SG Mart Limited (SGMART.NS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to SG Mart Limited Q3 FY '26 Earnings Call hosted by Motilal Oswal Financial Services Limited. We are pleased to welcome the management of SG Mart. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anubhav Gupta from SG Mart Limited. Thank you, and over to you, sir.

Thanks to Motilal Oswal for hosting SG Mart for its quarter 3 FY '26 earnings call, and I welcome all the participants who have joined. I'm accompanied by my colleagues, Mr. Suraj Kumar, the CFO; Mr. Amit Thakur, Director; Mr. Archit Arora, Leader, Service Center Business; Ms. Anamika Gulati, Leader - Renewable Business; and Mr. Naman Rastogi, General Manager, Strategy. If you look at the third quarter, the tough environment persisted in third quarter with the decline in steel prices and softness in the demand, though the financial performance is below expectations, but we are not disappointed with our business performance. If you look at our third quarter revenue, the sales volume has increased 9% quarter-on-quarter. So both B2B metal trading and renewable structure businesses are ramping up. We are not scared of INR 17 crore EBITDA, which we reported for the third quarter because the actual business EBITDA was INR 40 crores for the third quarter. Because of the softness in steel prices, there was inventory loss of around INR 20 crores as we carry 20, 25 days of inventory, and there was sharp correction in the steel prices to the tune of INR 2,500 to INR 3,000 per tonne. And plus there are minor INR 2 crores, INR 3 crores of business expenses, which we incurred to build the renewable structure and open profile business. I'll talk about it shortly about it. So it is important to understand that how we are at INR 40 crores of quarterly EBITDA at business level and how we are going to take this to INR 60 crores in quarter 4 and eventually to INR 80 crores, INR 85 crores quarterly run rate in FY '27. So we will give you the clear picture that how we are achieving INR 40 crores in the current quarter, like which went by quarter 3, how we're going to increase it by 50% in quarter 4 and how it's going to further increase to INR 80 crores, INR 85 crores quarterly run rate in FY '27. So there are like 4 businesses on which SG Mart is standing today, 4 pillars. Number one pillar is the service center business, wherein we have 4 operational service centers in India and 1 in Dubai. 5 new service centers will be operational in FY '27. And we have already started identifying 10 more locations for which the land acquisition work has started. So by end of FY '28, early FY '29, we shall have all 20 service centers up and running. So -- and over here, we are offering 3 products services. Number one is stock and sell of HR coil. Number two is cut to length metal sheet. And number third is embossed specialized chequered sheets for various industrial uses. So service center business, if you see quarter 3, we did around 163,000 tonnes in total with 50,000 tonnes of monthly run rate, 50,000, 55,000, which is coming per service center. Now in quarter 3, the EBITDA was slightly lower at around INR 1,500 per tonne. In general, we make INR 2,000 per tonne. But here, the spreads were lower by INR 500 per tonne because the market was on the declining side in terms of raw material prices. So there was some pressure on sales and lack of demand. So we had to offer some discounts to our customer. But in quarter 4, the revenue will be similar because the new service centers will start contributing from Q1, Q2 of FY '27. So quarter 4, the volume will remain same around 160,000 tonnes, but the EBITDA spread will improve to INR 2,000 per tonne, which is the real margin for the business. Then the second business is the B2B metal trading. In B2B metal trading, we did around 125,000 tonnes of volume, in quarter 3. In quarter 4, we expect similar volumes. And of course, the EBITDA spreads will improve here as well. In quarter 3, the EBITDA spread was around INR 500, INR 600 range. Again, because of declining steel prices, there was pressure on sales, lack of demand. So since the steel price correction has got arrested, so the business will make real spreads of INR 900 to INR 1,000 per tonne. So these 2 businesses, the volume will remain flattish in Q4, but EBITDA spreads will improve sequentially, which will improve the overall profitability for these 2 businesses. The third business is the renewable structures. The solar structures, what we are selling to IPPs and OEM customers in India. So in quarter 3, we did around 17,000 tonnes of sales volume. In quarter 4, based on the current order book, we will be doing around 25,000 tonnes for Q3. And EBITDA spread, of course, it was a bit lower in third quarter because the business is ramping up. So now all the costs got incurred already. So the EBITDA spreads will be to the tune of around INR 4,000 per tonne. We have a healthy order book here. And now we are in panel with almost 20, 25 large OEM and IPPs in the country. So this business will continue to grow quarter-on-quarter. The fourth business, which is part of the structures only, wherein like we wanted to start open sections starting from structure for residential rooftop, then cable trays for construction and purlins and racking structures. So we have identified all these products, the capacities are being built up. And we launched one structure for residential rooftop in end of Jan. And the result has been so encouraging because these products are being sold through our group distribution network. So a lot of strength we are getting because it is selling under APL Apollo brand with strong margins as well. So quarter 3, there was no volume from sale of these structures through trade