01 — At a Glance
Steel With Side Investments: The Ultimate FOMO Play
- 52-Week High / Low₹322 / ₹196
- 9M FY26 Revenue₹2,952 Cr
- 9M FY26 PAT₹156 Cr
- Full-Year FY25 EPS₹8.99
- Q3 FY26 EPS₹3.33
- Book Value₹474
- Price to Book0.45x
- Dividend Yield0.35%
- Debt / Equity0.07x
- Lloyds Investment Value₹7,724 Cr
The Sunflag Paradox: You’re buying a ₹3,993 crore steel company. But the stock’s real value? Hidden inside ₹7,724 crore worth of Lloyds Metals investments on the balance sheet. The math works like this: Steel company valued at ₹3,993 Cr. Lloyds stake worth ₹7,724 Cr. Translation: the market is paying negative ₹3,731 Cr to own the actual steel business. Either Lloyds is going to the moon, or we’re all sleeping on the century-old family business that actually makes the steel.
02 — Introduction
A Brief Lesson in How Not to Trade Your Own Success
Sunflag Iron & Steel. Incorporated in 1984. Started operations in 1989. Since then, they’ve quietly turned into one of India’s most important specialty steel suppliers — and nobody’s talking about it. The company manufactures alloy steels, carbon steels, bearing steels, valve steels, and spring steels. Think of them as the unsung hero who makes the gears that turn your Maruti transmission. Banal? Absolutely. Profitable? Also absolutely.
The problem is that Sunflag’s story is not one story — it’s two. Story One: A respectable, 35-year-old, family-run steel manufacturer with preferred vendor status from Maruti, TVS, Bajaj, Ford, and Toyota. Story Two: The company owns 11.02% of Lloyds Metals & Energy, a mining company that’s been on a multi-year bull run, currently valued at ₹70,000+ crore. The stake’s book value is ₹7,724 crore. Market cap of the parent? ₹3,993 crore. You see the problem.
In the past 12 months, the stock returned -6.91%. In three months, it returned -18.1%. Meanwhile, revenue is growing, profit is growing, and the CEO just got replaced in November 2025 (more on that later). The market is a beautiful, irrational thing. Sunflag is the proof.
CEO Musical Chairs (Feb 2026): Brijendra Kumar Tiwari resigned October 31, 2025. Dev Dyuti Sen appointed as new CEO effective November 14, 2025. Translation: the company is reset. Management is not settled. Now’s when things happen — for better or worse.
03 — Business Model: Steel That Actually Works
Making Boring Metal That Powers Everything You Drive
Sunflag is a semi-integrated steel manufacturer. They make sponge iron in-house (using DRI), convert it to pig iron via a mini blast furnace, then roll it into finished products at their 6.68 MTPA facility near Nagpur. The facility is centrally located in Maharashtra — strategically positioned to supply the auto industry across the country. 70% of their revenue comes from the auto sector. The remaining 30% comes from railways, defence, power, and general engineering.
The company supplies flat bars, round bars, bright bars, and wire rods across different grades. OEMs like Maruti, TVS, Bajaj, Ford, and Toyota have approved them as preferred vendors. This is not small-time. This is “your car’s transmission won’t work without our steel” level of critical. The company has been in technical collaboration with Daido Steel Company (Japan) since 2010 — a partnership that helps with localization of steel grades for OEM approval.
Production volumes have been impressive: FY25 rolled products output was 4.49 lakh tonnes (up from 4.10 lakh tonnes in FY24). The company commissioned a blooming mill in FY24, expanding capacity to 6.68 MTPA. They’ve also entered the super-alloy space — manufacturing alloys for aircraft parts, nuclear reactors, and space vehicles. Management says uptake is still slower than expected. Typical. Every new venture launches with “early days” commentary and ends with either hockey-stick growth or abandoned capex.
Auto Sector70%Revenue Mix
Railways/Defence20%Revenue Mix
Other Engineering10%Revenue Mix
Capacity6.68 MTPAInstalled
Raw Material Watch: Coal, iron ore, and ferro-alloys make up 70-80% of SISCL’s costs. The company sources coal from its captive mine in Belgaum and has a composite license for the Surjagad Iron Ore Block (awarded December 2023). About 50% of raw material is sourced domestically — the rest is imported, exposing them to forex volatility. This is not new. It’s life in steeltown.
💬 Have you ever wondered what steel grade your car transmission is made from? Spoiler alert: it’s probably Sunflag.
04 — Financials Overview
Q3 FY26: The Revenue High. The Profit Jump. The Stock Crash.
Result type: Quarterly Results (Q3 = 9M FY26) | Q3 FY26 EPS: ₹3.33 | Annualised EPS (Q3×4): ₹13.32 | Full-year FY25 EPS: ₹8.99
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 942 | 892 | 973 | +5.66% | -3.19% |
| Operating Profit | 132 | 110 | 101 | +20% | +30.7% |
| OPM % | 14% | 12% | 10% | +200 bps | +400 bps |
| PAT | 60 | 50 | 46 | +32.8% | +30.4% |
| EPS (₹) | 3.33 | 2.78 | 2.53 | +19.8% | +31.6% |
Annualised vs Full-Year Context: Q3 FY26 EPS of ₹3.33 × 4 = ₹13.32 annualised. But full-year FY25 EPS was ₹8.99. Why the jump? Q3 FY26 is literally their best quarter of the year — higher margins due to better cost absorption. Nine months revenue is ₹2,952 crore. Extrapolated to full year (assuming Q4 is slightly lower): roughly ₹3,900-4,000 crore. P/E on annualised Q3 EPS would be 16.7x. P/E on FY25 actuals is 24.7x. The stock is expensive on historical earnings but cheap on run-rate earnings. Classic steel cycle trap.
05 — Valuation: Fair Value Range
When Your Investment is Worth Negative Because of Another Investment
Method 1: P/E Based (Operational Business)
FY25 full-year EPS = ₹8.99. Sector median P/E (industrial products/capital goods) ≈ 17.6x. Sunflag historically trades at 18.3x. Fair P/E band: 16x–20x on operational earnings.
Range (Operational): ₹144 – ₹180
Method 2: Asset Value (Sum-of-Parts)
Steel business market cap: ₹3,993 Cr. Lloyds investment value: ₹7,724 Cr. Net worth per share (book value): ₹474. Price-to-Book: 0.45x. At fair P/B of 0.6x–0.8x (below peers due to ROCE headwinds):
Per share value = (Book value × Fair P/B): ₹285 – ₹379
Range (Sum-of-Parts): ₹285 – ₹379
Method 3: DCF (Steel Operations)
Base FCF (operational): ₹180 Cr (estimated). Growth: 4–6% for 5 years (tied to auto demand). Terminal growth: 2.5%. WACC: 10%.
→ PV of 5-year FCFs at 10%: ~₹700 Cr
→ Terminal Value (2.5% growth / 7.5% cap rate): ~₹2,700 Cr
→ Total EV (operational): ~₹3,400 Cr (minus net debt)
Range (DCF): ₹165 – ₹215
Fair Min: ₹165
CMP: ₹222
Fair Max: ₹379
CMP ₹222
⚠️ EduInvesting Fair Value Range: ₹165 – ₹379. Current price ₹222 sits in the middle. The wide range reflects the binary nature of this investment: (1) operational steel business is worth ₹165–215, (2) optionality from Lloyds stake adds ₹100–165 upside. This fair value range is for educational purposes only and is not investment advice. Please consult a SEBI-registered investment advisor before making any financial decision.
06 — What’s Cooking: Drama, Management Changes & Solar Dreams
When the CEO Leaves, Everyone Plays Musical Chairs
