Ratnamani Metals & Tubes Q2 FY27 Earnings Call: Order Book Jumps 30% QoQ, 50% US Tariff Weighs on Margins

Ratnamani Metals & Tubes Ltd held its Q2 FY27 earnings call on November 06, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Double-digit growth, but margins carry freight and tariff drag

• Consolidated revenue of Rs.1,348 Cr, +13% YoY — vs Rs.1,192 Cr in Q2 FY 2025-2026; EBITDA Rs.220 Cr at 16.3%, PBT Rs.174 Cr, PAT Rs.133 Cr.
• Standalone revenue of Rs.1,104 Cr, +18% YoY — EBITDA Rs.139 Cr at 12.6%, PBT Rs.106 Cr, PAT Rs.80 Cr; the standalone business remains debt-free.
• Freight and forwarding expenses rose significantly — driven by geopolitical uncertainties and global logistics, while gross margin and the overall cost structure remained largely stable.
• Q2 gross margin flattered by export mix — CFO Vimal Katta said major growth came from exports delivered on a DDB basis with freight embedded in pricing (gross-up effect); he indicated 35% gross margin can be taken as a norm over a longer period (period unspecified).
• Subsidiary performance was mixed — Ravi Technoforge revenue Rs.99 Cr (vs Rs.96 Cr in Q2 FY 2025-2026), EBITDA Rs.12 Cr at 11.8%; Ratnamani Finos Pooling Solutions revenue Rs.157 Cr (vs Rs.110 Cr), EBITDA Rs.86 Cr at 54.7%, PAT Rs.65 Cr.

Order book rebuilding after 9-12 months of weak demand

• Standalone order book above Rs.2,600 Cr, ~30% higher QoQ — vs Q1 FY 2026-2027; stainless steel close to Rs.1,000 Cr and carbon steel close to Rs.1,700 Cr, versus a historical order book of Rs.2,000-2,200 Cr.
• Carbon steel bidding pipeline near Rs.5,000+ Cr — spanning a few large ongoing oil & gas projects in India and early-stage Middle East opportunities; CEO Manoj Sanghvi noted the Middle East has only just started showing "fillers" (not major orders yet).
• US tariff inflates order book value — the US tariff is now 50% (up from 25% earlier), and the incremental 25% is built into the order book as of Q2 FY 2026-2027; the US accounts for roughly 20% of the order book (CEO's offhand estimate, CFO concurred).
• Stainless steel flow is fragmented — small-ticket orders of roughly Rs.5-10 Cr each across exports, data centers and other industries; CFO said it is difficult to pinpoint individual project sizes in the Rs.100-200 Cr range.
• Vino JV order book at Rs.3,000-odd Cr — with a few projects under bidding; management expects to book an additional Rs.40-50 Cr by end of FY 2026-2027.
• Demand drivers cited by management — stainless steel demand has picked up on thermal power projects; globally, US LNG plants and US data centers; within India, thermal power plants, oil & gas, chemical, fertilizer and heat exchanger segments.

50% US tariff inflates revenue and other expenses alike

• Consolidated other expenses materially higher QoQ — CEO Manoj Sanghvi attributed this to US export orders executed on a DDP basis, bundling the 50% US tariff, ocean freight, local transportation and customs clearance into both revenue and other expenses.
• Elevated other expenses to persist for 6-12 months — i.e., into FY 2027-2028, as the US is currently the highest-demand market; management illustrated an FOB value of 100 selling at 160, with 60 booked as other expense.
• Per-ton profitability on US supplies is similar, not better — per CEO Manoj Sanghvi, US export supplies priced inclusive of freight and duties earn returns similar to the historical average; domestic sales would still carry better margins if domestic demand existed, since 50-60% of domestic revenue represents built-up cost.
• Domestic demand for these products "was not there or is not there" — as of Q2 FY 2026-2027, while US demand has picked up sharply.
• No pass-through on existing order book — every order is fixed-price with no escalation clause for fuel, freight, oil or gas; cost increases on the existing book must be absorbed, while future orders are being priced to build in higher costs; detention/damage claims are under discussion with customers, with acceptance uncertain.

