At a Glance
Electrotherm (India) Ltd delivered a Q1 FY26 profit of ₹28 Cr, down a dramatic -74% QoQ, as sales fell -21% YoY to ₹834 Cr. Margins stayed a skinny 6%, but the market still values it at a P/E of 5.6, because, hey, cheap metal dreams sell. Contingent liabilities? A casual ₹1,067 Cr – just the usual elephant in the room. Stock closed at ₹1,056, with investors wondering if this is a steel phoenix or just rust.
Introduction
Electrotherm isn’t just any steel and engineering company; it’s the jack-of-all-industrial-trades – from induction furnaces (where it rules India with 65%+ market share) to special steels and electric vehicles. Yes, the same company that made YO Bykes back in the day (remember those?). While the steel sector parties on global demand, Electrotherm’s financial statements are like a suspense thriller – you never know whether the profit is organic or courtesy of “other income.”
Business Model (WTF Do They Even Do?)
- Engineering & Technologies: Induction melting equipment where it dominates the domestic market.
- Special Steels: Niche alloys catering to construction and automotive.
- Electric Vehicles: A once-hyped but now side-lined segment.
Roast: Electrotherm tries to juggle too many balls, and occasionally drops the EV one.
Financials Overview
- Revenue: ₹834 Cr (vs ₹1,161 Cr Q4 FY25)
- EBITDA: ₹52 Cr (margin 6%)
- PBT: ₹34 Cr
- PAT: ₹28 Cr
- EPS: ₹21.8 (down from ₹145 in Q4 FY25)
Commentary: From record profit last year to barely hanging on this quarter – a true case of “metal fatigue”.
Valuation
- CMP: ₹1,056
- P/E: 5.6x
- Book Value: ₹-125 (yes, negative!)
- ROCE: 31.7%
- Debt: ₹1,287 Cr
Fair Value Range: ₹950 – ₹1,200, assuming no more accounting surprises.
What’s Cooking – News, Triggers, Drama
- Q1 FY26 auditors raised flags on NPA interest non-provision.
- MDs reappointed; share capital reclassified.
- High other income in previous quarters is missing now.
- Regulatory penalties disclosed – not a good sign.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Total Assets | 1,918 |
| Total Liabilities | 1,918 |
| Net Worth | -159 |
| Borrowings | 1,287 |
Remarks: Negative net worth – the balance sheet is literally upside down.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | 107 | 351 | 329 |
| Investing | -2 | -68 | -72 |
| Financing | -103 | -294 | -303 |
Remarks: Good operating cash, but financing outflows keep eating the pie.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | Negative |
| ROCE | 31.7% |
| P/E | 5.6x |
| PAT Margin | 3.3% |
| D/E | 1.8 |
Remarks: ROCE great, but ROE missing in action thanks to negative equity.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 3,074 | 4,272 | 4,115 |
| EBITDA | 134 | 419 | 372 |
| PAT | -12 | 317 | 442 |
Remarks: FY25 was golden, Q1 FY26 feels like the hangover.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| APL Apollo | 20,885 | 801 | 53 |
| Welspun Corp | 14,392 | 1,622 | 15 |
| Jindal Saw | 20,829 | 1,473 | 9 |
| Electrotherm | 3,890 | 241 | 5.6 |
Remarks: Cheapest P/E, but also the most fragile balance sheet.
Miscellaneous – Shareholding, Promoters
- Promoter Holding: 29.9% (low and decreasing)
- FIIs: 4.6%
- DIIs: 1%
- Public: 64.5%
Comment: Low promoter skin in the game – red flag alert.
EduInvesting Verdict™
Past Performance
Electrotherm went from years of losses to FY25 profits, only to start FY26 with a profit collapse. The negative net worth keeps investors jittery.
SWOT Analysis
- Strengths: Market leader in induction melting equipment, strong ROCE.
- Weaknesses: Negative equity, low promoter stake, inconsistent earnings.
- Opportunities: Steel demand surge, new tech adoption.
- Threats: Debt, contingent liabilities, regulatory issues.
Final Word
Electrotherm is a classic “high risk, high thrill” stock. With volatile profits and accounting red flags, it’s not for the faint-hearted. If it sustains margins and reduces debt, upside is big; if not, brace for a meltdown.
Written by EduInvesting Team | 29 July 2025SEO Tags: Electrotherm India, Q1 FY26 Results, Steel Stocks, Special Steel
