A-One Steels’ FY26 Profit Surge Was Not Matched by Cash

A-One Steels reported FY26 profit of Rs 127.41 crore, up from Rs 7.71 crore in FY25, but operating cash flow fell to Rs 62.80 crore from Rs 108.96 crore. Trade receivables absorbed Rs 228.60 crore and inventories Rs 101.57 crore, limiting the conversion of higher reported profit into cash.

Why did A-One Steels’ FY26 profit surge not lift operating cash flow?

A-One Steels’ operating cash flow fell because working-capital assets consumed substantially more cash in FY26 than the company generated before those movements. Profit before tax rose to Rs 167.02 crore in FY26 from Rs 25.85 crore in FY25, while operating profit before changes in operating assets and liabilities increased to Rs 294.92 crore from Rs 177.71 crore. Yet cash generated from operations declined to Rs 86.34 crore from Rs 117.57 crore before tax payments.

The decisive change was in trade receivables, or amounts owed by customers for sales already recorded. Receivables used Rs 228.60 crore of cash in FY26, compared with a Rs 44.08 crore cash release in FY25. Inventories used a further Rs 101.57 crore, after using Rs 236.44 crore in FY25, while other non-financial operating assets used Rs 71.84 crore. Net cash flow from operating activities, which measures cash generated by the business after these movements and tax paid, therefore declined to Rs 62.80 crore after Rs 23.55 crore of tax payments.

How large was the receivables and inventory build-up in FY26?

A-One Steels ended FY26 with Rs 664.46 crore of trade receivables and Rs 899.33 crore of inventories, compared with Rs 437.57 crore and Rs 797.89 crore respectively at March 31, 2025. The balance-sheet increase was Rs 226.88 crore for receivables and Rs 101.44 crore for inventories. The cash-flow statement records closely related cash outflows of Rs 228.60 crore and Rs 101.57 crore, respectively.

Receivables and inventories together stood at Rs 1,563.79 crore at March 31, 2026, equal to about 70% of A-One Steels’ Rs 2,225.91 crore current assets. Other current assets added Rs 537.91 crore, up from Rs 467.11 crore at March 31, 2025. For the FY26 profit expansion to translate more fully into operating cash in a later period, customer collections, stock levels and other operating-asset balances would need to stabilise or reverse without a corresponding reduction in operating activity.

What offset the cash absorbed by operating assets?

A-One Steels partly funded the FY26 build-up in operating assets through higher trade payables. Trade payables generated Rs 191.92 crore of cash in FY26, following a Rs 227.21 crore inflow in FY25. At March 31, 2026, current trade payables to creditors other than micro and small enterprises were Rs 895.61 crore, up from Rs 703.89 crore a year earlier, while such non-current trade payables rose to Rs 61.38 crore from Rs 56.38 crore.

That supplier-credit inflow did not fully cover the principal operating-asset outflows. The Rs 191.92 crore payable increase was smaller than the combined Rs 402.01 crore absorbed by inventories, receivables and other non-financial assets. Other financial liabilities added Rs 2.49 crore of cash and other non-financial liabilities added Rs 0.37 crore, but provisions used Rs 0.70 crore. The persistence of this funding pattern depends on A-One Steels maintaining payable terms while collecting the Rs 664.46 crore due from customers and managing the Rs 899.33 crore inventory balance.

Did higher sales and profit explain the working-capital requirement?

A-One Steels’ FY26 revenue from operations rose to Rs 4,148.57 crore from Rs 3,541.78 crore in FY25, an increase of Rs 606.79 crore. Total income rose to Rs 4,202.05 crore from Rs 3,569.63 crore, helped by government grants of Rs 18.76 crore compared with Rs 2.59 crore. Profit for the year increased to Rs 127.41 crore from Rs 7.71 crore, while profit before exceptional items and tax rose to Rs 166.50 crore from Rs 30.29 crore.

The higher sales base coincided with larger customer balances and stock, but the supplied financial information does not assign a specific operational cause to either movement. Materials consumed increased to Rs 3,486.95 crore from Rs 3,053.73 crore, and other expenses rose to Rs 400.60 crore from Rs 349.61 crore. Finance costs decreased to Rs 109.19 crore from Rs 113.15 crore. Reported profit was therefore much higher in FY26, but net operating cash flow of Rs 62.80 crore was about 49% of the Rs 127.41 crore profit for the year.

How did FY26 cash conversion compare with the prior two years?

A-One Steels’ FY26 cash conversion was lower than FY25 and FY24 on an absolute operating-cash basis. Net operating cash flow was Rs 62.80 crore in FY26, versus Rs 108.96 crore in FY25 and Rs 325.40 crore in FY24. In FY24, trade receivables absorbed Rs 164.11 crore and other non-financial assets absorbed Rs 123.24 crore, but trade payables supplied Rs 355.54 crore, producing cash generated from operations of Rs 345.26 crore before tax.

FY25 differed from FY26 because receivables released Rs 44.08 crore of cash, despite a Rs 236.44 crore inventory outflow and a Rs 45.44 crore outflow into other non-financial assets. In FY26, receivables changed from a source of cash to the largest cash use. Cash and cash equivalents still increased to Rs 25.57 crore at March 31, 2026 from Rs 11.71 crore a year earlier, because the Rs 62.80 crore operating inflow exceeded the Rs 10.09 crore investing outflow and the Rs 38.85 crore financing outflow.

Conclusion

A-One Steels’ FY26 accounts show a divergence between earnings and cash generation. Revenue rose by Rs 606.79 crore and profit rose by Rs 119.70 crore, but the FY26 increase in receivables, inventory and other operating assets absorbed more cash than the increase in trade payables could offset. As a result, operating cash flow decreased by Rs 46.16 crore despite the higher reported profit.

The next financial update should show whether A-One Steels collects the Rs 664.46 crore of March 31, 2026 receivables and reduces or contains the Rs 899.33 crore inventory balance. It should also show whether supplier funding remains available, given that current trade payables had risen to Rs 895.61 crore and total borrowings, current plus non-current, stood at Rs 1,010.94 crore at March 31, 2026.