/** Kamdhenu Limited FY26 and Q4 FY26: Royalty-led growth inside an asset-light steel model */

Kamdhenu Limited FY26 and Q4 FY26: Royalty-led growth inside an asset-light steel model

Kamdhenu Limited ended FY26 with a familiar message: scale the brand, expand the franchise network’s throughput, and let royalty income do more of the earnings heavy lifting. The year’s reported top line growth was modest, but profitability improved meaningfully. For FY26, revenue from operations was INR763.4 crore versus INR747.5 crore in FY25, a growth of 2.1%. Profit before tax rose to INR105.5 crore from INR80.4 crore, up 31.2%. Profit after tax increased to INR78.4 crore from INR60.9 crore, up 28.7%.

Q4 FY26 followed a similar pattern. Revenue from operations grew 5.0% year on year to INR207.6 crore. Profit before tax increased 8.3% to INR24.4 crore. Profit after tax came in at INR17.4 crore, up 2.0%.

The performance sits on top of a business structure that is unusual for a listed steel brand. Kamdhenu positions itself primarily as a branding and marketing company with a franchisee-based manufacturing network. In practical terms, franchisees manufacture as per Kamdhenu’s specifications, while Kamdhenu focuses on product design and quality standards, brand building, and the distribution architecture that pushes product into retail markets.

The franchise engine: volumes grow, and royalty realization rises faster

The operational highlight of FY26 was volume growth through the franchise channel. In the investor presentation, total volume sold in FY26 is presented at 39.1 lakh metric tons. In the earnings call, management specified that franchisee route volume stood at 37.9 lakh metric tons in FY26 versus 34.4 lakh metric tons in FY25, reflecting 10% year-on-year growth. Volumes from the company’s own manufacturing were broadly flat at 121,092 metric tons versus 119,841 metric tons.

The bigger change was royalty income. Royalty income through franchisee sales was INR174.5 crore in FY26, up from INR139.1 crore in FY25, a 25.4% increase. In Q4 FY26, royalty income was INR45.5 crore versus INR38.2 crore, up 19.1%.

On the call, an analyst questioned why royalty income grew 25% when volume grew 10%. The CFO’s answer was straightforward: the company increased the royalty rate per ton. He disclosed that average royalty realization was INR435 per metric ton in FY26 compared with INR398 in FY25.

Management also gave forward-looking color on this lever. The CFO said the company is planning to increase royalty rates by 10% to 15% every year, alongside around 10% annual volume growth, which management believes it has been achieving over the last few years.

This matters because Kamdhenu’s model is designed for operating leverage through brand strength. Higher franchise volumes expand the base on which royalty is earned, while improved realization per ton lifts the rate at which volumes convert into royalty income.

Financial profile: margin expansion and strong return ratios

The profit-and-loss statement included in the presentation shows a clear improvement in margins. FY26 gross profit was INR252.0 crore versus INR225.0 crore in FY25, with gross margin improving to 33.0% from 30.1%. PBT margin improved to 13.8% from 10.8%, and PAT margin improved to 10.3% from 8.1%.

The company also highlighted strong return ratios and a conservative balance sheet posture. It reported ROCE of 26.8% and ROE of 19.8%, and stated that debt is nil.

A key disclosure in the presentation is that FY26 revenues were impacted by a reduction in the average selling price of TMT bars. This helps reconcile why revenue growth was low even as volumes and royalty income increased.

The company also proposed a dividend of INR0.40 per share (40% of face value of INR1), subject to shareholder approval.

Financial summary

Capacity and network: decentralised manufacturing backed by a large dealer base

Kamdhenu’s investor presentation puts scale around its franchise network. It cites franchise count at 100 plus, dealers at 12,500 plus, and distributors at 500 plus. The company also presented franchisee capacity of 40 lakh MT for steel rebars, 10 lakh MT for structural steel, and 2.5 lakh MT for colour coated profile sheets.

The decentralised nature of manufacturing is positioned as an operational advantage. The company argues that manufacturing near end customers reduces freight costs, supports quicker delivery, and enables penetration into smaller tier 2 and tier 3 markets through lower minimum order quantities.

Regionally, the presentation splits installed capacity across North (31%), South (15%), East (35%), and West (19%), with FY26 royalty income distribution across North (33%), South (13%), East (36%), and West (18%). On the call, management explicitly identified the South as the underpenetrated region and stated that increasing share in the South is a focus area.

The company’s owned manufacturing, R&D, and training facility is located in Bhiwadi, Rajasthan, with a capacity shown as 1,20,000 MT per annum. The presentation states the plant has been realigned to support future innovation, product development and training to franchise staff. In the earnings call, the CFO added that the facility caters primarily to the Delhi NCR market, has around 1.25 lakh MT capacity, and is expected to maintain 100% utilisation in the near future.

Market context and management commentary: pricing cycles versus structural demand

Management’s market commentary in the call focused on two themes: input cost volatility and underlying demand strength.

The MD noted that domestic iron ore prices have trended upwards, supported by strong domestic demand, while global iron ore prices have remained relatively stable. He also pointed to geopolitical disruptions that have created volatility in crude oil and natural gas, inputs that influence cost structures across the steel industry.

However, Kamdhenu’s argument is that its franchise model distributes a meaningful portion of input-cost risk across its partner network. At the same time, management acknowledged that average selling prices for TMT bars were marginally softer year on year, consistent with the presentation’s note on ASP-related revenue impact.

On demand, the MD referred to high single-digit growth in steel consumption during FY26 and linked the medium-term outlook to infrastructure and construction activity. He specifically referred to a capital investment outlay of INR12.2 lakh crores announced in the Union Budget, and cited policy initiatives such as the National Steel Policy, Make in India, and Atmanirbhar Bharat.

Capital allocation questions: large investments, policy under preparation

One of the more important investor questions on the call related to the company’s liquidity and investments, given the asset-light nature of the business. The CFO responded that the company is framing a treasury policy and is planning how it can reward shareholders, but did not provide a specific plan or timeline.

Another question addressed an investment into the paint business. The CFO stated that around INR20 crore was invested in March 2026 because the share price was low, resulting in an increase of equity stake by about 4% in that business. He also stated there is no plan to invest further in the paint business, and that treasury would be utilised for the steel business and shareholder rewards.

Takeaways

Kamdhenu’s FY26 results reinforce the core characteristics of its business model. Reported revenues moved only slightly, partly due to softer steel prices, but the company delivered strong growth in profit before tax and profit after tax. The largest operating lever was royalty income, which benefited from both franchise volume growth and higher royalty realization per ton.

The strategic priorities described for FY27 and beyond remain consistent with this model: strengthen the brand, expand franchise throughput and capacity, deepen dealer engagement, and push penetration in the South. The most open investor question remains the deployment framework for the company’s treasury and investment balances, which management said is under active work but not yet defined.