Usha Martin closes FY26 with stronger margins, cash conversion, and a net cash balance

Usha Martin ended FY26 with a combination investors usually like to see together: improving profitability, strong cash conversion, and a cleaner balance sheet. For the full year, consolidated revenue rose to INR 3,691 crore, up 6.2% over FY25. Operating EBITDA increased faster, to INR 705 crore, up 18.1%, lifting operating margin to 19.1% from 17.2%. PAT from continuing operations grew 20.9% to INR 491 crore.

The fourth quarter was the clearest illustration of the operating leverage that management has been trying to build since the sale of the steel business. Q4 FY26 revenue grew 9.3% year on year to INR 979 crore, but operating EBITDA jumped 51.6% to INR 212 crore. Operating margin expanded to 21.6% from 15.6% in Q4 FY25, and PAT from continuing operations rose to INR 155 crore.

Mix shift becomes visible in segment performance

The revenue mix continues to be anchored by Wire Rope, and in FY26 it remained the largest driver of both topline and profitability. In FY26, Wire Rope contributed 73% of revenue, with Wire at 11%, LRPC at 8%, and Others at 8%. The geographic base is also increasingly global, with international revenue rising to 57% of FY26 topline, up from 55% in FY25.

In Q4 FY26, Wire Rope revenue was INR 707 crore, up 14.8% year on year. Wire revenue was INR 118 crore, up 31.2% year on year. LRPC revenue fell to INR 80 crore, down 20.4% year on year. For the full year, Wire Rope revenue increased 7.9% to INR 2,683 crore, Wire grew 24.4% to INR 408 crore, while LRPC declined 15.8% to INR 308 crore.

Management acknowledged that tonnage growth does not always track linearly when the portfolio shifts toward specialised and high-performance ropes. It also noted that Middle East disruptions affected Q4 rope volumes, estimating about a 900 tonne impact during the quarter.

Cost discipline and cash conversion strengthen the narrative

A key operational message in both the presentation and the call was the company’s ability to manage volatility in raw materials and energy costs. Steel prices averaged INR 51,052 per tonne in FY26 versus INR 54,097 per tonne in FY25, while EBITDA per tonne improved to INR 34,107 for FY26 and rose sharply to INR 39,496 in Q4 FY26.

Management attributed margin improvement to a richer product mix, higher share of high-performance ropes, and sustained cost discipline. The One Usha Martin program was positioned as a structural lever, not a one-off action. On the call, the CFO stated fixed employee costs declined by about 3% and administrative expenses declined by over 7% year on year. Management quantified cumulative cost savings of about INR 65 crore to INR 70 crore over the last 18 months.

Cash generation was the other standout. Operating cash flow for FY26 was INR 736 crore, equal to 104% of operating EBITDA. After capex of INR 198 crore, free cash flow was INR 457 crore, described as a 2.5 times increase over FY25. The balance sheet moved from net debt of INR 63 crore in FY25 to net cash of INR 332 crore in FY26. Gross debt declined to INR 146 crore in FY26 from INR 338 crore in FY25, and interest coverage improved to 34.4 times.

Working capital remained stable as a percentage of turnover, with net working capital days improving marginally to 194 days in March 2026 from 199 days in March 2025. Management said the focus for FY27 remains on improving inventory turns and receivables.

FY27 priorities: targeted capacity expansion and new vertical scale-up

While management repeatedly acknowledged the uncertain external backdrop, it also laid out a clearer investment plan than in prior periods. It guided to capex of about INR 300 crore over the next two years, aimed primarily at increasing rope manufacturing capacity by about 6,000 tonnes. It stated that 70% to 75% of this capex would go toward rope capacity expansion, with the balance toward specialised wires and plasticated LRPC equipment and testing facilities.

Management also offered directional operating margin expectations, indicating that earlier internal benchmarks of 18% to 19% have shifted and that it now sees at least 20% operating margin as a minimum benchmark, while noting quarterly outcomes can vary with product mix.

On growth engines, two newer verticals received specific mention. For plasticated LRPC, management said it currently sells about 2,500 tonnes per year and expects to nearly double to about 4,000 to 4,500 tonnes once customer approvals are in place, which it expected within the next few weeks. Capacity is about 6,000 tonnes per annum currently, with potential step-up to 8,000 to 9,000 tonnes over time. For Oceanfibre synthetic slings, management highlighted early traction with approvals and repeat orders and stated expectations of significant growth in FY27 and beyond.

Geographically, the company emphasised continued traction in Europe and the Americas, particularly in higher value segments like cranes, elevators and mining. It noted that the US market grew from 7% to 9% of topline in FY26 and that its market share in the US remains sub-5%, implying room for expansion. It also discussed modernisation of its Thailand plant, with a focus on specialised cords and elevator ropes and an expected operational improvement over the next 18 months.

Takeaways from Q4 FY26

Usha Martin’s FY26 results strengthen the post-steel-business narrative: better margins, stronger cash conversion, and disciplined capital allocation. The company also appears to be moving from a deleveraging phase into a phase where internal accruals can fund both growth capex and optionality for selective inorganic expansion.

The key questions for FY27 will likely revolve around execution: whether the company can scale volume without diluting mix, whether high-margin project and replacement demand remains resilient amid geopolitical disruption, and whether working capital intensity can be structurally reduced. For now, the combination of a net cash position, improving margins, and quantified efficiency actions gives management credibility as it enters the next phase of growth.