment has become a dominant driver, contributing approximately 70% of the operating profit in Q2 FY26 following the SKS Power acquisition.

Geographic Revenue Split

Exports currently account for approximately 20-30% of the group's revenue, primarily driven by ferro alloy sales through the SMAL subsidiary located near Vishakhapatnam port. This proportion is expected to decrease as domestic power revenue from SKS Power scales up.

Profitability Margins

Consolidated PAT margin stood at 15.12% in FY25, up from 13.55% in FY24. Standalone net profit margin improved to 17.45% in FY25 from 17.04% YoY. The improvement is attributed to higher operating margins in the newly acquired power business.

EBITDA Margin

Consolidated EBITDA margin improved to 29% in FY25 from 24% in FY24. In Q2 FY26, EBITDA rose to INR 580 Cr from INR 393 Cr YoY, driven by the energy segment's 70% contribution to operating profits.

Capital Expenditure

Planned capital expenditure for FY25 is estimated at INR 400-500 Cr, focused on the commissioning and expansion of captive coal mines and ongoing maintenance of steel and power facilities.

Credit Rating & Borrowing

CRISIL reaffirmed the rating at 'AA-/Positive/A1+' in November 2025, upgrading the outlook from Stable. Borrowing costs are reflected in a finance cost of INR 220 Cr for FY25, up from INR 128 Cr in FY24 due to fresh debt for the SKS acquisition.

⚙️ Operational Drivers

Raw Materials

Key raw materials include thermal coal (100% captive for steel business) and iron ore. Raw material costs reached INR 2,573 Cr in FY25, representing approximately 53% of total revenue.

Import Sources

Raw materials are primarily sourced from captive mines in Chhattisgarh (Gare Palma IV/7 coal mine). Logistics for exports are optimized via proximity to the Vishakhapatnam port in Andhra Pradesh.

Key Suppliers

The company operates a self-feeding ecosystem with captive mineral resources for iron and coal, reducing dependency on external suppliers like Coal India or private miners.

Capacity Expansion

Current coal capacity at Gare Palma IV/7 was expanded from 1.44 MTPA to 1.68 MTPA, with plans to increase to 1.8 MTPA and eventually 3.0 MTPA. The SKS Power acquisition added 600 MW of thermal power capacity.

Raw Material Costs

Raw material costs rose to INR 2,573 Cr in FY25 from INR 2,407 Cr in FY24. The company utilizes a backward integration strategy where captive coal meets the entire requirement of the steel business, protecting margins from global price volatility.

Manufacturing Efficiency

Capacity utilization remains high in the metals business. SKS Power's rating is sensitive to maintaining Plant Load Factors (PLFs) above 70%.

Logistics & Distribution

Distribution costs are managed through strengthening rail and road infrastructure and strategic plant locations near ports and mineral belts.

📈 Strategic Growth

Expected Growth Rate

32%

Growth Strategy

Growth is driven by the integration of the 600 MW SKS Power plant, expanding captive coal mine capacity from 1.68 MTPA to 3.0 MTPA, and pursuing further acquisition opportunities in the power and mineral sectors.

Products & Services

Iron pellets, sponge iron, billets, wire rods, wires, ferro alloys (manganese-based), thermal power, and hydro power.

Brand Portfolio

Sarda Energy & Minerals Ltd (SEML), Sarda Metals & Alloys Ltd (SMAL), SKS Power Generation (Chhattisgarh) Ltd.

New Products/Services

Increased focus on long-term Power Purchase Agreements (PPAs) for SKS Power to stabilize revenue at remunerative tariffs.

Market Expansion

The company is targeting global markets for ferro alloys via its SMAL subsidiary while expanding its domestic energy footprint in Chhattisgarh.

Market Share & Ranking

Established market position in the Sarda group with diversified revenue streams across steel, ferro alloys, and power.

Strategic Alliances

Acquisition of SKS Power Generation (Chhattisgarh) Limited under the NCLT process w.e.f. August 22, 2024.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward integrated players with captive power and fuel. Power demand in India remains healthy, though pricing on exchanges like IEX is subject to seasonal fluctuations (INR 3.89 to 4.37 range).

Competitive Landscape

Operates in a highly competitive and cyclical steel and ferro alloy market, competing with both domestic integrated players and global exporters.

Competitive Moat

The moat is built on deep backward integration (100% captive coal for steel) and a diversified revenue base (Steel + Energy), which provides a 'self-feeding ecosystem' and protects against cyclicality in any single segment.

Macro Economic Sensitivity

Highly sensitive to global steel demand and commodity price cycles. Operating margins remained healthy at 14% even during the 2016 industry downturn.

Consumer Behavior

Industrial demand for steel and national grid demand for power are the primary drivers; power demand was recently affected by extended rainfall and below-average temperatures.

Geopolitical Risks

Geopolitical uncertainty and changes in government import/export policies (e.g., export duties) pose material risks to the ferro alloy and steel divisions.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to evolving environmental requirements and NCLT/NCLAT legal frameworks regarding acquisitions.

Environmental Compliance

The company is ISO 14001 certified and reported planting 8,009 plants around its facilities in FY25.

Taxation Policy Impact

Current tax liability fell in FY25 due to the set-off of brought-forward losses from SKS Power against the company's standalone profits.

Legal Contingencies

The NCLT order for the SKS Power acquisition has been challenged by other bidders in the National Company Law Appellate Tribunal (NCLAT) and the matter is currently sub-judice.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the sub-judice NCLAT matter regarding the SKS acquisition. Additionally, steel business margins are sensitive to global price volatility.

Geographic Concentration Risk

Significant operations are concentrated in Chhattisgarh, though the SMAL subsidiary provides geographic diversity via its Andhra Pradesh location.

Third Party Dependencies

Low dependency for thermal coal (100% captive), but exposed to third-party bidders' legal challenges in the NCLAT.

Technology Obsolescence Risk

The company identifies rapid technological advancement as a material risk and focuses on technological implementation to maintain efficiency.

Credit & Counterparty Risk

Receivables quality is reflected in a debtors' turnover of 10.87 days (Consolidated FY25). Loans and advances to group entities (excluding SMAL) stood at INR 1,293 Cr (36% of net worth) as of March 2024.