Scoda Tubes FY26: Export Momentum, Heavy Capex, and a Working Capital Squeeze

Scoda Tubes Limited closed FY26 with steady top-line growth but a more complicated set of under-the-hood signals. Revenue from operations rose to INR 518.7 crores, up 7.0% year on year. Gross profit grew faster at INR 165.4 crores, lifting gross margin to 31.9% from 30.6% in FY25.

Operating profitability, however, softened. EBITDA fell slightly to INR 76.2 crores from INR 78.1 crores, and EBITDA margin declined to 14.7% from 16.1%. Management described FY26 as a transition year focused on execution and capacity creation. A short production disruption in March and under-absorption of costs during commissioning also weighed on margins.

At the bottom line, PAT improved meaningfully. Profit after tax increased to INR 38.8 crores, up 22.4% year on year, with PAT margin expanding to 7.5% from 6.5%.

A year where exports carried growth

The most visible shift in FY26 was the revenue mix. Domestic revenue declined to INR 339.2 crores from INR 355.8 crores. Exports rose sharply to INR 179.5 crores from INR 129.1 crores, a 39.0% increase. This moved export share to 34.6% of revenue from 26.6% in FY25.

The trend was even stronger in Q4FY26. Domestic revenue dropped 28.6% year on year to INR 68.3 crores, while exports nearly doubled to INR 55.3 crores. Exports accounted for 44.7% of quarterly revenue, reflecting Scoda’s growing reliance on overseas demand.

Management also shared an FY26 geography split for revenue: India INR 339 crores, Europe INR 137.8 crores, Americas INR 30.7 crores, and others INR 8.9 crores.

What held back FY26 operating performance

Management attributed the year’s moderation in growth largely to an operational disruption. The piercing plant faced shutdowns due to gas shortages arising from geopolitical disruptions. In the concall, management said the plant was shut for about 15 to 17 days in March, and that the disruption impacted production volumes materially. While gas availability has normalized, management noted gas prices remain elevated and the cost impact is passed through to customers with a lag.

The income statement shows a clear mix of positives and negatives. Gross profit improved, helped by a lower cost of materials as a percentage of revenue. But employee benefit expense rose to INR 10.5 crores from INR 8.1 crores, and other expenses increased to INR 78.7 crores from INR 62.4 crores. Finance costs also rose to INR 24.9 crores from INR 22.0 crores, which management attributed to capex borrowing, higher working capital use, and interest on delayed income tax payments.

Working capital became the pressure point

FY26 numbers show a sharp working capital stretch. Debtor days increased to 97 from 76, and inventory days rose to 217 from 163. The cash conversion cycle expanded to 211 days from 164.

This fed directly into cash flows. Cashflow from operations turned negative at INR -13.8 crores versus INR 18.4 crores in FY25. The cashflow statement shows changes in working capital at INR -78.9 crores, which was the central driver.

Management acknowledged the spike in inventory days and stated it was linked to the gas disruption and shutdowns. The CFO guided that inventory days are expected to reduce to around 160 in FY27 and remain in the 160 to 170 range over the longer term.

The investment cycle: welded expansion and captive solar

Scoda’s strategic focus is now on scaling beyond a seamless-heavy profile into welded products, while improving cost stability through captive solar power.

On welded expansion, management stated that the welded segment opens end-use sectors such as data centers, water treatment, construction, and HVAC. In the concall, they discussed an 8,000 MTPA welded capacity addition at an investment of around INR 40 crores funded through internal accruals and term loans. They also referenced an additional welded capex of about INR 45 crores that is still underway. Timelines shared included equipment delivery expected by July to August, trial runs targeted by end of Q2 FY27, and the welded facility expected to be operational in H2 FY27. Management expects optimum welded contribution by FY29.

Alongside, Scoda is investing in solar. The company is installing 8.79 MW DC of solar capacity, split between 4.99 MW DC for seamless and 3.8 MW DC for the welded plant. Management expects annual generation of 137 lakh KWH and estimated electricity savings of INR 8.63 crores per year. The presentation also provided plant-level savings: INR 4.9 crores for seamless and INR 3.8 crores for welded.

The capex cycle is large relative to current profits. Management stated FY26 capex incurred was INR 110 crores and expected FY27 capex outflow is around INR 100 crores.

Balance sheet: equity strengthened, debt likely to rise

The balance sheet reflects the IPO-led strengthening of equity. Equity capital and reserves rose to INR 390.3 crores in FY26 from INR 150.4 crores in FY25. Borrowings reduced to INR 185.3 crores from INR 210.2 crores, and net debt to equity improved to 0.3x from 1.1x.

However, management was clear that debt could rise again as capex continues. The CFO said debt may increase by about INR 50 crores, with peak debt estimated around INR 250 crores.

Outlook and what management guided

Management provided multiple forward-looking datapoints in the concall:

They guided FY27 revenue growth of 25% and described it as conservative. They also stated a future target mix of 40% exports and 60% domestic. Utilization guidance was shared qualitatively: around 70% utilization for seamless in FY27 and around 25% for welded in FY27, while welded utilization is expected to reach optimum levels by FY29.

The company also disclosed an order book of around INR 175 crores, with execution expected over 3 to 4 months.

Key takeaways

FY26 was a year where Scoda improved gross margins and expanded PAT, while dealing with a short but meaningful production disruption and a sharp working capital build. The numbers also show a company deep into an investment cycle. Welded expansion and captive solar are the two big strategic levers management is pushing, with timelines and capex broadly quantified.

The near-term variables to track are straightforward: whether working capital normalizes as guided, whether the welded commissioning stays on its revised schedule, and whether export momentum remains strong enough to offset domestic lumpiness. If execution matches the stated milestones, FY27 will be less about transition and more about conversion of capacity into cash flows.