Ratnamani Metals and Tubes Ltd. - Recovery in sight - Company Update 

Ratnamani Metals & Tubes’ (RMT) Q4FY26 results missed our estimates, due to higher than expected operating expenses and lack of operational efficiencies. The pipes & tubes business reported weak results due to weak order book, disruption in Middle East and shutdown of the HSAW plant. The subsidiaries performed exceedingly well in FY26 and are expected to continue its growth momentum. Going forward, we expect a rebound in the CS and SS pipes revenues, due to restart of the CS plant post shifting, likely improvement in domestic demand from CGD projects, new cold finishing line in Saudi and pent-up demand from Middle East, due to re-construction of the Oil & gas infrastructure. We value RMT at an average of 30x Mar’28E PE and 17x Mar’28E EV/EBITDA to arrive at TP of Rs2,720 (Rs2,460 previously). However, due to limited upside (rich valuations), we move to Accumulate rating (previously BUY) on Ratnamani metals.

Weak pipes business drags revenue despite strong subsidiary contribution:

RMT reported 37% YoY decline in consol. revenues at Rs 10.9bn (largely in-line with MNCL estimates), dragged by a steep decline in revenue from pipes & tubes business, offset by a strong contribution from subsidiaries (Ravi Technoforge: Rs 1bn, +28% YoY; Spooling: Rs 719mn, +58% YoY). Standalone pipes & tubes revenue declined 43% YoY to Rs 8.9bn owing to delayed deliveries to Middle East, shifting of HSAW plant to Odisha and poor order book. For FY26, pipes & tubes revenue declined by 24% YoY to Rs 36.9bn. Consolidated revenue declined by 13% to Rs 44.9bn.

Margins miss expectations due to cost pressure:

RMT reported consol. EBITDA (miss to MNCL estimates) of Rs 1.5bn (-49% YoY) with margins at 14.2% (-345bps YoY / -505bps QoQ), impacted by high operating expenses i.e. repairs & maintenance cost of the shifted HSAW plant, provision for doubtful receivables and lack of scale efficiencies. Consol. Adj. PAT declined by 53% YoY to Rs 968mn. For FY26, consol. EBITDA declined by 8% to Rs 7.6bn, translating into margins of 16.9%; +98bps YoY. Adj. PAT declined by 9% YoY to Rs 4.9bn.

Early signs of recovery likely in the pipes business:

FY26 was a weak year due to poor demand from Oil & gas, especially CS line pipes, shutdowns for repairs and shifting of the HSAW plant to Odisha, correction in SS pricing and disruption caused by the Middle East war in the last quarter. However, the subsidiaries demonstrated strong growth momentum in FY26, followed by a margin improvement. The spooling business with an order book of Rs 5-6bn is expected to maintain strong growth and high margins, catering to the nuclear demand. Ravi Technoforge is likely to target margin expansion in FY27E, before adding new contracts at the expanded capacity in FY28E. Additionally, we expect a rebound in the pipes segment revenues over longer term, due to restart of the CS pipe plant post shifting, likely improvement in domestic demand from CGD projects, new cold finishing line in Saudi and pent-up demand from Middle East due to re-construction of the Oil & gas infrastructure. Remain positive on Ratnamani metals.

Valuation and rating:

We value RMT at an average of 30x Mar’28E PE (25x previously) and 17x Mar’28E EV/EBITDA (previously 15x) to arrive at TP of Rs2,720 (Rs2,460 previously). We have moved to Accumulate rating (previously BUY), due to limited upside and rich valuations. Increase in TP is due to upgrade in valuation multiple, partly offset by cut in earnings. Key risks: Delay in recovery of Oil & gas demand, rising competition in SS pipes & tubes.

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

*CMP is as per report published date

Click to download the full Ratnamani Metals and Tubes Ltd. Q4FY26 Company Update

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. Q4FY26 Company Update

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

Why did Ratnamani Metals report weak Q4FY26 results?

The quarter was impacted by weak pipes demand, Middle East disruptions, shutdowns related to HSAW plant shifting, and higher operating expenses.

What are the key recovery drivers for Ratnamani Metals?

Recovery is expected from improving CGD demand, restart of the carbon steel plant, Saudi expansion, and reconstruction-related demand from Middle East oil and gas infrastructure.

How are Ratnamani’s subsidiaries performing?

Subsidiaries like Ravi Technoforge and the spooling business delivered strong growth and are expected to continue contributing meaningfully to future earnings.

What industries does Ratnamani Metals serve?

The company serves oil & gas, industrial infrastructure, energy, nuclear and process industries through its steel pipes, tubes and engineering solutions.

What are the major risks for Ratnamani Metals?

Key risks include delayed recovery in oil & gas demand, rising competition in stainless steel pipes and continued geopolitical disruptions.

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