Sambhv Steel Tubes FY26: Record profitability, tighter balance sheet, and a big build-out to Vision 2030

Sambhv Steel Tubes Limited closed FY26 with its strongest reported financial performance to date, backed by higher volumes, better profitability and a continued tilt towards value-added products. On a standalone basis, FY26 revenue rose to INR 2,413.2 crore, operating EBITDA to INR 276.3 crore, and PAT to INR 143.3 crore. The company’s presentation attributes the year’s performance to operational execution, cost discipline and an improving product mix, while management reiterated that the longer-term roadmap is anchored on scaling finished products capacity to 2.032 million MTPA by 2030.

The Q4 FY26 quarter stood out as the company’s best quarter yet. Standalone revenue was INR 685.3 crore, operating EBITDA was INR 92.2 crore, and PAT was INR 55.8 crore. The company also reported its highest quarterly sales volume and operating EBITDA per ton, with operating EBITDA per ton of INR 9,512 excluding sponge iron sales as per the investor deck.

FY26 performance: growth with profitability recovery

FY26 was not only a high-growth year, it was also a year of margin improvement versus FY25. Operating EBITDA margin increased to 11.45% in FY26 from 10.23% in FY25, while PAT margin improved to 5.94% from 3.84%.

Management explained on the call that quarterly margin volatility remains linked to the interplay between finished product pricing and raw material procurement cycles. For Q4, management highlighted that lower-cost raw materials procured earlier were consumed in the quarter while realizations improved, supporting the sharp rise in EBITDA per ton. In response to an investor query, management stated there was no inventory gain booked in Q4.

The balance sheet also reflects a deleveraging trend. The investor presentation reports net debt to operating EBITDA of 0.78x for FY26 and a working capital cycle of 17 days. CFO generation remained positive at INR 215.8 crore despite growth and ongoing capex.

Product mix and the push towards value-added products

Sambhv operates across carbon steel and stainless steel, with a backward-integrated facility and a product chain spanning sponge iron, slabs, HR coils, ERW black pipes, GP coils and GP pipes, and stainless steel coils.

The FY26 finished goods sales segmentation by value, disclosed in the investor presentation, indicates that intermediate products still form a meaningful part of the mix, but coated and pipe segments are sizable and growing.

A key theme from both the presentation and the call is the company’s intent to expand the share of value-added products. In FY26, total sales volume reached 396,731 MT, and management stated that value-added product volumes increased to 356,000 ton, implying a higher contribution from downstream products.

In stainless steel, management described its current positioning as largely focused on 200 series and selective 300 series, while also building downstream traction through co-branding partnerships. The company reported execution of six additional MoUs under co-branding for stainless steel pipes, taking the total to 10 MoUs. This is intended to strengthen go-to-market reach in stainless products without building an immediate full downstream pipe manufacturing footprint.

Expansion roadmap: Kesda, power, and debottlenecking

The company’s strategic roadmap is dominated by capacity addition plans and deeper integration into value-added products. The investor presentation sets out a plan to grow finished products capacity from 6,24,000 MTPA to 20,32,000 MTPA over time.

Kesda greenfield project (Phase I)

The key near-term project is the greenfield expansion at Kesda and Kuthrel Unit II, adding 1.2 MTPA finished product capacity in phases. Phase I includes 0.36 MTPA stainless steel coils capacity with an estimated capex of INR 8,100 million and a targeted commissioning by Q4 FY27.

Management reiterated on the call that Phase II and Phase III product mix and capex will be clarified after Phase I is operationalized and ramp-up visibility improves. This sequencing suggests an approach that keeps later-stage expansion flexible, likely to adapt to market conditions and product economics.

Captive power additions

Energy integration is another pillar of the roadmap. The company already operates a 25 MW captive power setup comprising 16 MW WHRB and 9 MW AFBC. It is now pursuing two more power projects:

• A 25 MW round-the-clock power plant at Kesda in Phase I, with estimated capex of INR 1,250 million, targeted for commissioning by Q4 FY27.
• A 30 MW round-the-clock power plant at Sarora, Raipur, to reduce dependence on external sources.

The May 9, 2026 board outcome announcement provides a clearer regulatory disclosure for the Sarora additions. It states that the 30 MW power plant capex is INR 1,500 million, financed through INR 1,050 million via debt or lease and the balance through internal accruals, with a planned completion timeline of Dec 2027.

On the call, management linked these power projects to cost savings and reliability. It stated that after the Sarora 30 MW plant, Sarora would be 100% self-sufficient in power requirements.

ERW pipe mill expansion via DFT

The same board announcement also approved an expansion of the pipe mill complex at Sarora by 150,000 MTPA, taking total ERW capacity from 350,000 MTPA to 500,000 MTPA. The disclosed capex is INR 500 million, with Dec 2027 as the completion target.

Management explained that direct forming technology improves operational flexibility by reducing time required for size changes and increases throughput, especially for larger sizes. It also linked the capex to returns, stating that the DFT investment is expected to unlock operating value and, together with other operational efficiency capex, could deliver a meaningful operating boost.

Stainless steel CR coils debottlenecking

Separately, Sambhv has completed a brownfield debottlenecking project to increase stainless steel CR coils capacity from 58,000 MTPA to 116,000 MTPA. Management indicated it was awaiting consent to operate around the time of the call.

The company also signed an MoU with the Ministry of Steel under PLI Scheme 1.2 for manufacturing stainless steel CR coils. Management stated the PLI benefit would be available post commissioning and could be capped, with a potential incentive range depending on grade and thickness.

Balance sheet, funding, and risk disclosures

On funding, management stated it remains cautious on debt and highlighted the IPO objective of debt reduction. At the same time, the announced capex program is sizeable and includes debt funding components. In the call, management projected peak long-term debt of around INR 800 crore for the currently announced capex and additional working capital debt of INR 200 to 300 crore.

One material disclosure in the consolidated notes relates to an advance paid by the wholly owned subsidiary towards a land purchase, where undisclosed encumbrances were later identified. An FIR was lodged and INR 80.00 million of the INR 115.10 million advance was recovered. For the remaining INR 35.10 million, a provision was created as an exceptional item due to uncertainty in recovery. The company stated the matter is under legal proceedings and has no impact on normal operations.

Takeaways for investors

Sambhv Steel Tubes exits FY26 with record profitability, stronger cash generation, and improved leverage metrics, while keeping working capital tight. The bigger question now is execution. The company has outlined a multi-year build-out anchored on Kesda Phase I commissioning by Q4 FY27, captive power additions, ERW capacity expansion via DFT, and stainless debottlenecking.

If these projects are delivered on timeline and ramped efficiently, the company’s product mix could shift further towards higher value-added steel pipes, coated products and stainless offerings. Management’s Q1 FY27 operating EBITDA per ton guidance of INR 7,500 to 8,000 provides a near-term marker for margin sustainability as input costs and realizations normalize.