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Usha Martin Ltd

| Q3 & 9M FY26 Earnings Conference Call Transcript

BULLISH SENTIMENT

Report Source

⬤4th Feb 26

Summary : Usha Martin reported strong Q3 FY26 results with robust revenue and EBITDA growth, driven by value-added products and improved cash flow, positioning for future expansion despite some segment challenges.

Management Perspective positive : Management expressed congratulations for strong results, healthy cash flow, and a net cash position. They highlighted confidence in future growth, strategic initiatives, and maintaining margins.

Concall Report Analysis & Insights

Business Overview

  1. Consolidated revenues grew 6.6% year-on-year to INR917 crore in Q3 FY26.
  2. Wire segment revenues increased by 20.2% year-on-year, showing strong momentum.
  3. Operating EBITDA rose 23.3% year-on-year to INR176 crore, with margins at 19.2%.
  4. Net profit for Q3 FY26 increased to INR107 crore, despite a one-time INR13 crore Wage Code cost.
  5. The company achieved a net cash position of INR198 crore and a ROCE of 20%.

Future Growth Prospects

  1. Focus on value-accretive products like elevator, crane, and oil/offshore ropes.
  2. Scaling the Ocean Fiber synthetic sling business, which is already cash positive.
  3. Expanding customer base across geographies, notably adding 60 new customers in Saudi Arabia.
  4. Targeted capex of INR250-300 crore annually for brownfield and debottlenecking projects.
  5. Expect early double-digit revenue growth in the next financial year.

Management Insights

  1. Strong Q3 FY26 results reflect strategic choices, product mix, and demand trends.
  2. Improved operating leverage and cost discipline under the One Usha Martin framework.
  3. Generated strong cash flows, improved working capital, and strengthened the balance sheet.
  4. Confident in business positioning for next phase of growth despite global uncertainties.
  5. Committed to creating value for stakeholders sustainably.

Signs of Skepticism

  1. Wire Rope volume growth was only marginally up year-on-year.
  2. LRPC segment experienced a 13% decline, indicating market challenges.
  3. Parvatmala Project wire rope supply is 2-3 years away, not immediate.
  4. Thailand operations require 4-6 quarters for full cost optimization implementation.

Risk Factors

  1. Global operating environment continues to present uncertainties.
  2. LRPC segment experienced a 13% decline due to its commodity market nature.
  3. Wire Rope products may be impacted by CBAM in the 2028 cycle.
  4. Long customer qualification cycles for specialized products can delay volume ramp-up.

Good To Know

  1. Operating cash flow before tax was INR561 crore, converting 114% of operating EBITDA.
  2. Net working capital reduced by INR97 crore from December '24 peak.
  3. Gross debt decreased from INR338 crore (March 2025) to INR172 crore (December 2025).
  4. Ranchi plant capacity utilization is 75% for rope and 78% for wire after additions.

Key Drivers

  1. Strong order book for specialized products.
  2. New customer additions across markets.
  3. Ramp-up of synthetic sling business.
  4. Targeted capex for capacity expansion.

Key Analyst Discussions

Competitive Environment

  1. Strategic choice to focus on higher-contribution value-added products over low-value GP Ropes.
  2. CBAM not a significant competitive disadvantage as it applies to all.

Market Trends & Consumer Behavior

  1. Expect gradual volume ramp-up from Q4 FY26, improving in FY27.
  2. Saudi Arabian business is slowly ramping up with 60 new customers.
  3. Thailand operations are undergoing modernization and cost optimization for better numbers.
  4. Parvatmala Project wire rope procurement is in initial stages, supply 2-3 years away.

Financial Highlights

  1. Q3 Wire Ropes volume growth: India ~5%, Europe flat, US 5-8%.
  2. Ranchi capex added 19,000 tons rope and 21,000 tons wire capacity.
  3. Future capex expected at INR250-300 crore annually, including INR50 crore maintenance.
  4. EBITDA margins are targeted to remain between 19% to 20%.

Product Composition

  1. Synthetic sling business (Ocean Fiber) is growing and cash positive in its first year.
  2. Plasticated LRPC approvals expected in 2-3 months, with ramp-up in Q1-Q2 FY27.
  3. Wire Ropes will constitute 75-76% of top line, Wires will grow, LRPC will be lower.
  4. 70% of Wire Ropes turnover comes from value-added products.

Strategic Considerations

  1. Next phase of growth driven by diversified geographies and value-added products.
  2. Strategic roadmap includes reinvesting internal accruals and targeted capex.
  3. Exploring inorganic and organic opportunities to build markets in Europe.
  4. CBAM impacts small wire volumes now; Wire Ropes likely included in 2028 cycle.