route. But in quarter 3 -- sorry, in quarter 4, we are expecting 10,000 tonne of volume from these products. So Q4 -- and we are making around INR 6,000, INR 7,000 per tonne here because of brand premium. So if you multiply these 4 business segments, the revenue volume, which I explained and multiply it with EBITDA per tonne, we come around INR 60 crores of EBITDA -- business EBITDA in Q4. And now we don't expect any steel price correction. In fact, there has been some price increase only in month of Jan. So let's see how Feb and March pan out. If trend remains upward, there could be some reversal of inventory losses which we incurred in Q3 that will be over and above INR 60 crores of business EBITDA, but we don't want to like -- we do not want to comment on that. But we are very confident that our business EBITDA of INR 40 crores in Q3 will go up to INR 60 crores of business EBITDA in Q4. Now let me explain how we are looking at FY '27. So FY '27, the service centers, 5 operational, and we will get volume from 2, 3 service centers, which will start in H1 of FY '27. So the 5 locations where we are putting up are number one is Punjab, number two is Jaipur, number three is Kolkata, number 4 is Indore and number 5 is Ahmedabad. I mean Jaipur will start firstly, followed by Punjab, Indore, Ahmedabad also, I mean, work is on track. And Calcutta, we shall be starting by end of FY '27. So overall, we may get around 750,000 tonnes of full year volume from service centers. And assuming INR 2,000 per tonne EBITDA, which we are generating, we will get INR 150 crores EBITDA from the service centers. Then we have Dubai Service Center, which is generating around INR 10 crores, INR 12 crores of EBITDA on a monthly basis. We do around -- sorry, we do around 15,000 tonnes of monthly volume with superior spreads versus what we get in India. So we will get around INR 50 crores for the full year. We get INR 10 crores, INR 12 crores per quarter. So this translates to INR 50 crores for the full year from the Dubai Service Center. So the total service center business will give us INR 200 crores of EBITDA. Then the B2B metal trading business, we'll see like assuming the minimum volume depending on how steel supply shapes up, although we are quite positive as more and more steel supply is coming up, but this is something where we are dependent on the steel supply. So we are not giving aggressive guidance here. We are being very, very conservative. So we are taking the same run rate what we are doing 125,000 tonnes per quarter. So full year will be 500,000 tonnes. And here, the EBITDA spread will be [800, 900]. So INR 50 crores will come from B2B business, B2B metal trading business. Then we come to solar structures and the other structures what we are selling. So all in all, we have developed 250,000 tonnes of annual capacity for solar structures and 250,000 tonnes capacity for the other structures, which we will sell through trade channel. So total, it will be 0.5 million tonnes, 500,000 tonnes of annual capacity. For solar structures, we have assumed volume of around 180,000 tonnes for full year, which means run rate of 13,000, 14,000 tonnes per month, which we are confident of. And the profiles for the trade, the multiple, other products for the trade segment here, we will do around 200,000 tonnes. So put together, we will be around 350,000 to 400,000 tonnes of structures with EBITDA of around INR 4,000 to INR 5,000 per tonne, which can give another INR 120 crores to INR 150 crores EBITDA. So all in all, our business plan for FY '27 stands at around INR 350 crores plus EBITDA. And I mean the only risk to these numbers could be, again, a sharp correction in the steel prices, which has been continuing for last 2 years. But at the level the steel prices have come, we don't expect it to hurt our P&L. Plus what has happened is that our absolute EBITDA -- so now Q4, we do INR 60 crores of business EBITDA. So we shall close FY '26 with around INR 140 crores of full year EBITDA versus INR 103 crores last year, FY '25. So still, we are talking about 35%, 40% jump in absolute EBITDA. And when this INR 140 crores becomes INR 350 crores, so the impact from the steel prices also keeps on reducing. We saw this in journey of our -- another group company, APL Apollo Steel Pipes that when the EBITDA used to be small at absolute level, the steel prices fluctuation used to hit its P&L. But now that the absolute EBITDA is becoming a big number, then steel price fluctuation doesn't hit the P&L very badly. So we are confident that no matter how steel prices behave, unless there is like 15%, 20% crash, we should be able to achieve INR 350 crores plus EBITDA for FY '27. In terms of balance sheet, you see that the working capital days stood at 27 as at December 31, 2025. This was slightly higher because of the advanced payments we made to steel suppliers ahead of the imposition of antidumping duty on steel. So we just wanted to kind of book some steel because some destocking takes place. So we made some advanced payments to the steel suppliers. So by March, it will be better than 27 days what we reported. So we continue to maintain 50% earnings CAGR which is our long-term guidance, right? Although FY '26 was badly hit in the first 9 months, still we will be delivering a 40% kind of EBITDA growth. And fingers crossed, FY '27, there could be like 100% jump with the business model, which I explained, where we don't see much of a challenge because it's been 2.5 years the company got into existence. Now we have everything ready to take off all the systems, capacities, team, everything is in place. So with all the confidence and conviction, we are talking about these financial numbers. That's all from our side. Happy to take questions now.

