Ratnamani Metals and Tubes Ltd.: Core pipes weak; subsidiaries anchor margins - Company Update

We upgrade Ratnamani Metals to BUY (from Accumulate earlier); though revise our target price lower to Rs 2,460 given miss to our estimates and consequently the cut in our earnings. Q3FY26 saw core pipes business witness a sharp decline due to delayed deliveries in water projects and weak order booking from the Oil & Gas segment. However, consolidated margins exceeded expectations, supported by strong profitability at the spooling business and favourable product mix at the standalone level. Importantly, order book recovered QoQ, driven by large CS pipes orders, thereby improving revenue visibility. While over a longer term, new cold finishing plant in Saudi, expansion of CS pipe and bearing ring capacities and spooling business will drive growth, we remain cautious on the short-term prospects of the CS pipe business and increasing competition in the SS pipes business. Our rating upgrade also follows attractive valuations.

Weak pipes business drags revenue despite strong subsidiary contribution:

RMT reported 19% yoy decline in consol. revenues at Rs10.7bn, dragged by a steep decline in revenue from pipes & tubes business, offset by a strong contribution from subsidiaries (Ravi Technoforge: Rs985mn, +55% YoY; Spooling: Rs1.96bn, ~260x YoY). Standalone pipes & tubes revenue declined 39% YoY to Rs7.9bn owing to delayed deliveries in water projects i.e. volumes fell sharply by 50% YoY to 44kt, while realizations increased 24% YoY to Rs181,170/t (driven by high proportion of process pipes and SS pipes).

Standalone margins resilient; consol. margins exceed expectations:

Consolidated EBITDA stood at Rs2.1bn (flat YoY) with margins at 19.2% (+372bps YoY / +148bps QoQ) supported by spooling margins of >30% and improving profitability at Ravi (~13%). Standalone EBITDA margin was ~17%, due to favourable product mix. Consolidated Adj. PAT came at Rs 1.28bn (-2.5% YoY) after accounting for one-time expenses related to the new labour code.

Muted outlook for pipes business, but subsidiaries and exports drive confidence:

The spooling business with an order book of Rs5bn is also expected to maintain strong growth with high margins catering to the nuclear demand. In the pipes segment, domestic demand for CS line pipes remains muted, however few large orders especially from water segment has improved the order book on QoQ basis. Effectively, total order book now stands at Rs21.4bn as of 1st Feb’26 (SS/CS – Rs5.7bn/ Rs15.8bn), vs Rs20.2bn on 1st Nov’25. The weakness in domestic CS pipe order booking and increased competition in SS pipes business continues to cap near-term growth. This has led to further cut in valuation multiple. While over a longer term, the spooling business, new cold finishing plant in Saudi and expansion of CS pipe and bearing ring capacity will drive growth, we remain cautious on the medium-term prospects.

Valuation and rating:

We value RMT at an average of 25x Dec’27 PE and 15x Dec’27 EV/EBITDA (previously 28x and 17x) to arrive at TP of Rs2,460 (Rs 2,710 previously) but upgrade to BUY rating due to steep correction in share price. Decrease in TP is due to cut in earnings and multiple. Key risks: Delay in recovery of Oil & gas demand, increased competition in SS pipes & tubes business.

Company website: https://www.ratnamani.com/

*CMP is as per report published date

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Analyst:

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

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FAQs on Ratnamani Metals and Tubes Ltd. Q3FY26 Company Update

Here are quick answers to common investor queries about the Ratnamani Metals swing trading opportunity, including entry strategy, targets and key risks.

1. What is the ideal buying zone for Ratnamani Metals?

Traders can consider accumulating the stock near the ₹1,900–2,050 range based on current price levels and support zones.

2. What is the expected target price?

The stock has an upside potential towards ₹2,460 over the next 10–12 weeks.

3. What stop loss should be maintained?

A stop loss below ₹1,750 on a closing basis is recommended to manage downside risk.

4. What factors support the bullish outlook?

Strong profitability from the spooling business, improved order book visibility and attractive valuations after correction support the positive view.

5. What are the key risks to this trade?

Delay in recovery of oil & gas demand, weak carbon steel pipe orders or rising competition in stainless steel pipes could impact performance.

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