Approvals, Safran frame agreement and new capacity commissioned

• Five-year global frame agreement with Safran — sits with Ratnamani Metals & Tubes (not RFSS) for supply of tubes at an indicated value, expected to ramp gradually (illustratively, year 2 at ~1.2-1.3x of year 1); no specific-quantum order was disclosed.
• Specialized product approvals in Q2 FY 2026-2027 — approval to supply stainless steel seamless U-tubes for carbamate condensers (fertilizer sector) from a leading global technology licensor; orders for HP heater cold finish tubes and Harpin heat exchanger seamless tubes for nuclear projects; development order for steam generator tubes from Nuclear Power Corporation; critical seamless tube supplied in 138x1 size.
• Capacity commissioned in Q2 FY 2026-2027 — Spiral Mill 3 for pipes up to 18 meters with 100,000 tons annual capacity, and an external coating plant at Orissa with 25 lakh sq. m. annual capacity; standalone credit rating upgraded to CRISIL AA+.
• RFSS realizations are mix-dependent — at full potential of the 4,000 tons expanded capacity (period unspecified), revenue could reach Rs.1,200-1,500 Cr depending on material mix; CFO suggested modeling realizations at roughly Rs.2,500-4,500 per kg (period unspecified).
• RFSS margin normalization flagged — on the ~50% EBITDA margins earned in Q2 FY 2026-2027, CFO Vimal Katta guided that sustainable long-term EBITDA margins should be 25-30% (period unspecified), fluctuating with material dispatched.
• Ratnamani Finos export order of ~Rs.2,700 Cr — took its order book to over Rs.3,000 Cr; part of its expansion project commissioned, with induction beds production expected to commence in Q3 FY 2026-2027; credit rating upgraded to CRISIL AA.

Inventory and receivables build-up framed as structural

• Inventory and receivables combined run at roughly 5-6 months — a structural feature of the business that CFO Vimal Katta said will continue across reporting periods, as inventories rise first with the order book and then convert into receivables.
• Operating cash flow was negative in H1 FY 2026-2027 — responding to Salil Desai (Marcellus Investment Managers), the CFO attributed the spike in inventory and receivables to the working-capital-intensive nature of the business.
• Geopolitical issues forced export shipment deferrals in H1 FY 2026-2027 — finished goods were ready but could not be dispatched, causing inventory to accumulate for a longer duration.
• Receivables tied to INCO terms — payments do not begin until the transaction is completed per applicable INCO terms; the major Middle East export is to Abu Dhabi, with shipments happening to Saudi ports, which is taking time.

FY27 guidance reaffirmed; water weak, FY28 the hoped-for inflection

• FY 2026-2027 guidance reaffirmed — standalone revenue of Rs.4,000-4,200 Cr and consolidated of Rs.5,000-5,200 Cr, unchanged from the previous call; the analyst noted this implies a significant H2 FY27 ramp-up versus H1 even as EBITDA margins remain depressed.
• EBITDA margin expected upwards of 15% in FY 2027-2028 — once costs normalize and utilization increases; the CFO reiterated a longer-term EBITDA margin range of 15-16% to 18% (±1%) (period unspecified); Q3 FY 2026-2027 margins expected around the same level, with a little improvement possible on better utilization.
• Water demand remains weak — "still the same" as 3-4 quarters ago; CEO Manoj Sanghvi declined to time a recovery into H1 FY28 (FY 2027-2028), citing unstable oil prices and tightening availability of funds for water projects; CFO Vimal Katta said the majority of state government finances are under pressure from welfare schemes (e.g., "Ladli Behna" and similar schemes), which are "a drain on the resources of the respective state governments."
• Middle East hydrocarbon orders expected mid-to-end FY 2027-2028 — not at the start of the year; on desalination, the CEO indicated piping within plants would be stainless steel and titanium, with carbon steel piping in the downstream water distribution network.
• Thermal stainless steel pipe demand seen strong over 2-3 years — through ~FY 2029-2030, driven by thermal power plant announcements by the government as well as private players; competition intensity is higher as players manufacturing through other process routes also bid.
• FY 2027-2028 "seems to be quite promising" — if the year begins with the current order book; FY 2026-2027 still faces challenges, with management monitoring the geopolitical situation for the remainder of the year; management remains focused on operational efficiency, cost management and profitable growth, with capacity expansion and a growing presence in specialized applications (no specific timeframe or numeric target attached).