Rajratan Global Wire Limited Q2 FY27 Earnings Conference Call

Nature of Disclosure: Transcript of the earnings conference call for the quarter and financial year ended 30th September, 2026, conducted on 22nd October, 2026, filed pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Key Quantitative Figures & Operational Highlights

Financial Performance & Guidance:

  • Earnings are growing faster than revenue, led by operational improvements and higher volumes.
  • Debt-to-equity ratio is comfortable at 0.6, indicating a healthy balance sheet.
  • The company generated positive operating cash flow in September for both standalone and consolidated business.
  • Management is optimistic for the remaining two quarters of FY27 and the next 2-3 years.
  • Targets 15% to 20% volume growth year-on-year for the foreseeable future (next 10-15 quarters).
  • Consolidated sales target for FY27 is ~160,000 tons (FY26: 133,000 tons). H1 FY27 volume was 71,000 tons.
  • EBITDA margin for the quarter was stated to be at a "rock bottom" level of ~12.7%-13% and is not expected to fall below this. Improvement is anticipated, primarily driven by the Thailand business.

Capacity & Expansion Details (India - Chennai):

  • The Chennai plant expansion from 30,000 tons to 60,000 tons is on track for completion in Q3 FY27 (current quarter).
  • The expansion is being done gradually by adding modular machines. Current rated capacity is 40,000 tons.
  • Monthly production is targeted to increase from 3,500 tons to 4,000 tons, then to 4,500 tons.
  • Total production from Chennai for FY27 is projected to be 37,000-38,000 tons.
  • The incremental capex for the Chennai expansion (from 30K to 60K tons) is INR 30-35 crores (Total initial cost: INR 270 crores for 30,000 tons).
  • Management foresees a need for another 60,000-ton expansion in Chennai within the next two years, subject to market conditions and board approval.

Capacity & Expansion Details (Thailand):

  • The Thailand facility is running at almost 100% capacity.
  • A brownfield expansion of 50,000 tons is planned in Thailand.
  • The total capex for this expansion is estimated at INR 100-125 crores. INR 20 crores has already been spent on acquiring a new factory for supporting infrastructure.
  • The new capacity is expected to be operational within one year (by H2 FY28) and fully utilized within two years of operation.
  • Funding will be a combination of internal accruals (Thailand balance sheet is accruing cash monthly) and bank loans at competitive rates (~below 4%).

Volume Breakdown (H1 FY27):

  • Thailand Exports: 8,500 tons (Q2: 5,200 tons).
  • Total Exports (India + Thailand): Target is more than 30,000 tons for FY27.
  • India Exports: Target is ~14,000-15,000 tons for FY27. This represents ~40% growth year-on-year.

Thailand Business & 'Green Bead Wire':

  • Thailand's unique advantage is sourcing raw material (wire rod) from 92-95% scrap, qualifying its product as "green bead wire."
  • This is a key differentiator, especially for European customers focused on reducing carbon footprint and complying with CBAM (Carbon Border Adjustment Mechanism) regulations.
  • This advantage has led to faster approvals from major multinational tire companies.
  • Currently, 30-32% of Thailand's sales are to premium customers, with an expectation to grow this to 40%.
  • The price differential between a premium customer and a lower-tier (e.g., Chinese) customer can be up to THB 10,000 per ton (~INR 25,000-26,000).

New Project - Steel Cord (Pithampur, India):

  • The project for manufacturing steel cord for conveyor belts is in its initial stages.
  • Capital work in progress for this project is INR 70-80 crores.
  • The company is currently buying semi-finished goods; some equipment is yet to be bought and installed.
  • Sample submission to customers is expected to begin next month (November 2026).
  • The project involves obtaining ISO and BIS certifications. Full-scale production is expected next financial year (FY28).
  • No revenue from this project is factored into FY27 projections. Depreciation will begin once capitalized, expected by end of Q3 FY27.

Market & Competitive Landscape:

  • Rajratan is among the top two bead wire players outside China and top five globally including China.
  • In India, the company holds ~50% market share at premium customers. The strategy is to maintain or capture market share and avoid supplying to low-price customers.
  • The Indian tire market is growing at 8-10% with sustained demand.
  • Main competitors in India are Tata Steel and Bansal Wire.
  • Exports face a 50% tariff under Section 232 when supplying to the U.S., from both India and Thailand.

Cost & Margin Pressures:

  • Margin pressure is attributed to increased costs of freight (especially sea freight for exports), energy (gas, electricity), diesel, packing materials, and consumables, not primarily from steel prices.
  • The working capital cycle for exports is longer: 70-80 days for Europe (includes 40-day transit time) and 90 days for the U.S., compared to ~40 days for local sales in Thailand.
  • Management has implemented freight surcharges with some customers to mitigate volatility.
  • A price hike is anticipated by the end of Q3 FY27 to pass on increased costs, including recent steel price increases.

Management Commentary & Forward Outlook:

  • The company is in "exciting times" and confident in its growth journey despite a turbulent geopolitical and market environment.
  • The focus is on consolidating market share, which is expected to lead to improved profitability over time.
  • Growth engines are exports from India, expansion and premiumization in Thailand, and the future steel cord business.
  • The payback period for the Thailand expansion, while not explicitly quantified, is considered justified given the competitive brownfield cost (vs. ~INR 300 crores for a greenfield) and the strategic need to supply marquee customers.