Rathi Steel And Power Limited

Basic Materials — Steel · BSE

₹19.95−₹0.25 (−1.24%)

DalalBaazaar Score

46 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

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

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:26 pm

Understanding the Business

Company site ↗

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

What does this company do?

Rathi Steel And Power Limited manufactures and sells steel and steel-related products in India. The company offers stainless steel billets, flat, wire rods, bright bars, annealed wire rods, rebars, and wires; mild steel TMT bars; and pickled bars and rods.

IndustrySteel

SectorBasic Materials

Employees265

Annual revenue₹716 Cr

How does it make money?

Turns over ₹716 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹4 left at the operating level before interest, tax and depreciation. Each of its 265 employees supports ₹2.70 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.70 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 10.8% 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 +14% while net margin moved -87% 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+14%

Margin effect-87%

DalalBaazaar Score

46/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 4.6% — barely ahead of inflation
✗ Profit has declined at 47.2% a year
✗ Profit is compounding slower than revenue — margins are being squeezed as the business grows

Quality vs. Valuation

Company Quality

40/ 100

Weak

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

Valuation

80/ 100

Cheap

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

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

11.9x

3Y Median

12.0x

40 monthly readings · mean 10.6x · range 0.5x–25.1x

Sector Median

18.2x

median of 4 sector peers

🟡Currently trading close to its 3y median of 12.0x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 34% below the peer median of 18.2x.

vs. its own history

Fair

12.0x median over 40 months · -0%

vs. sector peers

Cheap

18.2x median of 4 peers · -34%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

7.4x

PEG

—

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 64% over 3 years.
Very low debt
Debt/Equity of 0.30x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 126.6% to 10.8% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 1 high · 4 watch

🔴Receivables growing faster than salesFinancial
Receivables up 599% against revenue up 14% — sales are being booked faster than they are collected.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹25 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 85% over 3 years.
🟡Inventory building faster than salesFinancial
Inventory up 59% against revenue up 14% — stock may not be moving.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 176% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 64% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 34% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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?

Sales are being booked faster than collected
Receivables are up 599% against revenue up 14%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 4.6% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
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 2%✓ 4.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹25 Cr
Profit that never becomes cash eventually stops being profit.
3Interest cover stays above 3x✗ 2.7x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✓ 4.6% CAGR
Latest reported year was 24.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Debt / EBITDA stays below 2x✓ 1.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.

Investment Checklist

6 / 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

6 good · 4 neutral · 1 weak

Market Cap

₹172 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

11.9x

Cheap

Cheap against the generic band

P/B Ratio

1.15x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹1.67

Profitable

Profitable on a per-share basis

ROE

8.6%

Moderate

Moderate capital efficiency

ROCE

10.8%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.30x

Low

Conservative leverage

Revenue Growth (YoY)

24.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

81.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

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

Free Cash Flow

-₹25 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

2.7%

Weak

Thin margins leave little room for error

Net Margin

1.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.04

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

1.00

Market-like

Moves roughly in line with the market

52W Range Position

42%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

20.7 / 22.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

32.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹627 Cr	₹488 Cr	₹503 Cr	₹716 Cr	+4.6%
EBITDA	₹20 Cr	₹12 Cr	₹24 Cr	₹29 Cr	+12.9%
EBITDA Margin	3.2%	2.5%	4.8%	4.0%	—
PAT (Net Profit)	₹87 Cr	₹24 Cr	₹14 Cr	₹13 Cr	-47.2%
EPS	₹27.86	₹2.77	₹1.62	₹1.49	-62.3%
ROE	—	19.1%	10.2%	8.6%	—
ROCE	126.6%	18.6%	13.5%	10.8%	—
Total Debt	₹125 Cr	₹2 Cr	₹40 Cr	₹45 Cr	-28.9%
Free Cash Flow	₹98 Cr	₹11 Cr	-₹40 Cr	-₹25 Cr	—

🟢 Revenue has grown at 4.6% a year over 3 years.

🟢 EBITDA has grown at 12.9% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 4.0% over 3 years.

🔴 PAT (Net Profit) has shrunk at 47.2% a year over 3 years.

🔴 EPS has shrunk at 62.3% a year over 3 years.

🔴 ROE has fallen from 19.1% to 8.6% over 3 years (-10.5 pts).

🔴 ROCE has fallen from 126.6% to 10.8% over 3 years (-115.8 pts).

🟢 Total Debt has shrunk at 28.9% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹98 Cr to -₹25 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹327 Cr

Total Liabilities

₹177 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

-₹1 Cr

Capex

-₹24 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

58.6%

Corporate Actions

Ex-Dividend Date

22 Sept 2011

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

1 mixed5 general

Rathi Steel & Power Completes Hot Charging Trial for MS TMT Rebars to Boost Efficiency and Cut Costs

scanx.trade, 17 Oct

Rathi Steel & Power Ltd. Lower Circuit Today: Price, Data and Peers

Univest, 01 Oct

900% rally in five years! Multibagger stock to be in focus on Monday. Details here

Livemint, 19 Apr

Rathi Steel & Power: मुनाफे की नई रफ्तार, Q2 में रेवेन्यू **₹200 करोड़** के पार

Whalesbook, 07 OctResults

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

Rathi Steel & Power Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Rathi Steel: Forging Strength, Delivering Value Revenue of Rs 716.49 Cr, Up 41.76% YoY

ThePrint, 01 Jun

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongValuation

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 1 high-severity red flag sits above this conclusion and should be read first.

2 of 5 tripwires tripped — Free cash flow remains positive; Interest cover stays above 3x · see Key things to watch ↑