Rathi Steel slashes cost savings guidance by 99%, cancels expansion plans
In a concall, management cut expected hot charging savings from ₹3,000-4,000 per ton to ₹1.5-2 per ton and said no expansion beyond maintenance. FY26 revenue up 42% but utilisation at 50-55%.
— 2 earlier stories on Rathi Steel & Power Ltd. →What's new
- Cost savings from hot charging slashed from ₹3,000-4,000 per ton to just ₹1.5-2 per ton.
- Capacity expansion plans reversed; only maintenance capex now.
- FY26 total income ₹716 crore, up 42% YoY; capacity utilisation 50-55%.
Why this matters
The 99%+ cut in the cost-saving estimate severely damages management's credibility on what was a key growth narrative. With expansion shelved and utilisation low, the 20% CAGR target hinges entirely on market conditions, not internal drivers.
What we're watching
- Whether management can explain the basis of the original ₹3,000-4,000 per ton guidance.
- Any improvement in utilisation from the current 50-55% level.
- If negative working capital trends reverse as debt pressures ease.
The full read
Three weeks ago, Rathi Steel told investors that its new hot charging technology would save ₹3,000-4,000 per ton. In Tuesday's concall, that figure dropped to ₹1.5-2 per ton. A near-total wipeout with no explanation. The same call scrapped earlier capacity expansion plans, leaving only maintenance capex. FY26 revenue hit ₹716 crore (up 42% YoY), but capacity utilisation is stuck at 50-55% and working capital remains negative. Management still targets a 20% CAGR over 2-3 years, but the two pillars supporting that narrative, cost savings and expansion, have both collapsed. Hardly a growth story. For a ₹163 crore market-cap stock trading at 12.7x trailing earnings, the concall didn't just revise numbers. It retracted the story.
Questions answered
- Why did the cost savings guidance drop so dramatically?
- Management revised expected savings from hot charging from ₹3,000-4,000 per ton to ₹1.5-2 per ton in just three weeks. The filing provides no explanation for the near-total reduction.
- Is Rathi Steel still debt-free?
- Yes, the company achieved debt-free status in March 2024 after restructuring peak debts of ₹590 crore, and it remains debt-free.
- What is the current capacity utilisation?
- Utilisation is at 50-55%, well below the previous 80% target highlighted in June 2026. Management blamed multi-year debt service stress and negative working capital.
- Are they expanding the melting shop?
- No. Management reversed earlier expansion plans, stating there will be no expansion beyond maintenance capex.
- What is the revenue growth trajectory?
- FY26 total income was ₹716 crore, up 42% YoY. The company set a directional 20% CAGR target for the next 2-3 years, but it is subject to market conditions.
Rathi Steel & Power Ltd.
Latest quarter · Jun 2013
Strength & growth
Story so far
All notes on RATHIST →- 29 Jun 2026 · 1:50 PM IST Rathi Steel slashes cost savings guidance by 99%, cancels expansion plans
- 30d ago Rathi Steel skips the furnace in a hot-charging trial at Ghaziabad
- 33d ago Rathi Steel's melting shop is running at half capacity, not the 80% it promised.