💰 Financial Performance

Revenue Growth by Segment

Revenue from operations for Q2 FY26 was INR 36.31 Cr, representing a 21% YoY decline from INR 45.72 Cr in Q2 FY25. The Aluminium Flipping Coil segment saw a 47.37% YoY volume drop to 180 tonnes, though realizations improved 17.03% to INR 2.68 Lakh/Tonne. Historical revenue grew 106% from INR 221.93 Cr in FY21 to INR 457.31 Cr in FY22.

Geographic Revenue Split

Not disclosed in available documents, though the company utilizes exports to provide a natural hedge against currency fluctuations.

Profitability Margins

PAT margins were 6.01% in FY22 and improved to 7.29% in FY23. For Q2 FY26, PAT was INR 0.76 Cr, down 8% YoY from INR 0.83 Cr. Operating margins in H1 FY23 improved to 10.35% from 9.01% in FY22 due to higher capacity utilization.

EBITDA Margin

EBITDA margin for Q2 FY26 was 4.53%, an improvement of 32 bps YoY from 4.21% in Q2 FY25. This margin expansion occurred despite a 15% YoY drop in absolute EBITDA to INR 1.64 Cr, driven by strategic withdrawal from low-margin segments.

Capital Expenditure

Not disclosed in absolute INR Cr, but the company is expected to increase production capacity over the medium term. Debt-funded capex is monitored as a potential risk to liquidity.

Credit Rating & Borrowing

CRISIL BBB/Positive (Outlook revised from Stable in Nov 2022). Total bank loan facilities rated at INR 27.25 Cr. Repayment obligations were INR 1.68 Cr for FY23 and INR 2.58 Cr for FY24.

⚙️ Operational Drivers

Raw Materials

Aluminum and Ferro alloys are the primary raw materials, with costs susceptible to high volatility which impacts operating margins.

Import Sources

Not disclosed in available documents, but benchmarking to international commodity exchanges and US Dollar benchmarking suggests global sourcing.

Key Suppliers

Key suppliers include Tata Steel Ltd, Jindal Steel and Power Ltd, and Jindal Stainless Limited, who also serve as major customers.

Capacity Expansion

Current capacity utilization has reached healthy levels, leading to an ROCE of over 25.5% in FY22. Planned expansion is expected over the medium term to support revenue growth.

Raw Material Costs

Raw material costs are managed through long-term contracts benchmarked to international commodity exchanges to provide supply-side hedges. Operating margins of 9.01% in FY22 indicate sufficient cost pass-through.

Manufacturing Efficiency

Operating income to gross block ratio was over 21 times as of March 31, 2022, indicating high asset turnover and efficiency.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth will be driven by the new Welding division (targeting INR 25 Cr+ sales with 9-10% EBITDA margins) and the upcoming Biotech segment targeting distillery companies. The company is also expanding its SKU count from 5 to 10 in the welding business.

Products & Services

Metallurgical cored wires, aluminum flipping coil, and welding consumables (welding division).

Brand Portfolio

Sarthak Metals Limited (SMLT).

New Products/Services

Welding division (star performer) and Biotech division (revenue expected to start very soon with positive response from distilleries).

Market Expansion

The company is targeting the distillery sector for its biotech products and expanding its presence in the welding consumables market.

🌍 External Factors

Industry Trends

The industry is seeing intense price pressure and 'unethical competition' in certain segments like flipping coils, leading players to focus on technological differentiation and niche segments like welding.

Competitive Landscape

Faces competition from domestic and established players; currently navigating a subdued market due to unethical competitive practices in the flipping coil segment.

Competitive Moat

Moat is built on 5 decades of promoter experience and deep-rooted relationships with Tier-1 steel manufacturers, which mitigates bad debt risk and ensures raw material supply.

Macro Economic Sensitivity

Highly sensitive to the steel industry, which is driven by infrastructure and real estate cyclicality. Volumetric growth of 35% in FY22 was directly linked to robust steel demand.

⚖️ Regulatory & Governance

Industry Regulations

Complies with SEBI Listing Obligations and Disclosure Requirements (LODR) 2015, specifically Regulations 17 to 27 regarding corporate governance.

Legal Contingencies

No material financial or commercial transactions by senior management with personal interest were reported. Statutory audit fees were INR 5,00,000.

⚠️ Risk Analysis

Key Uncertainties

Volatility in aluminum and ferro alloy prices can squeeze operating margins if cost pass-through is delayed. Dependency on the cyclical infrastructure sector poses a risk to volume stability.

Geographic Concentration Risk

Operations are centered in Durg, Chhattisgarh, though the company serves major national steel players and international export markets.

Third Party Dependencies

High dependency on the health of the domestic steel industry and key clients like Tata and Jindal for revenue stability.

Technology Obsolescence Risk

The company relies on its technological strength to maintain trust and market share in a price-sensitive environment.

Credit & Counterparty Risk

Risk is mitigated by the sound creditworthiness of its primary customers (established steel majors).