Summary
Steelcast Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026 4:00 PM
Event Participants
Executives 4 Chetan Tamboli (Chairman and Managing Director), Rushil Tamboli (Whole Time Director), Subhash Sharma (Executive Director & CFO), Umesh Bhatt (Company Secretary)
Analysts 5 Chirag Shah (ICICI Securities), Harshil Solanki (Equitree Capital), Manish Goyal (Thinqwise Wealth Managers), Mosam Shah (Wealth Guardian), Parikshit Gujrati (Niveshaay)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹97.4 crores | -3.08% YoY; Moderate degrowth due to softer demand and geopolitical uncertainties in export markets. |
| EBITDA | ₹31.21 crores | +6.81% YoY; Growth driven by input cost reductions and internal cost-saving programs. |
| EBITDA Margin | 32.04% | +297 bps YoY; Significant expansion due to operational efficiencies and favorable raw material costs. |
| PBT | ₹27.89 crores | +8.01% YoY; Margin improved to 28.63% (+294 bps YoY). |
| PAT | ₹20.59 crores | +7.17% YoY; PAT margin stood at 21.14% (+202 bps YoY). |
| Capacity Utilization | 46% | Reflects softer Q3 volumes; management expects a ramp-up to 58% in FY27. |
| Order Book | ₹115 crores | Current backlog as of Jan 30, 2026, scheduled for execution in Q4 FY26. |
| Export Revenue % | 63% | Contribution from 16 countries; US specifically accounts for ~26-27% of total sales. |
| Cash & Liquid Assets | ₹110 crores | Parked in government securities and fixed deposits; expected to reach ₹125-130 crores by year-end. |
Geographic & Segment Commentary
- US Market: Performance impacted by tariff uncertainties and geopolitical factors, with export contribution potentially dipping from 30% to 26% of total revenue. Management maintains a price advantage of 5-13% over Chinese competitors and has not offered discounts despite the 50% tariff burden on customers.
- Europe & New Markets: Currently exports to 16 countries with plans to expand to 18 within 90 days. Targeting a shift in European export contribution from 15% to 20% in the next fiscal year, aided by potential free trade agreements (FTAs).
- Defense & GET Segment: Actively developing combat vehicle parts for an Israeli defense company with serial orders expected shortly. Over 36 new components are under development in Ground Engaging Tools (GET) and Construction, with initial order execution commencing in Q2 FY26.
Company-Specific & Strategic Commentary
- Product Development: Massive scale-up in R&D with 144 new parts developed across FY25 (56), FY26 (46), and FY27 (42). Tooling and sample purchase orders are already secured for the FY27 pipeline to drive volume growth.
- Cost Efficiency: A 2.4-MW hybrid power plant project is underway, expected to commission by June 30, 2026. This initiative is projected to generate annual power cost savings of ₹3.5 crores to ₹4 crores.
- Strategic Diversification: Moving toward providing sub-assemblies rather than just individual parts to deepen customer partnerships. The company is focusing on sectoral diversification into Defense and GET to reduce reliance on traditional mining/construction cycles.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 11% for FY26 | Based on expected Q4 performance returning to Q1/Q2 levels. |
| Long-term Growth | 20%+ CAGR | Projected over the next 3 years driven by the convergence of 144 new parts into serial production. |
| Capacity Utilization | 58% (FY27) / 90% (FY29) | Gradual ramp-up from current 46%; 90% target equates to ~26,000 tons. |
| Sustainable EBITDA | 27.5% - 28.0% | Normalization expected from current 32% as product mix shifts toward higher volumes. |
| Capex | ₹35 crores (FY27) | Allocated for new space for handling output and balancing equipment for new product mix. |
Risks & Constraints
| Risk | Context |
|---|---|
| US Tariffs & Trade Policy | Additional 50% tariff impact on US customers is creating near-term volume sensitivity. Management believes supply chains are sticky but acknowledges the risk if trade resolutions are delayed beyond a few quarters. |
| Geopolitical Uncertainty | Conflicts in certain export markets (Israel/Middle East) and global trade rebalancing affect immediate demand and logistics. While the company is diversifying, any escalation could disrupt the current 63% export revenue stream. |
| Raw Material Pass-through | While currently beneficial, the sales price variation formula means margins will “normalize” if steel prices rise. The company relies on scrap (25% Alang, 75% Auto/Engineering) which is subject to global price volatility. |
Q&A Highlights
Tariff Impact & Pricing
- Question: Are US customers asking for discounts due to the 50% tariff burden? (Chirag Shah)
- Answer: No price reductions have been given to US customers as a 1-1.5% discount would not materially offset a 50% tariff; customers realize changing supply chains takes 2-3 years (Chetan Tamboli).
Utilization & Capex
- Question: When will the company decide on major new capacity expansion? (Chirag Shah)
- Answer: Capex for expansion will only be triggered once the company hits a sustained annual utilization rate of 75% (Chetan Tamboli).
One-off Gains
- Question: What contributed to the margin expansion this quarter? (Subhash Sharma)
- Answer: The quarter included a ₹1.41 Cr forex gain, ₹1.09 Cr purchase price variance gain, and ₹0.90 Cr from internal cost reduction programs (Subhash Sharma).
Defense Strategy
- Question: What is the status of the Defense segment? (Manish Goyal)
- Answer: Successfully completed two rounds of sampling for combat vehicle parts for an Israeli firm; serial export orders are expected in the coming weeks (Chetan Tamboli).
Key Takeaway
Steelcast Limited delivered a resilient Q3 FY26, characterized by significant margin expansion to 32.04% despite a slight revenue contraction to ₹97.4 crores due to US tariff uncertainties. The company is at a strategic inflection point, transitioning from component manufacturing to sub-assemblies while aggressively diversifying its geography (targeting 18 countries) and segments (Defense and GET). With 144 new parts entering serial production over a three-year cycle and a ₹115 crore order book for Q4, management remains confident in achieving a 20% CAGR through FY29. While utilization currently sits at 46%, the roadmap to 90% (~26,000 tons) is backed by ₹110 crores in liquid reserves and a ₹35 crore tactical capex plan for FY27. Investors should monitor the impact of pending trade agreements and the successful conversion of defense samples into serial orders as primary growth catalysts.
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