Rama Steel Tubes Limited

Basic Materials — Steel · NSE

₹3.93−₹0.06 (−1.50%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:51 pm

Understanding the Business

Company site ↗

The 60-second version of Rama Steel Tubes Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Rama Steel Tubes Limited manufactures and sells steel pipes and tubes in India. The company offers mild steel electric resistance welded (ERW) black steel pipes and tubes, galvanized iron (GI) pipes, and specialty pipes.

IndustrySteel

SectorBasic Materials

Employees100

Annual revenue₹1,117 Cr

How does it make money?

Turns over ₹1,117 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹3 left at the operating level before interest, tax and depreciation. Each of its 100 employees supports ₹11.17 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹11.17 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, JINDAL STEEL LIMITED, STEEL AUTHORITY OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 5.5% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE10.8%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -16% while net margin moved -44% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-16%

Margin effect-44%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 5.6% a year
✗ Profit has declined at 22.2% a year
✗ Latest-year revenue growth of -16.7% is below the longer-term trend — momentum is fading

Quality vs. Valuation

Company Quality

36/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

42/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

39.3x

3Y Median

32.8x

40 monthly readings · mean 37.3x · range 17.3x–68.2x

Sector Median

18.2x

median of 4 sector peers

⚠️Current valuation is approximately 20% above its 3y median of 32.8x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 116% above the peer median of 18.2x.

vs. its own history

Fair

32.8x median over 40 months · +20%

vs. sector peers

Expensive

18.2x median of 4 peers · +116%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

22.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 33% over 3 years.
Very low debt
Debt/Equity of 0.27x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 10.7% to 2.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 17.7% to 5.5% — often a sign of competition or overexpansion.

Red Flags

4 items require attention · 4 watch

🟡Interest coverage is deterioratingFinancial
Cover has fallen from 3.6x to 2.5x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹116 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 53% over 3 years.
🟡Receivables growing faster than salesFinancial
Receivables up 30% against revenue up -16% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 33% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 3.7x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 30% against revenue up -16%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 116% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 10.7% to 2.6%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 1%✓ 3.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹116 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 2.5x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 8%✗ 5.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✗ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 4 neutral · 4 weak

Market Cap

₹643 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

39.3x

Fair

Fairly valued against the generic band

P/B Ratio

1.17x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.1

Profitable

Profitable on a per-share basis

ROE

2.6%

Weak

Weak capital efficiency

ROCE

5.5%

Weak

Low return on total capital employed

Debt/Equity

0.27x

Low

Conservative leverage

Revenue Growth (YoY)

-16.7%

Shrinking

Sales are contracting

Profit Growth (YoY)

0.0%

Modest

Slow profit growth

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹116 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

0.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

2.0%

Weak

Thin margins leave little room for error

Net Margin

1.1%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.80

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

1.10

Market-like

Moves roughly in line with the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

4.3 / 4.3

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

19.1

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,327 Cr	₹1,039 Cr	₹1,040 Cr	₹1,117 Cr	-5.6%
EBITDA	₹57 Cr	₹63 Cr	₹38 Cr	₹35 Cr	-15.5%
EBITDA Margin	4.3%	6.1%	3.6%	3.1%	—
PAT (Net Profit)	₹27 Cr	₹29 Cr	₹23 Cr	₹13 Cr	-22.2%
EPS	₹0.37	₹0.54	₹0.15	₹0.07	-42.4%
ROE	10.7%	8.7%	6.2%	2.6%	—
ROCE	17.7%	15.3%	10.4%	5.5%	—
Total Debt	₹193 Cr	₹146 Cr	₹89 Cr	₹130 Cr	-12.4%
Free Cash Flow	-₹156 Cr	₹5 Cr	₹37 Cr	-₹116 Cr	—

🔴 Revenue has shrunk at 5.6% a year over 3 years.

🔴 EBITDA has shrunk at 15.5% a year over 3 years.

🔴 EBITDA Margin has fallen from 4.3% to 3.1% over 3 years (-1.2 pts).

🔴 PAT (Net Profit) has shrunk at 22.2% a year over 3 years.

🔴 EPS has shrunk at 42.4% a year over 3 years.

🔴 ROE has fallen from 10.7% to 2.6% over 3 years (-8.0 pts).

🔴 ROCE has fallen from 17.7% to 5.5% over 3 years (-12.2 pts).

🟢 Total Debt has shrunk at 12.4% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹890 Cr

Total Liabilities

₹408 Cr

Cash & Equivalents

₹4 Cr

Operating Cash Flow

-₹109 Cr

Capex

-₹8 Cr

Shareholding (proxy)

Institutional Holding

0.2%

Insider Holding

40.7%

Corporate Actions

Ex-Dividend Date

24 Feb 2022

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
JINDAL STEEL LIMITED	39.1x	5.3%
STEEL AUTHORITY OF INDIA	16.5x	7.1%

Recent News

2 mixed4 general

We Think That There Are More Issues For Rama Steel Tubes (NSE:RAMASTEEL) Than Just Sluggish Earnings

Simply Wall Street, 07 JunResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Rama Steel Tubes Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 13 Oct

Rama Steel Tubes Share Price Target 2027 to 2030: Analyst Outlook

Univest, 18 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Rama Steel Tube Consolidated March 2026 Net Sales at Rs 246.15 crore, down 16.05% Y-o-Y

Moneycontrol.com, 03 Jun

Rama Steel Tubes publishes EGM notice for Oct 21 capital hike vote

scanx.trade, 17 Sept

Compare with

Equitymaster, 14 Oct

Watch Items

Revenue growth is negative (-16.7%) on the latest reported period — check if this is one-off or a trend.
Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

MiddlingFinancial Health · Valuation

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation.

4 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