Ratnamani Metals and Tubes is reportedly exploring the possibility of producing stainless steel long products in-house.

Ahmedabad-based Ratnamani Metals and Tubes, a company specializing in the manufacturing of seamless stainless steel and welded tubes and pipes, is reportedly in the process of planning to establish an in-house unit for the production of stainless steel long products.
In a conversation with CNBC-TV18, Manoj Sanghvi, the head of Ratnamani Metals and Tubes' business unit, shared that the company is contemplating backward integration into stainless steel long products to enhance its industry standing. While no final decision has been made, the company is actively exploring this possibility. If implemented, the proposed project is anticipated to require a significant capital expenditure, estimated to fall within the range of ?500 crore to ?700 crore. As of now, Ratnamani Metals and Tubes sources its stainless steel from third-party suppliers.

During the September quarter, Ratnamani Metals witnessed a notable growth in revenue, marking a 26% increase, and a substantial growth in Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA), which rose by 68% compared to the same period last year. A noteworthy highlight of the quarter was the expansion in margins, exceeding 21%, surpassing the company's earlier guidance of 16% to 18%.

The enhanced margin performance was attributed to a higher percentage of stainless steel tube volumes and the successful execution of orders with favorable margins.

According to Sanghvi, Ratnamani Metals is anticipated to achieve a topline in the range of ?4,800 crore to ?5,000 crore by the end of the current financial year. The stainless steel business constitutes 30% of the overall topline. Regarding future margin expectations, Sanghvi projected a range of 16% to 18%. Although this guidance is slightly lower than the margins achieved in the first half of the financial year 2024, it considers the higher contribution from the water pipe segment, which may impact overall margins.

The company's current capacity utilization is close to 60%, indicating potential for further expansion. As of November 1, Ratnamani's order book stood at ?2,950 crore, with 20% coming from the exports market.

As of now, Ratnamani Metals & Tubes is trading at a fresh lifetime high, having experienced a 30% rally so far in 2023. The stock is currently trading at a price-to-earnings multiple of 35 times the financial year 2025 estimated Earnings per Share (EPS). With a market capitalization of Rs 24,375 crore, the company seems poised for a dynamic phase of growth and innovation in the stainless steel industry.