[Operator Instructions] The first question is from the line of Vivek Patel from Ficom Family Office.

Am I audible?

Yes. You are audible.

I just wanted to understand from Mr. Archit Arora and obviously, Anubhav sir as well as to, firstly, the Jaipur service center, if I'm not wrong, was expected to become operational in Q4. And also -- so what caused -- what is probably causing the delay, as you mentioned that you are planning to open the same in FY '27? And broadly, what are the key challenges that is faced by the company in expansion of service center as well, although the company has ample cash on the books, I believe INR 880 crores, INR 900 crores as of December. And also, as you mentioned, there are locations which are scouted through the country as well. I'll be very thankful if you could expand on that.

Yes. So just to answer the question on some delay on Jaipur operations beginning in quarter 4. So it is just delayed by a couple of months because of excessive rain in that area. The rains lasted up to November. So civil work was impacted for a couple of months. Now it is back on track, and we should be able to start operations by mid of March.

And to answer on like the ability to be aggressive on the service centers, see, I mean, like I said, now we have 20 service center locations on hand in India, plus 1 in Dubai. 4 are operational, 5 work has started already. The other sites, I can name like Chennai, Hyderabad, Coimbatore, Hubli, Kolapur, Kanpur, Ranchi, Vizag, Patna, Siliguri, Guwahati, Bhubaneswar in Odisha. All these sites, we have activated the land acquisition process. And maybe in 1, 2 more quarters, you will see -- we will keep updating you that we have locked sites at these locations and the work has started. So see, I mean, it took us like 3, 4 quarters to get convinced that, yes, I mean, we can easily do 8,000, 9,000 tonne of monthly volume from each service center, right, with INR 2,000 per tonne of EBITDA so that we get desired ROCE of 25%, 30%. Now it's been like 3, 4 quarters, consistent 3, 4 quarters that we have achieved this. So it gives us a lot of confidence and conviction that now we have to become aggressive and go all out. So January 2026 is that month where we have taken a call that now we'll go all out, and we want to establish these 20 plus 1 service centers as soon as possible.

