SG Mart Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Best quarter, war headwinds absorbed: Revenue topped INR1,800 crores and business EBITDA hit the long-awaited INR50 crores milestone, even as the Middle East crisis froze Dubai and steel shortages pinched B2B volumes.
• Profitability mix shift is the real story: Flat FY26 revenue masked 35% EBITDA growth to INR137 crores, driven by a deliberate pivot from low-margin B2B toward service centers, renewable structures and the new profiles vertical.
• FY27 guided at INR300–350 crores EBITDA: Management is confident of nearing that range, contingent on the war not worsening; the ramp of new verticals and service centers is expected to lift quarterly EBITDA sequentially from the Q4 base.
• Capex cycle is accelerating, not pausing: INR600 crores of approved capex over FY27–28 will fund 4–5 land parcels, 3–4 service centers and profile machines, with more possible if renewable and profile demand stays strong.
• What to watch next quarter: Whether coated steel supply normalizes enough to lift renewable volumes toward 8,000–9,000 tons/month, the pace of the profiles ramp, and any resolution on the unanswered Dubai gross margin and net block questions.

The INR50 Crore Milestone & Profitability Shift

• Business EBITDA finally crossed INR50 crores: Management had targeted this level in Q2 or Q3 but missed due to multiple headwinds; Q4 delivered INR50 crores of operating EBITDA plus INR6 crores of inventory gain from rising steel prices.
• Flat revenue, sharply higher profit: FY26 revenue was flat year-on-year, yet EBITDA grew 35% because the company scaled down low-margin B2B volumes and focused on value-added verticals: service centers, renewable structures, and the newly launched steel profiles business.
• EBITDA per ton ranges hold into FY27: B2B at INR700–1,000, service centers at INR1,700–2,000, solar at INR3,000–5,000, and profiles at INR5,000–8,000; management expects no margin deterioration from these levels.
• PAT lag is a depreciation story, not a concern: Heavy investment in service centers, renewable structures and profile capacity has lifted depreciation and interest costs, so PAT growth trails EBITDA; management points to cash profit as the better metric and expects PAT to catch up over time.
• Inventory swings masked true earnings power: A ~INR15–20 crore inventory loss in Q3 reversed to a INR6 crore gain in Q4; full-year EBITDA would have exceeded INR150 crores if adjusted for these swings, and the company states it does not intend to take inventory risk on its books.

Anubhav Gupta: "Throughout the FY26 financial year, we were hoping that we would touch this INR50 crores business EBITDA, maybe in the second or third quarter, but obviously, because of multiple reasons, we couldn't achieve that. So finally, we did that in quarter 4."

Vertical Volume Trajectories

• Service centers are the volume engine: Q4 volume rose over 10% sequentially to 190,000 tons, driven by new center additions; three more centers will be added in FY27, taking the exit count to 11–12, with a three-year target of roughly 20 centers each doing 8,000–10,000 tons monthly.
• Renewable structures are supply-constrained, not demand-constrained: Volume dipped in Q4 because specialized coated steel was in short supply due to gas issues at steel mills; April improved, May looks better, and management expects a ramp to 8,000–9,000 tons/month once supply normalizes, targeting 130,000–150,000 tons for FY27.
• Profiles business launched with immediate traction: The new vertical, selling under the APL Apollo brand and group distribution network, moved roughly 7,000 tons in its first quarter with good margins; April already hit a 5,000–6,000 ton monthly run rate, and the full-year target is 100,000 tons-plus as more products and machines come online.
• B2B is the wildcard: Volumes were soft in Q4 and remain slow due to an overall steel shortage in the country; whatever supply is available gets absorbed by larger customers, and management has deferred aggressive outreach to small MSMEs until supply streamlines.
• Dubai is frozen but not broken: The Middle East conflict meant hardly any business in March, and fixed costs hurt profitability; teams have started traveling again, and a new cut-to-length machine has been added, but management cannot give any near-term guidance.
• Puff panels are the next horizon: Capacity for 80,000 tons is being set up to capture a fragmented market that could double or triple in three to four years as factories and warehouses shift from standard sheets to insulated panels.

