Extensive experience of the promoters
SSTL is promoted by the Goyal family based in Raipur, Chhattisgarh, who have over three decades of experience in the said line of industry. The company operates a single-location integrated plant situated in Chhattisgarh, a mineral-rich state that provides access to quality coal and iron ore. Acuité believes that the long track record of operations and the vast experience of the promoters will continue to support the growth plans of the company, going forward.

Integrated nature of business operations
The company operates a fully integrated manufacturing setup with both forward and backward linkages. The backward integration includes in-house production of sponge iron and billets, which serve as key raw materials for downstream processes. Further, forward integration is reflected in the production of finished goods such as HR coils and sheets, CR coils, ERW and GI pipes, GP pipes, and stainless-steel products. This structure enables the company to manage its supply chain internally across multiple stages of steel processing, from raw material conversion to final product delivery.

Growing scale of operations supported by capacity expansion & product diversification
The revenue of the company grew by ~18% to Rs. 1511.97 Cr. in FY2025 from Rs. 1286.45 Cr. in FY2024 owing to improved sales volume and commissioning of new products such as stainless steel and GP Pipes. Further in Q1 FY2026, the company reported revenue of Rs.558.63 Cr. However, the operating profit margin declined to 10.33% in FY2025 from 12.53% in FY2024, attributed to lower price realisations across segments and an increase in employee and power costs. Going forward, the growth in scale of operations is reflected through the expansion in production capacity, a fully integrated operational framework, and the addition of value-added steel products, which have better realisations.

Healthy financial risk profile
While tangible networth stood improved at Rs. 496.03 Cr. on March 31, 2025, from Rs. 438.23 Cr. on March 31, 2024, due to accretion of profit, the increase in capex induced debt led to moderation in the Debt-EBITDA from 2.14 times in FY2024 to 3.32 times in FY2025. The gearing also stood moderated at 1.08 times in FY2025 from 0.80 times in FY2024. The TOL/TNW levels stood at 1.89 times in FY2025 from 1.15 times in FY2024. However, during FY26, following the IPO, the net worth of the company has improved by Rs 412.46 Cr. (net off issue expenses). Further, with pre-payment of term loan from the IPO proceeds; the company is now expected to have minimal exposure to long term debt with below-unity gearing and comfortable debt protection metrics.
Going forward, any significant debt funded capex affecting the overall financial risk profile will remain a key monitorable.

Moderately intensive working capital management
The working capital management of the company is moderate in nature marked by gross current assets (GCA) of 123 days as of March 31, 2025 (79 days as of March 31, 2024). The GCA days are mainly driven by high inventory days which stood at 68 days as on March 31, 2025 (48 days as on March 31, 2024) for the procurement of bulk raw materials in order to mitigate fluctuation in raw material prices. However, the debtor days stood comfortable at 36 days in FY2025 (27 days in FY2024).
Acuité believes that the working capital operations of the company will remain at similar levels given the nature of the industry over the medium term.

Intense competition and inherent cyclical nature of the steel industry
The downstream steel industry remains heavily fragmented and unorganised. Therefore, the company is exposed to intense competitive pressures from large number of organised and unorganised players along with its exposure to inherent cyclical nature of the steel industry. Additionally, prices of raw materials and products are highly volatile in nature causing an adverse impact on the profitability of the company.