Understood. Nextly, EBITDA per tonne as you have mentioned over the quarters. So FY '25 EBITDA per tonne was slightly above INR 900 and for this 9 months, it stood at slightly above INR 1,000. So based on your plans of expansion of service centers and also increasing share of renewables over the next few quarters, how do you expect this number, EBITDA per tonne to change over the next, say, 2 years, FY '27, '28?

So I think, I mean, one should not look at the blended EBITDA per tonne, okay? What one should look at is that how each business vertical is performing. Although I mean, it may appear like around INR 1,800, INR 1,900 per tonne, okay, on blended basis. But there is a lot of scope to increase margins in the renewable structures and the other profile structures because once you start doing some of the like backward integration, you can get a lot of the margins from quoting process, right? So I think we are very clear that B2B business should be generating INR 1,000 per tonne. Service center business in India should be generating INR 2,000 per tonne. Service center business in Dubai should be generating INR 5,000 per tonne plus, then the solar OEM business should be generating INR 3,000 to INR 5,000 per tonne. And the profile business, which is trade-led sales, that should generate upward of INR 5,000, INR 6,000 per tonne. So we are very clear on this. And each business vertical has its own working capital requirement. So each business vertical will throw its own ROCE, right? So we are not too much concerned that what will be the EBITDA per tonne on a blended basis, rather, what we look at is what will be the ROCE for the overall company, ROCE at the overall company level.

Understood. Understood. And last question I had was on the financials. So the short-term borrowings have reduced drastically from, I think, about INR 700 crores in FY '25 to INR 130 crores now in December. While the interest cost has stayed in the range of INR 12 crores in quarter 1 and 2 and now it has increased to INR 17 crores. Just wanted to understand why the interest cost has stayed the same while the debt has come down drastically.

So see, I mean, here, I mean, if you look at the interest cost, which we account INR 13 crores, INR 14 crores for the whole year, okay, for the quarter annualizes around INR 50 crores, INR 55 crores. So this translates that we have used like kind of loan of INR 740 crores. Short term, long term, it is Suraj's call that how we wants to navigate with the bankers. Now out of INR 750 crores, I mean -- so that's the loan or that's the limits we have taken from the banks, right? So half of this goes for the bill discounting, right, because we sell on cash-and-carry. So we get the receivable discounted from various banks. And plus there is a gross debt on the books, which you can see around INR 134 crores. And then we use some bank limits while we import steel from overseas. So a lot of steel is always on high sea where I mean, we have to fund those purchases. So that's the breakup of like the quarterly interest cost of INR 13 crores, INR 14 crores or I would say, INR 5 crores per month -- INR 4 crores per month run rate. But then at the same time, we have INR 800 crores of cash on the books, right, which gives us around INR 15 crores, INR 16 crores, INR 17 crores of quarterly interest income also..

Yes. Understood. Just a small follow-up, sir. How much of your steel requirements are you importing now?

Now it will become very less only in Dubai, right, because the Indian government recently imposed steel duty, antidumping tariffs. So for India, anyways, we were importing very less since April 2025, antidumping duties came in. And now the government continued it for next 2 years. So nothing much here. Dubai, of course, it is all imported.

Our next question comes from the line of Rahul Kumar from Vaikarya Fund.

Can you just elaborate further on the interest cost breakup between the various heads which you mentioned? So how much was because of bill discounting? How much was because of short-term cost, short-term debt?

So 50% is because of bill discounting, okay? And 50% would be -- 40% will be for import of steel and rest would be like bank charges, et cetera.

Okay. And there is short-term debt also, right, INR 134 crores?

Yes. So that I've taken into account.

Where, which head?

Others...

Okay. And how much bill discounting we do on an average?

So normally, like you can back calculate when I say 50% is bill discounting, right, interest cost, 7% is the interest rate, you can do back calculation.

Okay. And second question, I think on the renewables structure business, can you give some more color on the order book status, how it has moved? And what is it now?