FY27 Guidance & the INR300–350 Crore Bet

• The headline number: Management guided for INR300–350 crores of annualized EBITDA in FY27, confident of being near that number unless the war causes further business loss in B2B or Middle East operations.
• The building blocks: Quarterly EBITDA is expected to keep rising from the INR50 crore Q4 base as new businesses and verticals ramp; India business, renewable structures and steel profiles are already operational and throwing off good profitability and returns.
• EBITDA can outgrow revenue: Even if revenue does not grow 50%, EBITDA can grow faster because every new vertical added carries higher margins than the legacy B2B mix.
• 50% CAGR visibility over three years: Management sees a path to 50% compound growth in the business, with performance improving every quarter from here; the three-year volume ambition includes roughly 0.2 crore tons from service centers, 250,000–300,000 tons from renewable structures, and 300,000 tons from steel profiles, while B2B remains too unpredictable to size.
• Steel supply is the swing factor: The overall shortage of steel as a commodity in India, aggravated by the war’s impact on gas supply to mills, makes the timeline for normalization unpredictable; management hears it could improve in a month or so but cautions the war makes it impossible to call.

Anubhav Gupta: "In our last earnings call, we did guide for INR300 crores to INR350 crores of annualized EBITDA for FY27. We are confident that we should be near that number unless there is more loss of business due to war in our B2B business or in our Middle East operations."

Capex: Building the Capacity Pipeline

• INR600 crores approved for FY27–28: This is the minimum; more could be added if demand for renewable structures and profile structures requires additional lines.
• Rough allocation: About one-third for building service centers, half for acquiring new land parcels, and the balance 15–20% for profile machines.
• Land bank expansion underway: Land has already been acquired in Ahmedabad, Indore and Kolkata (a new addition this year); the company is actively scouting in Hyderabad, Chennai and Punjab, with more acquisitions possible in the next 2–3 months.
• Renewable capacity will expand in step with demand: Once the business sustains 10,000 tons per month for four to five months, management will order more plant and machinery; lead time is only three to four months, and land and infrastructure are already available.
• Capital allocation is growth-first: For the next two years, all focus and cash flow will go to growth and capacity building; existing cash on the books may fund incremental working capital as the business scales, and dividends are a conversation for after that period.
• Inorganic options are on the radar but nothing fits: The company keeps evaluating assets but has not found any matching its quality profile.

Balance Sheet & Cash Flow

• Working capital tightened to 20 days: Inventory and debtor rationalization drove the improvement, which reduced overall capital employed and lowered interest costs.
• Operating cash flow of INR300 crores funded the capex cycle: Full-year OCF of roughly INR300 crores was almost entirely absorbed by capex of upwards of INR250 crores, leaving only a small free cash flow generation; net cash increased by just INR10 crores sequentially from Q3 to Q4.
• Balance sheet closed with INR750 crores of net cash: The company ended the year with a strong net cash position despite the heavy investment cycle.
• Dubai questions went unanswered: An analyst flagged that the consolidated-minus-standalone gross margin had come down significantly and that the net block difference was INR108 crores, asking if further capacity investment was happening in Dubai; management promised to revert during the call but did not provide answers within the recorded discussion, later attributing it to a calculation error without offering specifics.

Unanswered Questions & Risks

• Dubai financials remain opaque: The gross margin divergence between consolidated and standalone books, and the INR108 crore net block difference, were raised twice and not resolved; management’s eventual claim of a calculation error lacked supporting figures.
• Steel supply is the single biggest uncontrollable: The overall shortage of steel in the country, tied to gas supply to mills and the war, directly caps volumes in B2B and renewable structures; management acknowledges it is unpredictable and can only wait for normalization.
• Tech investment is deliberately deferred: The company does not want to invest heavily in its technology stack until it has confidence in steel supply and availability, calling it a three-to-four-month process whenever needed; this could become a bottleneck if supply normalizes faster than expected.
• Q4-specific EBITDA per ton was not disclosed: When asked for vertical-level EBITDA per ton for the quarter, management gave broad ranges rather than Q4-specific figures, limiting visibility into the quarter’s exact margin mix.

Anubhav Gupta: "See, I mean, it's so unpredictable. I mean war goes on for 30 days, 60 days, 90 days. I mean unless until the fuel supply becomes streamline, it will remain a challenge."

Guidance & Commitments

Key Metrics