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Bajaj Steel’s FY26: Diversification Gains, Cotton Exports Weigh on Margins

Bajaj Steel Industries Limited closed FY26 with a mixed scorecard. On a consolidated basis, revenue from operations fell to 524.2 crore from 584.8 crore in FY25, a decline of 10.4% year on year. Profitability saw a sharper reset. FY26 EBITDA came in at 60.3 crore versus 92.1 crore in the previous year, while PAT declined to 36.9 crore from 84.3 crore.

The company attributed a significant part of the year’s weakness to the March quarter. Q4FY26 revenue fell to 116.8 crore from 153.5 crore in Q4FY25. EBITDA margin compressed to 4.8% from 15.8% a year ago. The presentation links this to delays in order conversion and dispatches across certain segments, along with volatile global trade conditions that impacted overall business sentiment.

The year split into two stories: cotton softness and non-cotton momentum

Bajaj Steel’s core business remains cotton processing machinery, where it positions itself as a global leader with a broad portfolio across ginning technologies. But FY26 was subdued for this segment. Segment revenue declined to 309 crore from 385 crore in FY25.

The pressure was concentrated in exports. Cotton processing machinery exports fell to 158 crore in FY26 from 257 crore in FY25, while domestic revenue improved to 151 crore from 128 crore. Management commentary in the presentation points to volatile cotton prices, weaker demand dynamics, and global trade fluctuations as the drivers of lower export performance. It also notes execution issues at customer sites. Site unpreparedness and pending commercial clearances delayed dispatches, resulting in deferred revenue recognition even though advances had been received.

At the same time, the diversification thesis showed clearer traction. The presentation highlights a consistently growing diversified portfolio with a stated revenue CAGR of 36% for the “other business segments” bucket. FY26 revenue for these segments is presented at 201 crore, up from 158 crore in FY25.

Within this diversified set, Infrastructure, Electrical Panels, Heavy Engineering, and Other Products together increased the share of the revenue base. The company also notes that the Infrastructure business witnessed healthy momentum during the year, registering around 30% year on year growth.

Financial snapshot (consolidated)

Note: FY25 PAT included a one-time dividend of around 26.5 crore from the US subsidiary.

Segment performance: exports fell, domestic and non-cotton lines supported the base

The cotton processing machinery division continues to be the largest revenue contributor. The presentation also frames cotton machinery as about 60% of total revenue, and separately provides FY26 division-wise revenue share with cotton processing at 59%.

But the segment’s FY26 mix changed meaningfully. The year’s domestic revenue growth suggests the company retained strength in the Indian market, while exports weakened due to demand and trade volatility.

The non-cotton segments, on the other hand, offered a counterweight.

This order book profile is a key data point. The total order book stands at 587 crore as of March 31, 2026, spread across both cotton machinery and diversified segments. While order book does not eliminate execution risk, the spread indicates that diversification is not just a strategy statement, but also reflected in backlog.

Balance sheet and cash flows: stronger cash generation despite earnings pressure

One of the steadier parts of the FY26 narrative is the balance sheet. Net worth increased to 424 crore as of March 2026 from 387.4 crore in March 2025. Total outside liabilities to tangible net worth (TOL/TNW) stood at 0.7x, broadly consistent with recent years.

The company reports net debt to equity at -0.1x in FY26, indicating low leverage. Cash and cash equivalents rose to 101.0 crore at the end of FY26 from 86.2 crore at the end of FY25.

Cash flow from operations improved to 78.2 crore in FY26 from 52.1 crore in FY25. Investing cash flow was -58.4 crore in FY26, reflecting higher investing outflows versus FY25 (-38.1 crore). Net cash increased by 14.8 crore during FY26.

On funding access, the company discloses CRISIL ratings of A/Stable for long-term and A1 for short-term facilities, with total rated bank loan facilities of 194 crore as of Mar-25.

What the presentation suggests about FY27 setup

Management’s forward-looking commentary remains qualitative rather than numeric. The presentation states that the company expects improvement in performance supported by improving market conditions and better execution across business segments.

The setup for this improvement rests on two levers that are visible in the disclosed data.

First, execution. FY26 performance was impacted by delays in order conversion and dispatches, and in the cotton segment specifically by customer site readiness and commercial clearances. Better conversion of backlog into dispatches should directly influence quarterly revenue stability.

Second, diversification. The “other business segments” have grown over the last few years and reached a level where they can influence the consolidated run rate. The infrastructure division continues to execute turnkey projects and pre-engineered buildings. Electrical panels has partnerships with Schneider Electric and ABB, and the heavy engineering division has delivered complex fabrication products including aerobridges, which the presentation notes as 57 units delivered as of Dec 31, 2024.

Takeaways for investors

Bajaj Steel’s FY26 results reflect a year where external volatility and execution delays in Q4 exposed the earnings sensitivity of a cotton export-heavy business. The cotton processing machinery segment saw a significant export decline, and the fixed cost base remained largely unchanged, hurting margins.

At the same time, the company’s diversification efforts appear to be translating into revenue growth in non-cotton segments and a more balanced order book. The balance sheet remains conservative with low leverage, and operating cash flows improved in FY26.

The near-term focus, based on the presentation, is straightforward: convert the 587 crore order book into dispatches with fewer delays, while keeping the diversification engine moving so that consolidated performance becomes less dependent on cotton export cycles. */