1. At a Glance
Gandhi Special Tubes Ltd (GSTL) is the corporate equivalent of that disciplined kid in school who always scored 90+, never borrowed anyone’s pen, and somehow still made money selling lunchbox snacks. Incorporated in 1959, this family-backed steel tubes manufacturer not only makes seamless and welded steel tubes but also squeezes 40% operating margins like it’s no big deal. Oh, and they also generate wind power — because apparently making obscene margins on steel tubes wasn’t enough.
2. Introduction
Picture this: 1960s India, where importing specialized steel tubes was as easy as getting a visa to Mars. Enter GSTL, born from a tie-up with Germany’s Benteler, here to “Make in India” before it was cool.
Fast forward to 2025 — the company sits debt-free, flush with reserves, and hands out dividends with a 30% payout ratio. While the steel sector is known for cutthroat pricing, cyclicality, and occasionally bankruptcies, GSTL operates in a niche — small diameter seamless & welded tubes and coupling nuts — where competition is limited, margins are fat, and customers keep coming back for more.
If steel-making is a high-voltage rock concert, GSTL is the acoustic guitarist — low volume, high quality, steady fan following.
3. Business Model (WTF Do They Even Do?)
GSTL manufactures:
- Seamless Steel Tubes – cold drawn, precision tubes for auto, hydraulics, and industrial use.
- Welded Tubes – small diameter, welded products for various industrial applications.
- Coupling Nuts – used in hydraulic and automotive sectors.
- Wind Power – yes, they also run windmills, contributing small but stable
- green energy revenue.
Their moat? Decades of process expertise, German-origin tech, precision quality standards, and a niche customer base that values reliability over discounts.
While most steel companies ride the commodity rollercoaster, GSTL’s niche + process quality means it doesn’t bleed profits in bad cycles.
4. Financials Overview
Latest Quarter (Q1 FY26):
- Revenue: ₹48 Cr
- Operating Profit: ₹21 Cr
- OPM: 43% (yes, nearly half of sales is profit before other income)
- Net Profit: ₹22 Cr
- EPS: ₹17.78
Fresh P/E Calculation:
Annualized EPS = ₹17.78 × 4 = ₹71.12
At CMP ₹692 → P/E = 9.73 (much cheaper than the displayed 12.8, because trailing profits just got juicier).
TTM (FY25 + Q1 FY26 trends):
- Revenue: ₹180 Cr
- Net Profit: ₹66 Cr
- ROE: 21%
- ROCE: 27.5%
- Dividend Yield: 2.17%
Commentary: This is a rare small-cap manufacturing company with 40%+ OPM, zero debt, and consistent dividend payouts. If Buffett liked microcaps, this would be his type — but sadly, GSTL doesn’t make Coca-Cola.
5. Valuation (Fair Value Range)
| Method | Basis | Multiple / Assumption | Value (₹ Cr) | Per Share (₹) |
|---|---|---|---|---|
| P/E | EPS ₹71.12 × 10-12 | 10x – 12x | 1,142 – 1,370 | 937 – 1,123 |
| EV/EBITDA | EBITDA ₹85 Cr × 7-8 | 7x – 8x | 595 – 680 | 975 – 1,115 |
| DCF | 10% growth, 12% discount, 10 yrs | Conservative | ~₹1,050 Cr | ~₹1,030 |
