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Sambhv Steel
Our verdict on Sambhv Steel isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The brownfield expansion for GP capacity to 1,16,000 tons has already gone live, and the stainless steel doubling is on track for March 2026. (1 met across 1 tracked commitment)
“So now in the first quarter and second quarter, this number is 5,10,000 ton of capacity. And increased capacity is 5,86,000 ton. We are commissioned at Q4, I think. Of FY26.”
Management reiterated that 13% is the sustainable operating range for the coming quarters. (1 met across 1 tracked commitment)
“Umang: Okay. So, sir, the sustainable margin, I can assume that for coming years it will be between 12% to 13%? Management: Yes, of course.”
See the full cited Management analysis of Sambhv Steel
How durable is the business?
Capacity utilization for the galvanized division has improved significantly as the company prioritizes these high-margin products over standard ERW pipes. (2 expanding)
“Capacity utilization of pre-galvanized and stainless steel coils division has improved significantly. The EBITDA per ton also has significantly improved to the INR7,800 per ton.”
This segment saw significant expansion following the commissioning of the Kuthrel facility, growing from a negligible base to 5% of total sales volume. (5 expanding across 2 engines)
“Finished Goods Sales Segmentation FY25 (By Value): Pre-Galvanised (GP) Coils and Pipes 8%”
See the full cited Business Model analysis of Sambhv Steel
Where does growth come from?
The company is moving from planning to execution on its massive Greenfield expansion at Kesda, having secured land and environmental clearances, while already operationalizing the Kuthrel facility in FY25. (2 accelerating, 1 new trend, 2 steady across 5 signals, 1 leading indicator)
“Thirdly, greenfield, as we have said, we are going to make 3,50,000 tons of stainless steel from Kesda in the first phase.”
The expansion of high-margin Pre-Galvanized (GP) coil capacity is accelerating, with the company now targeting a doubling of capacity by the end of FY26. (4 accelerating, 1 new trend across 5 signals, 2 leading indicators)
“If you see currently the mix is -- if you see for the stainless steel 300 and 200 series it is mostly 30-70 currently, but we try to achieve 50-50 mix in Q4.”
See the full cited Future Growth analysis of Sambhv Steel
What could break the thesis?
EBITDA per ton for the first half of the year stood at INR 6,950, which is below the earlier guidance of INR 8,000. Management has revised the maintainable EBITDA expectation to INR 7,000 per ton due to corrections in MS coil prices. (1 stable, 1 intensifying, 1 high-severity)
“EBITDA Margin (%) 8.68% 10.30% 10.39% ... QoQ -15%”
ROCE dropped from 17.66% in FY24 to 11.94% in FY25. This is attributed to the increase in capital employed for new projects that have not yet reached full earning potential. (3 intensifying, 2 easing, 2 high-severity)
“Gross Profit (INR Mn) & Margin (%) ... 9MFY25 30.46% ... 9MFY26 28.17%”
See the full cited Risk analysis of Sambhv Steel
Read the full thesis on Sambhv Steel
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