Crisil Ratings stated that the rating Revenue increased by 3% year-on-year in fiscal 2025, supported by volume growth as realisations remained muted due to lower commodity prices. EBITDA margin declined to 15.8% in fiscal 2025, from 18.2% in fiscal 2024, due to change in product mix with increase in orders from water applications that have lower profitability compared to oil and gas applications.

The company's revenue is expected to increase by 8-10% over the medium term, driven by healthy order book position of Rs 2,000 crore, ramping up of increased production capacity and scaling up of revenue from subsidiaries. Meanwhile, the operating margin may sustain at 16-18%.

The company plans to undertake a capital expenditure (capex) of Rs 1,600 crore, of which Rs 844 crore will be towards capacity expansion at helical submerged arc welding/longitudinal submerged arc welding (HSAW/LSAW) capacity at its existing plants and Rs 764 crore towards incremental capacity in subsidiaries.

The capex at the company (standalone level) will be funded by internal cash accrual with major capex (nearly 64%) expected to be completed in fiscal 2026 and remaining by fiscal 2027. The capex in group companies - viz. Ravi Technoforge and Ratnamani Finow Spooling Solutions - and joint venture (JV) in Saudi will be funded by mix of debt and equity and should be completed by fiscal 2027.

The capital structure of the company continues to be healthy and the debt coverage remains healthy as well. Ratios may remain healthy over the medium term as well. Financial and liquidity risk profiles are expected to remain strong, aided by healthy cash accrual against debt obligation of only Rs 40-50 crore over the medium term.

The ratings continue to reflect the strong business risk profile of Ratnamani, supported by market leadership in the stainless steel Fs and pipes (SSTP) segment, diversified revenue and healthy financial risk profile as reflected in low gearing and comfortable debt protection metrics.

These strengths are partially offset by large working capital requirement and susceptibility to slowdown in end-user industries.

Ratnamani Metals and Tubes manufactures a wide range of welded and seamless SSTP (installed capacity of 61,500 TPA) and carbon steel pipes (5,10,000 TPA) of LSAW, HSAW, circumferential seam submerged arc welded and ERW pipes.

The scrip shed 0.70% to currently trade at Rs 2887.60 on the BSE.

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