Summary
Usha Martin Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026 10:00 AM IST
Event Participants
Executives 3 Abhijit Paul (CFO), Rajeev Jhawar (Managing Director), Shreya Jhawar (Strategy and Growth)
Analysts 6 Aman Kumar Sonthalia, Anil Yadav, Jasdeep Walia, Kartikeya Kumar Pandey, Prolin Nandu, Rupesh Tatiya, Sucrit D. Patel
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹917 crores | +6.6% YoY; Driven by better product mix and strong demand in Wire segment (+20.2%). |
| Operating EBITDA | ₹176 crores | +23.3% YoY; Supported by cost discipline and higher traction in value-added products. |
| EBITDA Margin | 19.2% | +260 bps YoY; Improvement from 16.6% due to favorable sales mix and operating leverage. |
| Profit After Tax (PAT) | ₹107 crores | +16.3% YoY; Includes a one-time ₹13 crore impact from Wage Code implementation. |
| EBITDA per Metric Tonne | ₹33,350 | Reflects strategic shift toward engineering-driven products like elevator and crane ropes. |
| Net Debt / (Cash) | (₹198 crores) | Shift to net cash position from ₹338 crore gross debt in March 2025 via internal accruals. |
| ROCE | 20% | Management target is to scale this to 25% over the long term. |
| Operating Cash Flow | ₹561 crores | Represents 114% conversion of EBITDA to cash; reflects tight working capital management. |
Geographical & Segment Commentary
- Wire Ropes: Contributed 73% of total revenue with 6.6% YoY growth. Value-added products now comprise 70% of segment turnover, with realizations for specialty ropes (e.g., elevator) approximately ₹1 lakh higher per tonne than general-purpose ropes.
- Wires & LRPC: Wire segment revenue grew 20.2% YoY, while LRPC declined 13% YoY. Management is pivoting away from the commoditized “black” LRPC toward high-margin plasticated LRPC, which is awaiting further OEM approvals.
- International Markets: Saudi Arabian operations added 60 new customers via the new Rigging business. Thailand operations are undergoing modernization and cost optimization expected to yield results in 4-6 quarters, while Europe remains the primary hub for OEM order generation.
Company-Specific & Strategic Commentary
- Product Diversification: Launched “Ocean Fiber,” a synthetic sling solution for offshore applications. The vertical turned cash-positive in its first year and serves as a strategic complement to the steel rope portfolio.
- Production Strategy: Management is deliberately sacrificing volume in low-value General Purpose (GP) ropes to prioritize capacity for value-added products (Elevator, Crane, Mining), which have 30-35% lower output speed due to complexity.
- Supply Chain & Sustainability: Setting up a 4-MW solar plant at the Ranchi facility to mitigate future EU Carbon Border Adjustment Mechanism (CBAM) impacts. While Wire Ropes are not expected to be included in CBAM until 2028, calculations for direct/indirect emissions have commenced.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | 12% to 15% (FY27) | Expected pickup in Q4 FY26 followed by a stronger FY27 as new OEM approvals stabilize. |
| Annual Capex | ₹250 - ₹300 crores | To be funded entirely via internal accruals; includes ₹50 crore for maintenance. |
| EBITDA Margin | 19% - 20% | Sustainable range; management will not push higher to avoid losing market share. |
| Working Capital | 180 Days | Target reduction from current 199 days through digital tracking and inventory discipline. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Pricing | Exposure to steel and zinc price fluctuations. Management noted Wire and LRPC are pass-through, but Ropes require active mix management to protect margins. |
| Regulatory Compliance | Implementation of New Wage Code resulted in a ₹13 crore one-time hit and minor recurring increases in gratuity costs. |
| Execution Timelines | Infrastructure projects like “Parvatmala” have long gestation periods; commercial wire rope orders are not expected for 2-3 years. |
Q&A Highlights
Volume Recovery & Mix
- Question: When will volume growth return, specifically in the domestic market? (Jasdeep Walia)
- Answer: Domestic growth was 5% in Q3, but R&D focus on value-added segments like elevators and cranes reduces total tonnage output. Pickup is expected in Q4 FY26 as the order book is currently healthier than previous quarters (Rajeev Jhawar).
Strategic Growth & Cash Allocation
- Question: How will the ₹200 crore net cash be utilized? (Rupesh Tatiya)
- Answer: Priorities include ₹250-300 crore annual brownfield capex and exploring inorganic opportunities in Europe (Germany/Spain) to build markets for existing capacities (Shreya Jhawar).
Operational Efficiency
- Question: What is the current capacity utilization at the Ranchi plant? (Rupesh Tatiya)
- Answer: Following the 40,000-tonne expansion, Ranchi is operating at 75% for Ropes and 78% for Wires (Abhijit Paul).
Future Segments
- Question: What is the status of the plasticated LRPC and synthetic slings? (Aman Sonthalia)
- Answer: Synthetic slings (Ocean Fiber) are already cash-positive. Plasticated LRPC is awaiting 2-3 major player approvals, with a volume ramp-up expected by Q1-Q2 FY27 (Rajeev Jhawar).
Key Takeaway
Usha Martin delivered a resilient Q3 FY26, characterized by a strategic pivot toward high-margin, engineering-driven products which pushed EBITDA margins to 19.2% and EBITDA per tonne to ₹33,350. Despite a 13% decline in the commoditized LRPC segment and a one-time ₹13 crore wage code impact, the company achieved a significant milestone by moving into a net cash position of ₹198 crores. Management is focusing on “One Usha Martin” digital integration to optimize working capital and is reinvesting ₹250-300 crores annually in value-added capacities. While volume growth remains mid-single digit currently due to the complexity of specialty ropes, the company expects a ramp-up to 12-15% growth in FY27 supported by a strong order book and new customer acquisitions in Saudi Arabia and Europe. The outlook remains positive with a focus on维持 19-20% margins while scaling specialized verticals like Ocean Fiber and plasticated LRPC.
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