SUNFLAG - Sunflag Iron

📊 NSE: SUNFLAG 🏢 Steel - Medium / Small 📅 Last Updated: 12/14/2025 13:51

💰 Financial Performance

Revenue Growth by Segment

The company derives 70-75% of its revenue from the Automobile OEM segment and 25-30% from the non-auto segment. Revenue from operations for Q2 FY26 stood at INR 972.99 Cr.

Geographic Revenue Split

Operations are primarily concentrated in India with the main manufacturing facility located in Bhandara, Maharashtra, which provides strategic access to both raw material sources and domestic customers.

Profitability Margins

Operating Profit Margin for FY 24-25 was 7.97% compared to 8.06% in FY 23-24. Net Profit Margin was 4.15% in FY 24-25 compared to 4.57% in FY 23-24, reflecting slight compression due to industry volatility.

EBITDA Margin

Historical operating margins have ranged between 10-14%, though they are currently around 7.97-8.06%. Management expects margins to stabilize around 11-12% over the medium term as capacity utilization improves.

Capital Expenditure

The company has recently completed capacity expansion for its blooming mill and super-alloy plant. Planned discretionary capex is focused on the development of new mines, with INR 116 Cr allocated for gross debt repayments in FY25.

Credit Rating & Borrowing

The company maintains a credit rating of CARE A+; Stable for long-term facilities and CARE A1+ for short-term facilities. Interest coverage ratio stands at 2.88x as of FY 24-25.

⚙️ Operational Drivers

Raw Materials

Primary raw materials include Iron Ore and Coal, which are used to produce intermediate Pig Iron and Sponge Iron. These integrated inputs are critical for the production of alloy and mild steel.

Import Sources

Raw materials are primarily sourced domestically, leveraging the plant's strategic location in Maharashtra for proximity to mines and local supply chains.

Capacity Expansion

Recently completed expansion of the blooming mill and super-alloy plant. Current operations are fully integrated from pig iron/sponge iron manufacturing to final steel products.

Raw Material Costs

Integrated operations support a stable operating margin of 10-14% historically. The company uses backward integration into pig iron and sponge iron to mitigate the impact of raw material price fluctuations.

Manufacturing Efficiency

Integrated nature of operations allows for better control over the value chain, though it requires higher inventory levels to ensure continuous production.

Logistics & Distribution

The Bhandara facility is strategically located to optimize distribution to major automobile OEMs and government entities.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth is targeted through the expansion of high-value product lines like super-alloys and blooming mill capacity, alongside the development of new mines to secure raw material self-sufficiency and reduce costs.

Products & Services

Mild-steel products, alloy steel products, carbon steel products, and super-alloys supplied to OEMs and ordnance factories.

Brand Portfolio

Sunflag Steel

New Products/Services

Super-alloy products from the newly expanded plant are expected to contribute to higher-margin revenue streams.

Market Expansion

Targeting increased contribution from the non-auto segment (currently 25-30%) and government entities like ordnance factories.

Strategic Alliances

The company operates with various subsidiaries and joint ventures, including a significant investment in Lloyds Metals and Energy Ltd.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward high-performance alloys and integrated manufacturing to combat margin volatility. Demand is currently driven by a recovery in the automotive sector.

Competitive Landscape

Competes with other major alloy steel producers in India, maintaining an edge through specialized super-alloy capabilities.

Competitive Moat

The moat is built on 50 years of promoter experience, deep-rooted relationships with major auto OEMs, and a fully integrated manufacturing setup that provides cost leadership.