SG Mart Q2 FY27 Earnings Call: H1 Earnings Up 100% YoY, Targets 25+ Service Centers by 2030 (SGMART)

SG Mart Ltd held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Third Consecutive Quarter of Sustainable EBITDA Performance

• Q2 FY 2026-2027 EBITDA at Rs.72 crores — management characterised this as the third consecutive quarter of sustainable performance, with the trajectory holding from Q4 FY 2025-2026 through Q1 FY 2026-2027 into Q2 FY 2026-2027.
• H1 FY 2026-2027 earnings up 100% YoY — versus H1 FY 2025-2026, reflecting the shift from pure trading to a trading + manufacturing model spanning HR coil/coated product processing, profiles, and accessories.
• Processing volumes at 206,000 tons in Q2 FY 2026-2027 — up 16% QoQ vs Q1 FY 2026-2027; each service center takes 6-9 months to fully ramp up.
• Profiles volumes ~40,000 tons in Q2 FY 2026-2027 — up 20% QoQ, a 160,000 tons annualised run-rate against 500,000 tons installed capacity, leaving a wide ramp-up runway.
• Blended EBITDA margin at 4-5% in H1 FY 2026-2027 — management clarified the 6-7% target applies to the whole company on a blended basis, not only the profiles business.
• No inventory gains in Q2 margins — inventory stood at just 14 days on the 30 September balance sheet; the operating model targets 15-20x inventory churn per year, an approach management said it learned from sister company Apollo Steel Tubes.

8 Operational, 25+ Targeted by 2030 Across Non-Metro Clusters

• 8 service centers fully operational as of Q2 FY 2026-2027 — including Ghaziabad, Jaipur, Ahmedabad, Pune, Bangalore, Raipur; Indore was added during Q2, while Jaipur and Ahmedabad commenced ~2 months prior.
• 25+ service centers targeted by 2030 — management plans to add 5-6 annually, believes it may achieve this early, and may raise the count to 30-35 (period unspecified); network design goal is a service center within ~200 km across the country.
• Land acquisition in process at seven locations — Jammu, Punjab, Rajkot, Coimbatore, Chennai, Vishakhapatnam and Bhubaneswar; game plan is 8-10 acre parcels housing processing, profile manufacturing and finished-goods warehousing.
• Next leg of 2-3 service centers expected operational by April-May 2027 (Q1 FY 2027-2028) — with additions every 6 months thereafter; recently commissioned centers (Jaipur, Ahmedabad, Indore) to show significant growth in Q3 and Q4 FY 2026-2027.
• Per-center capex of Rs.70-80 crore — ~Rs.50 crore land for a 10-acre parcel, Rs.5 crore plant & machinery, Rs.10 crore industrial shed; each center can generate monthly revenue of ~Rs.70-80 crore at 3-4% EBITDA margin, yielding 25%+ RoCE on an 18-day working capital cycle (period unspecified).
• Return-on-capital profiles consistent across locations — land-cost differences are offset by volume differences (illustratively, land at Rs.100 in Ghaziabad vs Rs.50 in Jammu, with much higher volumes in Ghaziabad).
• Pure service center sales up 30% YoY in Q2 FY 2026-2027 — apparent YoY decline in reported volumes reflects complete discontinuation of B2B metal trading; management will share separated data on analyst request.

Raipur Coated-Steel Plant and Margin Bridge to 6-7%

• Raipur coated-steel plant expected to start in 9-12 months (~Q2-Q3 FY 2027-2028) — management said it will inch up EBITDA margin by 2-3% and add to top and bottom line straight away via backward manufacturing margins; a separate segment reference cited a 12-15 month timeline (i.e., FY 2027-2028).
• Sustainable EBITDA margin of 6-7% expected going forward (period unspecified) — vs 4-5% currently in Q2 FY 2026-2027; blended margins can inch up by 200 bps (period unspecified).
• EBITDA per ton actuals in Q2 FY 2026-2027 — service centers ~Rs.2,000/ton (stable QoQ); steel profiles via distribution Rs.4,000-5,000/ton; solar structures Rs.3,000-4,000/ton (stable QoQ).
• CRCA sheets sell at a premium of ~Rs.2,000-3,000 per ton over HR coil (period unspecified); management believes each service center can generate 1,000-2,000 tons per month of CRCA (period unspecified).
• Welding rods currently outsourced — SG Mart buys from third-party factories; management will take a call on its own manufacturing line within the next 6 months (i.e., by ~Q1 FY 2027-2028), citing "pretty encouraging" initial response.
• Contract manufacturing under evaluation — nothing concrete on the table yet; management expects something concrete by the next earnings call (Q3 FY 2026-2027).
• Two products serve the PEB industry — steel plates processed at service centers and sold directly to PEB vendors, and purlins for roofing structures in industrial sheds and warehouses; management stated India's top 100 PV companies buy from its service centers.

