Rathi Steel & Power reported a significant turnaround in its first quarter of FY27, driven by robust volume expansion and improved product mix. The Ghaziabad-based steel manufacturer posted a 24.6% year-on-year rise in total income to ₹193.67 crore, while net profit after tax (PAT) surged 84.5% to ₹3.48 crore. The results reflect the company’s focus on operational efficiency and market penetration in the National Capital Region (NCR).

Financial Performance

The company’s top-line growth was supported by a 30% increase in total dispatch volumes, which rose to 28,372 metric tons from 21,864 metric tons in the corresponding period last year. This volume surge contributed to an EBITDA of ₹7.77 crore, marking a 24.83% year-on-year increase. PAT margins expanded by 58 basis points to 1.8%, indicating improved cost management despite volatile energy prices.

*Figures for Q1FY26 derived from disclosed growth percentages.

Segmental Highlights

The TMT bar segment emerged as the primary growth engine, with volumes more than doubling to approximately 18,677 metric tons from roughly 8,200 metric tons in Q1FY26. This strong performance offset a softer outlook in the stainless steel division, where volumes declined by 10-12% due to geopolitical disruptions affecting export-oriented end-users and high ocean freight costs.

Management noted that the revenue mix is now nearly balanced, with TMT bars contributing approximately 45-48% of total revenue, primarily serving the real estate sector in the NCR region. The remaining revenue comes from stainless steel wire rods and billets, which cater to B2B engineering applications.

What the Numbers Show

The divergence between the stainless steel and TMT segments highlights the company’s strategic pivot towards margin accretive products. While stainless steel volumes contracted due to external supply chain pressures, the company leveraged its flexible manufacturing setup to ramp up TMT production. With TMT bars now accounting for nearly half of the revenue mix, the business model is shifting from a pure stainless steel play to a diversified steel producer, reducing dependency on volatile alloy prices like nickel and molybdenum that affect the 200-series stainless steel grades.

Operational Outlook and Capex

Promoter Udit Rathi stated that the company aims to maintain its current momentum despite the monsoon season typically dampening construction activity. The firm has successfully completed trial runs for integrating its melting capacity with the TMT plant, a move expected to improve margins by increasing integration levels. Currently, rolling mill utilization stands at approximately 50-52%, with management targeting over 60% utilization for FY27.

Capital expenditure for the quarter was estimated at ₹4-5 crore, with full-year capex expected to reach ₹15 crore or more. This spending will focus on modernization, debottlenecking, and upgrading old equipment to meet industry standards. The company plans to fund this largely through internal accruals, maintaining a cautious approach to debt levels. Management also indicated plans to explore refinancing options to reduce borrowing costs, which could further boost margins in the coming years.

Rathi Steel & Power reported a net profit of ₹3.48 crore for the quarter ended June 30, 2026, an 84.56% increase from ₹1.89 crore in the same period last fiscal year. Operating income climbed 24.63% to ₹193.41 crore, reflecting higher production volumes and improved operational efficiency at its Ghaziabad facility.

The company’s EBITDA rose 24.83% to ₹7.77 crore from ₹6.23 crore in Q1FY26. Total income reached ₹193.67 crore, supported by a ₹0.26 crore other income contribution compared to ₹0.11 crore previously.

Financial Performance Breakdown

Total expenditure increased to ₹185.90 crore from ₹149.17 crore, primarily driven by higher raw material costs of ₹162.42 crore against ₹124.84 crore in the prior year. Employee benefit expenses rose to ₹4.31 crore from ₹3.71 crore, while other expenses declined slightly to ₹19.17 crore from ₹20.62 crore.

What the Numbers Show

The disproportionate growth in net profit relative to revenue highlights significant operating leverage. While operating income grew 24.63%, EBITDA expanded by a nearly identical 24.83%, indicating stable margin dynamics despite rising raw material costs. The absence of tax outflows in both periods allowed the pre-tax profit growth to flow directly to the bottom line.

Balance Sheet Position

As of March 31, 2026, total assets stood at ₹327.19 crore. Trade receivables increased significantly to ₹56.54 crore from ₹24.77 crore in FY25, suggesting potential collection pressure or extended credit terms amid volume growth. Cash and bank balances remained modest at ₹2.26 crore.

Total equity rose to ₹149.89 crore, with reserves and surplus increasing to ₹54.63 crore. Long-term borrowings stood at ₹12.12 crore, while short-term borrowings were ₹32.68 crore.

Strategic Outlook

Rathi Steel plans to increase steel melting shop utilization from approximately 60% towards 80% through higher production volumes. The company aims to resume full-scale utilization of its TMT rolling mill to improve operating leverage. Key growth initiatives include scaling up stainless steel reinforcement bars and expanding the share of premium Fe 550D TMT bars in infrastructure projects.

The company targets approximately 20% revenue CAGR over the next two years, focusing on high-margin product mix and disciplined capital allocation. Planned rooftop solar installations and increased renewable power procurement through Open Access are part of its sustainable manufacturing strategy.

Earnings Call Availability

Pursuant to SEBI Listing Regulations, the audio recording of the earnings conference call held on August 18, 2026, related to the unaudited financial results for the quarter ended June 30, 2026, is available on the company’s website. The call concluded at 3:51 pm on that date.