Analysis: Rathi Steel

Growth thesis

Rathi Steel produces stainless steel billets, wire rods, and TMT bars for infrastructure and industrial applications. Stainless steel products (60-65% revenue) and TMT bars (30-40% revenue) form its core segments. Growth will accelerate through 80% steel melting shop utilization (currently ~50%), direct charging technology reducing TMT costs by INR3,000-4,000/ton, and expanding high-margin 550D TMT bars. Rooftop solar (1-2 MW) and green certifications will enhance margins while aligning with ESG demand. The company targets 20-25% CAGR revenue growth over three years (FY25 base), with turnover potentially doubling in five years. Execution hinges on achieving 80% melting shop utilization by FY27 to unlock operating leverage and margin expansion.

Why is Rathi Steel stock rising?

• Ramping steel melting shop utilization from current ~50% towards 80%
• Implementing direct charging technology for TMT mill to improve thermal efficiency and reduce costs
• Targeting rolling mill utilization improvement to 60-65% in FY27
• Aspiring to maintain 20-25% CAGR revenue growth over three years with FY25 as base
• Increasing share of high-margin stainless steel products and premium 550D grade TMT bars

Research report

companyname: Rathi Steel and Power Limited ticker: 504903 sector: Iron & Steel / Steel & Steel Products Rathi Steel and Power Limited is an Indian steel company incorporated in 1971, carrying a legacy of more than five decades under the Rathi brand. It operates a single manufacturing facility on approximately 12.5 acres in Ghaziabad, within the NCR region. The plant has a steel melting capacity of around 85,000 tons per annum and a rolling capacity of approximately 2,00,000 tons per annum. The ...

Catalysts

capex, margin expansion

Growth guidance

FY27 revenue growth guided at 20-25% CAGR to maintain growth momentum