Order Book Rebuilt After Steel-Price-Driven Pause

• Solar order book of more than 50,000 tons currently (FY 2026-2027) — against a quarterly run-rate of 11,000 tons (~50,000 tons annualised per management), giving ~1 year of order book visibility into FY 2027-2028.
• Large volume of new orders booked in October 2026 (Q3 FY 2026-2027) — order booking had been held off amid rising steel prices; with prices now showing stability and land-acquisition delays from independent power producers (IPPs) resolved, bookings resumed.
• No contracted-vs-pipeline split provided — against the analyst-referenced guidance of 130-150k tons (period unspecified).
• Planned 25-center network implies ~3.5 million tons of capacity (period unspecified) — average per-center throughput of 12,000-13,000 tons/month: 8,000 tons HR coil, 1,000-2,000 tons CRCA sheets, 2,000-3,000 tons pre-galvanized sheets.
• SG Mart processes ~1-1.5 million tons of steel annually (FY 2026-2027 run-rate) — placing it among India's top 5-7 steel consumers; management expects mill benefits/discounts to improve as volumes scale to 3-4 million tons over the next 3-4 years (through ~FY 2030-2031).

Rs.1,500 Crore Capex Funded Internally; Online Channel in Build-Out

• Rs.250 crores deployed in H1 FY 2026-2027 — across service-center land, plant & equipment and the Raipur plant; another Rs.250-300 crores planned for the rest of FY 2026-2027; residual Rs.1,500 crores over the next 2-3 years (through ~FY 2029-2030), funded from internal cash flows and cash on books.
• Cash on books ~Rs.700 crores — slightly below the Q1 FY 2026-2027 level; working capital days stable at 18 in H1 FY 2026-2027, with operating cash flow exceeding EBITDA.
• Online sales platform expected ready within 6 months (~Q1 FY 2027-2028) — team building and tech-stack investment already underway; SG Mart has started tracking which products are bought by which customer types to build a simple tech stack facilitating most sales online.
• Platform housed in a subsidiary with its own future P&L — management wants investments there to generate desired ROIs and may later make it a B2B digital platform, but stressed it does not wish to do a lot of cash burn; management explicitly declined to guide on any sales uplift from the platform (period unspecified).
• Distribution network at ~1,200 dealers/distributors — extended from tubes into rebars and other downstream steel products; accessories line has 5 products launched with 2-3 more in the pipeline (period unspecified).

FY27 Guidance Reaffirmed; Macro Headwinds Acknowledged

• Rs.131 crore of the Rs.300 crore FY27 EBITDA guidance achieved in H1 FY27 — Rs.170 crore needed in H2 FY27, a ~Rs.80 crore quarterly run rate; management added "we should be able to achieve this, I don't see any problem."
• Management maintains the business model is capable of delivering 50%+ earnings CAGR over the next 3-4 years (through ~FY 2029-2030/FY 2030-2031) — contingent on ramp-up of the manufacturing and trading platforms.
• ROCE target of ~25% in the coming years (period unspecified) — potentially exceeding 30% once capacities are fully utilized; the integrated raw-material-to-finished-product model is expected to protect a 25-30% superior ROCE profile.
• Macro headwinds cited by management — steel prices up 25-30% over the last 6-7 months since the Middle East crisis began, impacting end demand (construction, automobile, white-goods customers); ocean freight up sharply; weak sentiment from elevated crude and commodity prices. Management does not expect these to derail growth in coming quarters.
• Analyst CA Garvit Goyal flagged rising interest rates (citing a recent RBI rate hike) as a potential drag on relative growth rates, possibly in FY28; management responded that SG Mart's young business model — combining trading with backward manufacturing, stabilized ~1.5-2 years ago — limits its macro sensitivity.
• Dubai service center volumes stagnant QoQ in Q2 FY 2026-2027 — margins slightly better due to steel scarcity; recovery awaited on ports reopening and resumption of steel inflow; a UAE/Gulf expansion call will be taken only once the crisis is over (period unspecified).
• Five-year business plans target a 3-4x capacity increase per product line over the next 5 years (through ~FY 2031-2032) — mainly non-metro rollout: 7-8 large centers in metro cities (Ghaziabad, Bangalore, Pune, Ahmedabad, Hyderabad, Kolkata) and the balance in tier-2/3 clusters (Coimbatore, Indore, Kanpur, Patna, Jammu, Mandi, Punjab).