Scan Steels Q1 FY27 Results (NSE: SCANSTL)
Signal: Growth decelerated
The read
Scan Steels delivered a solid Q1FY27 beat on PAT driven by margin expansion from lower input costs, but the underlying revenue growth was modest (+11% YoY) and sequential revenue declined (-8.5% QoQ), typical for steel seasonality. The 370bps YoY drop in raw material cost as % of revenue is the key tailwind, though the company did not explicitly attribute it to pricing power or deflation — given flat revenue sequentially, it appears input-cost led rather than demand-driven. PAT-to-EPS divergence (dilution from share count increase) warrants monitoring, but not a red flag at this stage. Overall, a steady quarter in a cyclical upturn, with margins recovering from Q4FY26 lows.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹257.79 Cr | 11.1% | -8.5% |
| EBIT | ₹19.76 Cr | 49.2% | |
| Net profit | ₹13.25 Cr | 26.2% | |
| EPS | ₹2.18 | 21.8% | |
| EBIT margin | 6.72% |
P&L walk
Consolidated P&L mirrors standalone because the company's associates contribute only ₹29.48 lakh (2.2% of consolidated PAT). Revenue grew 11.1% YoY, but margin profile improved due to input cost tailwind.
Segments
The company reports a single segment: Steel Manufacturing. No segment-wise disclosure is provided as per IND AS 108.
Key positives
- PAT of ₹13.25 Cr grew +26.2% YoY on only +11.1% revenue growth — margin expansion is real and operationally driven.
- Raw material cost % of revenue declined 370bps YoY to 66.77%, a strong tailwind for a steel manufacturer with no captive iron ore.
- Consolidated EBITDA margin improved to ~6.7% from ~5.9% a year ago, and recovered from 4.9% in Q4FY26.
Key concerns
- Revenue declined 8.5% sequentially from Q4FY26 to Q1FY27 — while partly seasonal, it raises questions about demand sustainability in the steel cycle.
- Finance costs rose 21.7% YoY even as total borrowings aren't disclosed — could signal rising working capital needs or higher interest rates.
- Equity diluted ~3.7% (paid-up capital rose by ₹214.42 lakh), causing EPS growth (21.8%) to lag PAT growth (26.2%).
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