Sambhv Steel Q2 FY27 Earnings Call — Analysis (NSE: SAMBHV)
Sambhv Steel Tubes reported Q2FY27 revenue of ₹840 Cr and EBITDA of ₹105 Cr, while approving a ₹148 Cr capex to enter stainless steel seamless pipes alongside ongoing major capacity expansions.
Result quality: stable — Results context unavailable. Management sentiment: optimistic.
The take
Q2FY27 Revenue from Operations ₹840 Cr . New guidance — FY27 fy27 full-year sales volume and… 8,000 to 8,500 . New story: Stainless Seamless Pipes Greenfield Expansion .
Results
Revenue reached ₹840 Cr with EBITDA of ₹105 Cr (margin >12%) and PAT of ₹61 Cr, supported by 27% YoY growth in value-added product volumes.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue from Operations | ₹840 Cr | none · Q2FY27 · reported quarter revenue | |
| EBITDA | ₹105 Cr | none · Q2FY27 · operating EBITDA | |
| PAT | ₹61 Cr | none · Q2FY27 · net profit | |
| Operating Cash Flow | ₹213 Cr | none · Q2FY27 · cash flow from operations | |
| EBITDA Margin | 12% | none · Q2FY27 · >12% stated by management | |
| PAT Margin | 7% | none · Q2FY27 · >7% stated by management |
Guidance
Targeting FY27 VAP volume of 4.10-4.25 lakh tonnes with EBITDA/ton of ₹8,000-8,500, scaling to >5.5 lakh tonnes and >₹550 Cr EBITDA in FY28 upon commissioning of the Kesda plant.
What management committed to
- [Sambhv Steel Tubes] will commission its 360,000-ton integrated stainless steel facility and 25 MW captive power plant at Kesda by March 2027. — 360,000 ton, Q4FY27
- [Sambhv Steel Tubes] will commission a 30 MW captive power plant at Sarora by September 2027 with ₹150 Cr capex, generating annual cost savings of ₹60-70 Cr. — INR150 crores, Q2FY28
- [Sambhv Steel Tubes] will complete a 1.5 lakh ton DFT pipe expansion taking total pipe capacity from 3.5 lakh to 5.0 lakh tons by September 2027. — 1.5 lakh ton, Q2FY28
- [Sambhv Steel Tubes] will set up a 14,400 TPA stainless steel seamless pipe facility with ₹148 Cr capex, going live by March 2028. — 14,400-ton, Q4FY28
- [Sambhv Steel Tubes] targets FY27 full-year value-added sales volume of 4,10,000 to 4,25,000 tonnes and EBITDA per ton of ₹8,000 to ₹8,500. — 8,000 to 8,500, FY27
- [Sambhv Steel Tubes] targets FY28 sales volume of ~5.5 lakh tonnes and EBITDA upward of ₹550 Cr. — INR550 crores, FY28
- [Sambhv Steel Tubes] targets seamless pipe division to generate ₹400 Cr revenue and ₹60-70 Cr EBITDA on 10,000 tonnes production by FY30. — INR400 crores, FY30
- [Sambhv Steel Tubes] aims to achieve 2.5% to 3% EBITDA margin expansion by 2030 through captive power and cost optimization projects. — 2.5% to 3%, FY30
Key themes
Capacity expansion and seamless pipe entry
How the narrative shifted
- Stainless Seamless Pipes Greenfield Expansion: Entering high-margin austenitic SS seamless tubes (14.4k TPA, ₹148 Cr capex) leveraging PLI 1.2 incentives (13%) and targeting import substitution (>6-inch pipes) and high-growth sectors.
- Backward Integration and Margin Resilience: In-house manufacturing of >80% HR coil requirements and captive power plants protect the company from market supply shortages and yield 100-150 bps margin expansion.
- Chinese Dumping and QCO Relaxation Headwind: Relaxation of QCO norms has driven Chinese dumping of 200/300 series coils, shrinking SS EBITDA/ton to ₹12,000-13,000, but domestic demand remains strong and import restrictions are expected by March 2027.
- Vision 2030 Capacity and Cost Road Map: Scaling finished goods capacity from 0.6 MT to >2 MT with 90% captive power by 2030, supported by ₹1,500-2,000 Cr Phase 2 & 3 capex.
Operational commentary
- Announced entry into stainless steel seamless pipes and tubes with a ₹148 Cr investment for 14,400 TPA capacity using the piercing and pilgering route, eligible for ~13% PLI incentive under PLI 1.2.
- Kesda integrated stainless steel facility (360,000 TPA + 25 MW captive power plant) is on track for commissioning by March 2027.
- Sarora 30 MW captive power plant capex of ₹150 Cr scheduled for completion by September 2027, targeted to yield annual power cost savings of ₹60-70 Cr.
- Brownfield expansion of pipe manufacturing via Direct Forming Technology (DFT) adding 1.5 lakh tonnes capacity (expanding from 3.5 to 5.0 lakh tonnes) slated for go-live by September 2027.
- High degree of backward integration (>80% of HR coil requirement produced in-house) insulates the company from external HR coil supply tightness.
- Working capital days compressed to 4-5 days due to distributor destocking in anticipation of price increases, improved customer collections, and better supplier credit terms; long-term steady-state guided at 20-25 days.
Analyst Q&A
Q. What drove the sequential decline in EBITDA per ton from ₹8,800 in Q1 to ₹8,200 in Q2?
Decline was due to higher raw material moisture during monsoons hurting yields, stainless steel margins softening to ₹12,000-13,000/ton due to QCO relaxation and Chinese dumping, and Q1 being an exceptionally high-margin outlier.
Q. What is the sourcing strategy and technology selection for the new stainless steel seamless pipe project?
The facility will deploy the capital-efficient piercing and pilgering method; round bars will initially be sourced domestically from large underutilized producers, with captive backward integration planned in future phases.
Q. What is the overall capex estimate for Phase 2 and Phase 3 under Vision 2030?
Estimated between ₹1,500 Cr and ₹2,000 Cr covering power plants, upstream expansion, and syngas/gas plants, to be formalized post commissioning of Kesda in March 2027.
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