Q4FY26 Metal Ancillaries Sector Report - Pure Play commodity businesses outperform

With resilient steel production growth in Mar’26 quarter, we expect a mixed quarter for our metal ancillary pack, supported by reasonable demand and strong rebound in spreads as discussed in our March’26 Monthly Metals Periodical. The benefit of price hike led elevated spreads is likely to drive a meaningful recovery in EBITDA margins across steel and intermediates, with players such as Sambhv, KFIL and GPIL expected to report a sharp rebound. While raw material trends remain benign for the quarter, the recent spike in coking coal prices indicates near-term cost pressures heading into 1QFY27. The refractory pack is expected to report resilient performance due to strong steel production growth, partly offset by pressure of high RM cost (rupee depreciation) and inflated fuel cost. Pipe players like Ratnamani, Venus & Scoda tubes are likely to see a mixed performance, with selective export disruptions and fuel supply issues (linked to the Middle East conflict). We continue to prefer Sambhv and KFIL within our coverage, given stronger earnings visibility and attractive valuations.

RHI Magnesita India :

We have factored a 9% yoy growth in consol. revenues, slightly higher than the crude steel production growth in India. We expect higher growth for the erstwhile RHI entities and Hi-tech while Dalmia OCL is expected to grow below the steel production growth due to a seasonally weak quarter for demand from cement plants. We expect the consol. margins to improve to 13.1%, +300bps yoy on the benefits of eased Alumina cost, partly offset by war related inflation in input cost.

IFGL Refractories :

We have factored a 16% yoy growth in consol. revenues at Rs5.2bn, largely driven by a 13% growth in the standalone business and a high growth in the overseas entities on a very low base. This is driven by increasing penetration in the domestic market and a yoy improving performance in overseas subsidiaries in Europe and America. Margins are expected to remain flat due to price hikes in the America business and European entities turning breakeven, offset by war related inflation in input cost. Signs for improvement in performance of overseas subsidiaries will be a key monitorable.

Vesuvius India :

We expect 8% yoy growth in revenues mainly led by resilient demand for flow control refractories, ramp up of new capacities of Mould flux powder, Basic and Alumina monolithics, partly offset by impact of shutdown by its customers. Margins are expected to edge down 16.5% on account of war led input cost inflation.

Ratnamani Metals & Tubes :

We expect a 35% yoy decline in consol. revenues, driven by a significant slowdown in pipes segment dispatches, impacted by disruptions in the Middle East market and shifting of the plant to Odisha. Ravi Technoforge and Finow Spoolings are expected to sustain healthy traction, providing meaningful boost to the topline. Margins are expected to be at the lower end of the guided range ~15.5% due to war related cost inflation. Order inflows in the CS pipe segment and resumption of business in Middle East will be a key monitorable.

Venus Pipes & Tubes :

We expect ~19% yoy growth in revenues, largely led by strong execution of the order book and price hikes in stainless steel. QoQ performance is expected to remain largely stable, in line with steady demand conditions. Margins are expected to moderate slightly below 16%, impacted by elevated freight and fuel expenses, although most cost pressures are being passed on in new orders.

Scoda Tubes :

We expect a weak quarter, with revenues up by mere 6% YoY due to temporary stoppage in seamless operations following gas supply issues in March, although operations have resumed in April. EBITDA margins are likely to moderate to ~14%, impacted by elevated gas costs and adverse operating leverage.

Kirloskar Ferrous Industries Ltd. :

We expect improvement in casting sales volumes (led by improved demand from tractor and volumes at Oliver engg. and Solapur phase 2 foundry) and seamless tubes (ONGC order) along with price hikes, to drive the revenue in 4QFY26. This has resulted into a 13% yoy jump in consol. revenues. Benefits of price hikes and stable RM cost is expected to result in improved gross margins translating into EBITDA margins of 13.3%; +170bps yoy. The sustenance of tractor demand, order book for seamless tubes along with direction on pig iron spreads will be key monitorable in KFIL.

Godawari Power & Ispat :

We expect 27% yoy growth in consol. revenue, driven by sharp increase in pellet volumes (pass on of inventory from 3QFY25 and mining EC received on 1st Feb’26) as well as price hikes across the board. Muted iron ore, thermal, and coking coal cost will lead to elevated spreads, which along with higher proportion of pellet revenues should lead to resilient margins of 25%. With the EC approval for mining, ramp up in pellet production and progress of capex will be key monitorable.

Sambhv Steel Tubes :

We expect Q4FY26 to be exceptionally strong with a 42% YoY growth in topline driven by all-time high volumes and significant uptick in realizations across all products. EBITDA margin may very well sustain ~12% due to benefits of low-cost raw material. Operating leverage further aided by higher internal GP capacity and improving stainless mix. Importantly, Sambhv remains unaffected by the LPG supply disruptions linked to the Middle East conflict unlike several LPG-based GP & SS competitors who have curtailed operations, enabling Sambhv to charge a premium.

Click to download the full Metal Ancillaries Sector Report 4QFY26 Company Update

Analyst:

• Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
• Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)

Open your MNCL Demat Account

FAQs on Metal Ancillaries sector report 4QFY26

What is driving growth in metal ancillaries in Q4FY26?

Higher steel production, improved spreads, and stable raw material costs are driving strong EBITDA recovery across the sector.

Which companies are expected to outperform?

Sambhv Steel Tubes, KFIL, and GPIL are expected to outperform due to strong volume growth, better realizations, and margin expansion.

Why are pipe companies seeing mixed performance?

Export disruptions, fuel supply issues, and Middle East uncertainties are impacting dispatches and margins for pipe manufacturers.

What risks should investors track going forward?

Rising coking coal prices, geopolitical risks, and demand slowdown in Q1FY27 could impact margins and growth momentum.

Before You Trade, Strengthen Your Foundations with These Guides

• For a stronger understanding of indicators such as RSI, VWAP, and trendlines, check our 👉 Technical Analysis Fundamentals section.
• Want to refine your risk-reward planning? Explore our insights on 👉 Position Sizing & Risk Management Strategies.