Rajratan Sets Record Volume Despite Steel Cost Pressures

Rajratan Global Wire reported record sales tonnage for FY26, surpassing 133,000 tons, a significant 18% increase year-on-year. Despite this volume success, the company's fourth-quarter margins faced pressure from a sharp rise in steel prices.

Q4 Results: Record Volume, Margin Squeeze

Rajratan Global Wire announced its full fiscal year and fourth-quarter results, highlighting a substantial achievement in sales volume. The company reached its highest-ever sales tonnage, exceeding 133,000 tons for FY26. However, the final quarter faced considerable margin pressure due to a sharp INR 10,000 per ton increase in raw material (steel) prices starting in January. Energy availability and pricing also negatively impacted EBITDA margins during Q4. Management has since increased prices in April/May and expects margins to normalize in Q1 FY27.

Expansion Plans and New Verticals Drive Growth Outlook

The company is in an aggressive expansion phase, aiming to capture more market share and reduce reliance on a single industry. The new niche steel cord vertical, designed for conveyor belts, presents significant revenue potential with targeted high margins, adding a new growth engine. Successfully managing input cost swings and operational challenges will be key to meeting its FY27 volume and margin targets. The Indian tyre market share has also recovered to 42-43%.

Company's Growth Trajectory

Rajratan Global Wire has historically focused on expanding its production capacity to meet growing demand from the tyre industry and other sectors. The company has strategically invested in enhancing its operations, including recent moves to significantly increase capacity at its Chennai plant and develop its specialized steel cord product line.

Outlook: Capacity Boost, Margin Recovery Expected

Investors can expect increased production capacity with the Chennai plant set to double its output by Q2 FY27. The company is targeting substantial 17-18% volume growth for FY27, aiming for approximately 155,000 tons. There is a renewed focus on recovering consolidated EBITDA margins to a sustainable 13.5% to 14% range in the upcoming fiscal year. The steel cord segment, with its niche applications and higher margin potential, offers a new growth avenue.

Key Risks to Monitor

Input cost volatility: Sudden spikes in steel prices can impact quarterly profitability if not immediately passed on to customers.

Working capital strain: Higher export volumes, especially to the US, require larger upfront duty payments and longer credit cycles, tying up capital.

Supply chain disruptions: Port congestion and raw material shortages continue to challenge timely shipments.

Competitive Landscape

Rajratan operates in a specialized market. Competitors in related areas include Bekaert India, a global leader in steel wire technologies, and Usha Martin Ltd., a major steel wire manufacturer.

Looking Ahead

Key items investors will track include: achievement of the FY27 volume growth target of 17-18%; successful normalization of EBITDA margins to the guided 13.5-14% range in Q1 FY27; performance and revenue ramp-up of the new steel cord segment; progress on Production Linked Incentive (PLI) status and potential benefits; and timelines for capacity expansion at the Chennai plant and operational efficiency at Indore steel cord trials.