Ratnamani Metals and Tubes Ltd. - Subsidiaries outperform | Company Update

We increase target price to Rs 2710 (previously 2690) and upgrade to Accumulate rating. Increase in target price is due to valuation roll forward. In 2QFY26, the core pipes business saw modest growth as strong offtake was offset by weak realizations. The consolidated performance was uplifted by robust growth in subsidiaries. Similarly, margins got a boost due to surge in operational profit at the spooling business and Ravi Technoforge. 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. Accumulate on dips.

Strong subsidiary momentum drives revenue growth:

RMT reported 23% yoy growth in consol. revenues at Rs 11.9bn, led by contribution from subsidiaries (Ravi Technoforge: Rs 956mn, +40% YoY; Spooling: Rs 1.1bn, ~18x YoY). Standalone pipes & tubes revenue grew modestly due to adverse pricing i.e. volumes grew 23.5% YoY to 65.1kt, while realizations declined 15% YoY.

Standalone margins weak; consolidated margins expand:

Consolidated EBITDA stood at Rs 2.1bn (+38% YoY) with margins at 17.7% (+192bps YoY / +139bps QoQ) supported by spooling margins of >30% and improving profitability at Ravi (~13%). Standalone EBITDA margin was ~15%, under management’s guided band due to adverse product mix. Consolidated PAT came at Rs 1.36bn (+36% YoY) aided by higher other income and no finance cost. Management reiterated margin comfort in the 16-18% range despite near- term pressure in CS water segment.

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

The bearing ring business at Ravi Technoforge is expected to ramp up margins due to automation and improved demand. The spooling business with an order book of Rs 5 bn is also expected to scale up revenues exponentially in FY26 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 Rs 20 bn as of 1st Nov’25 (SS/CS – Rs 6.5 bn/ Rs 13.6 bn), vs Rs 14.7 bn on 1st July’25. The weakness in domestic CS pipe order booking continues to cap near-term growth for the pipes business, however improving export traction and subsidiary momentum provide earnings support. 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 of the domestic pipes business.

Valuation and rating:

We value RMT at an average of 28x Sep’27 PE and 17x Sep’27 EV/EBITDA to arrive at TP of Rs 2710 (Rs 2,690 previously) and upgrade to Accumulate rating. Increase in TP is due to valuation roll forward. Key risks: Delay in recovery of Oil & gas demand, failure to ramp up margins at bearing business.

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

Click to download the full Ratnamani Metals and Tubes 2QFY26 Company Update

Analyst: 

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

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