1. At a Glance
Pradeep Metals Ltd (BSE: 513532) has just reported a hot-off-the-forge Q2FY26 with₹85.7 crore in revenue (+15.5% YoY)and₹7.39 crore in PAT (+14.2% YoY). The company, known for its forged and machined components, has clearly been hammering out profits with precision. With a market cap of ₹419 crore and stock price of ₹242, this smallcap metal maestro trades at a modestP/E of 15.7x, giving it the rare title of “value stock with a brain and a bicep.”
ROE and ROCE both flex strong at20.5%, meaning management is squeezing every rupee harder than a machinist tightening a bolt. Debt? ₹67 crore only, manageable at a D/E ratio of 0.46. OPM? 14.8% — enough to show it knows how to price its metal, not melt its margins.
From patents on microwave furnaces to a 2.25 MW solar plant, this company is blending old-school metallurgy with next-gen green tech. Who said “forging” was outdated?
2. Introduction – The Engineer’s Love Story with Steel
Welcome toPradeep Metals Ltd, the 40-year-old machine whisperer from Navi Mumbai that turns lumps of alloy into profits (and flanges). Established in 1982, the company has built a global business inclosed-die forgings— which basically means taking hot metal and beating it into submission, but with ISO certifications.
In an industry dominated by giants like Bharat Forge and Schaeffler, Pradeep Metals plays the precision game — smaller volumes, custom jobs, and higher value-add machining. Think of it as the “tailor-made metal boutique” while others run “metal supermarkets.”
The beauty of the business? It’s international. Warehouses inHouston, Singapore, Munich, London, and Swedenkeep the company closer to customers and further from customs headaches. Over52% of revenue comes from exports, catering to high-spec industries likeoil & gas, process equipment, and automotive.
But don’t mistake it for a sleepy exporter — this company ownstwo global patents, including one for aMicrowave Composite Heating Furnaceco-developed with Japan’s Chubu University. Because if you’re not heating your steel with microwaves, are you even innovating?
3. Business Model – WTF Do They Even Do?
Here’s the layman’s guide:Pradeep Metals takes raw steel → heats it to a few thousand degrees → smashes it into complex shapes → machines it → polishes it → exports it to people who’ll pay in dollars.
They makeclosed-die stainless, alloy, and carbon steel forgingsused invalves, flanges, gears, manifolds, andgeneral engineering parts. Essentially, if it’s round, shiny, and sits inside heavy machinery, there’s a 50% chance it’s from PML.
The product mix as of FY23:
- Valves – 32%
- Flanges – 31%
- General Engineering & Instrumentation – 37%
Revenue segmentation:
- Closed-die forging & processing – 99%
- Power generation (solar) – 1%
And here’s the kicker:exports form 52%of revenue. Their U.S. subsidiary,PML Inc., identifies clients and facilitates exports. The step-down unit,Dimensional Machine Works (Houston), handles precision machining.
Basically, India supplies the muscle, the U.S. adds finishing finesse, and Europe pays in Euros.
The company’s model is asset-light but capability-heavy — and now with a solar plant, they’re running part of their factory on sunlight. Clean energy for dirty work — poetic,
right?
4. Financials Overview – Forging Profits with Precision
| Metric (₹ Cr) | Q2FY26 (Latest) | Q2FY25 (YoY) | Q1FY26 (QoQ) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 85.66 | 74.18 | 77.53 | 15.5% | 10.5% |
| EBITDA | 14.42 | 11.85 | 10.25 | 21.7% | 40.7% |
| PAT | 7.39 | 6.47 | 5.57 | 14.2% | 32.6% |
| EPS (₹)** | 4.28 | 3.75 | 3.23 | 14.1% | 32.5% |
Annualized EPS:₹17.1 → P/E ≈ 14.1xVerdict:At these numbers, valuation looks cheaper than scrap metal in a recession.
Margins are holding firm despite raw material cost pressures, and PAT growth outpacing revenue means the business isn’t just growing — it’s optimizing.
5. Valuation Discussion – Fair Value Range (Educational Purpose Only)
Let’s run three valuation tests, minus the drama:
(a) P/E Method
EPS (TTM): ₹15.4Industry P/E: 32.7Fair Range = ₹15.4 × (18–25) =₹277 – ₹385 per share
(b) EV/EBITDA Method
EV = ₹480 CrEBITDA = ₹49 CrEV/EBITDA = 9.1xFair multiple range (10–12x) → EV = ₹490–₹590 Cr→Fair Equity Value = ₹250 – ₹310 per share
(c) Simplified DCF
Assume FCF ₹30 Cr, growth 8%, discount 11% → Fair Value = ₹270–₹320
✅Educational Fair Value Range: ₹270–₹320 per share(This range is purely for learning; not a recommendation.)
6. What’s Cooking – News, Triggers, and Patents Hotter Than Its Furnaces
If there’s one smallcap that actually innovates, it’s this one. Let’s recap its 2023–25 R&D showreel:
- 🧠Two global patents granted in 2023—
- AMicrowave Composite Heating Furnace, developed with Chubu University (Japan), capable of producing purer pig iron while cuttinggreenhouse gas emissions by 50%.
- AMicrowave-based baking processfor brake pads and clutch linings, cutting cycle time and energy use. Basically, they made the world’s first industrial microwave that can cook steel, not pizza.
- 🌞June 2023:Commissioned a2.25 MW solar power plantfor captive use — because apparently, even the sun now works for them.
- 🔧May 2024:Acquired more shares in its U.S. subsidiary, consolidating control.
- 🧾Mar 2024:Announced anamalgamation with Nami Capital
