MSP Steel & Power Ltd Q2 FY26: Net Loss ₹74.77 Cr, Preferential Warrants ₹98 Cr, and Pledged Promoters – The Full Steel Soap Opera

1. At a Glance

Welcome toMSP Steel & Power Ltd, where the “Power” stands forpower of patienceand “Steel” stands forthe nerves investors need. The stock closed at ₹33.9 on 21st November 2025, down 2.25%, giving the company amarket cap of ₹1,920 crore. In the last six months, the stock rose 25%, but over one year—it’s down nearly 19%. That’s the kind of return that makes you question if you’re investing or donating.

Thelatest quarter (Q2 FY26)turned into a Shakespearean tragedy with anet loss of ₹74.77 crore, largely due to an exceptional item of ₹100.88 crore. The management immediately announced apreferential warrant issue of ₹98 crore, because when in doubt—print shares. Sales stood at ₹677 crore, flat QoQ, while PAT sank faster than a steel anchor in the Ganges. The stock trades at aP/E of 105—because the “E” is so small it almost disappeared.

Promoter holding is35.2%, but hold your breath—81.3% of that is pledged. Basically, if the promoters sneeze, the banks will own the factory. ROE is-3.78%, ROCE6.43%, and debt-to-equity a mild0.31. On paper, the company’s debt is “under control,” but we all know that “control” is relative—like your diet during Diwali.

2. Introduction

Founded in 1968,MSP Steel & Power Ltdis like that old Bollywood actor who refuses to retire—occasionally giving a hit but mostly living off nostalgia. Based in Chhattisgarh, the company produces sponge iron, billets, TMT bars, and generates power from its own integrated plant. It’s been through everything: CDR exits, OCD conversions, preferential allotments, and enough board meetings to make the BSE website crash.

In 2025, the company has been in the headlines not for record profits but forrecord restructuring. The September quarter saw a massive one-off item that dragged it into loss territory. Yet, management’s solution is to raise ₹98 crore via warrants—because who needs profit when you have dilution?

The funny part? Credit agencies seem optimistic. CARE upgraded it toBBB; Stable, probably because it survived another year without defaulting. But the real entertainment lies in its financial journey—a mixture of debt repayment drama, pledge panic, and promoter reshuffles that could make for an entire Netflix mini-series:“Steel, Sweat & Suspense.”

3. Business Model – WTF Do They Even Do?

MSP Steel & Power Ltd makesiron and steel productsand also generatespower—basically, they melt metal and burn money simultaneously. The company produces sponge iron, billets, and premium-gradeTMT barsusing “3-Stage Turbo Quench Technology” (which sounds like something Iron Man would use, but really it’s about cooling steel rods efficiently).

They also producestructural steel—beams, channels, and angles—because India builds a new flyover every time someone sneezes. TheirERW pipesgo into everything from agriculture to construction.

ItsISO 14001:2015-certified integrated plantinRaigarh, Chhattisgarhhandles the entire value chain: pelletization, sponge iron making, steel melting, rolling, and power generation. In FY23, MSP produced:

• Pellets:10.67 lakh MT
• Sponge Iron:3.65 lakh MT
• Billets:3.60 lakh MT
• TMT/Structural Steel:3.27 lakh MT
• Power:50.7 crore kWh

The product mix is classic steel mill economics: about67% revenue from TMT/structural, 22% from pellets, and the rest from other goods. About69% of salesare via intermediaries, proving that middlemen never go extinct in India—just evolve.

4. Financials Overview

Commentary:MSP’s profit graph looks like a seismograph during an earthquake. From ₹18 crore profit in June to ₹75 crore loss in September—an impressive 500% drop. EBITDA halved QoQ, and margins melted faster than a steel ingot in summer.

At a P/E of 105, this is the kind of “valuation premium” only Indian retail optimism can justify. If profits don’t recover, P/E will soon stand forPlease Explain.

5. Valuation Discussion – Fair Value Range Only

Method 1: P/E-Based ApproachIndustry P/E (Iron & Steel peers) ≈ 21. MSP P/E = 105 (distorted due to losses).If normalized earnings (say ₹25 crore annual) are used → EPS ≈ ₹0.44 → Fair value at 20x = ₹9.If cyclical recovery lifts EPS to ₹2 → Fair value = ₹40.👉Range: ₹9 – ₹40 per share

Method 2: EV/EBITDAEV = ₹2,167 crore