Yes. So order book is INR 300 crores plus, right? I mean, which is enough to do volume of around 25,000 tonnes for the quarter 4. So we are fully covered for that. And as we have installed almost 2 gigawatt of -- 1 gigawatt, 1 gigawatt, 1.5 gigawatt of structures we have already installed since we started the business in quarter 1, right? So now there is a lot of acceptance in the market that SG Mart is already #2 player and the [empanelments] have become very easy now. It's just that steel prices went up a bit. So purchases like the new orders will take 5, 10 days to settle because all the purchase heads of solar companies, they are getting adjusted to the increase in steel prices. So maybe like early Feb, this INR 300 crore order book could be above INR 400 crores with the pipeline what we have in hand.

Okay. Okay. So this INR 300 crores is only for the Q4?

No, no. 25,000 tonne if we do the average realization is 75,000. So it's around INR 100 crores, INR 200 crores.

Got it. And correct me if I'm wrong, how much volume did we get from the 2 new rented facilities which have opened in the quarter?

So it's around 3,000, 4,000 tonnes per month from each entity.

Okay. Okay. So does that mean that...

Now that we are setting up our own centers, right? So we are not ramping those up. We're just waiting for our centers to start. So once we start our centers, so this 3,000, 4,000 tonnes will shift plus additional 5,000, 6,000 tonnes will capture extra market.

Our next question comes from the line of Aman Soni from Nvest Analytics Advisory LLP.

Am I audible?

Please go ahead.

Sir, first question, again, like this quarter also, we are speaking about INR 60 crores EBITDA. And maybe I've joined a little bit late, so maybe you must have explained it. So just wanted to understand from you, INR 60 crores EBITDA that we are targeting. And at the same time, we are speaking about there is a little bit of slowdown in steel downstream products, demand of steel downstream products. So how are we confident enough to achieve this big number, sir, in Q4?

So 2 things. One that we already achieved INR 40 crores business EBITDA in Q3. So this gives us a lot of confidence for Q4, number one. Number two, B2B metal business and service center business, we are assuming flattish sales volume. We are not factoring in any increase in the sales volume sequentially. Because the demand environment was weak in quarter 3, so there was a push sales, which led us to offer some discounts to the customers. But now we have pulled off those discounts, and we are getting the desired margin of INR 1,000 per tonne in B2B and INR 2,000 per tonne in the service center business. So earnings will increase from improvement in the margins in B2B and service centers. Plus the solar business, we did 17,000 tonne volume. Now we are projecting 25,000 tonnes. right? So 30% increase in the volume there. And margins will also expand as the operating leverage benefits come in plus the new products for trade like solar structure for the residential rooftop application, that we launched. Then cable tray will start next month, then the slotted angle, which is used for racking system. Then purlin structures for PV sheds that will start. So we are expecting almost 10,000 tonnes of additional volume from these products in the quarter 4. And because they're selling under APL Apollo brand, so the margins are really high. So this gives us confidence that INR 60 crores is a very much achievable number in terms of business EBITDA.

Okay. And usually, we speak about that business EBITDA will obviously reflect in the bottom line as well. So can we expect the similar PAT?

So interest cost will be similar to the other income, right? And tax rate will be slightly lower because Dubai is also contributing. So growth-wise, it will match, yes. But because -- see, what's happening is that business is using cash to build capacities to open service centers. So the other income will slowly, gradually keep on going down, right? Like earlier we used to INR 1,000 crores, INR 1,100 crores cash on the book. Now we have INR 780 crores, INR 790 crores cash. As we go on to acquire land for 20 locations -- for 10 more locations, again, we'll have to use cash for CapEx, right? So we're talking to some machine vendors where we purchase machinery for all the 10 service centers in one go so that we get a very sweet deal, right? So we may have to pay advances for buying of machinery. So I mean, it's just that other income will keep on going down as the business will use more cash. Otherwise, the flow from EBITDA to PAT will be same.

So let's pose INR 350 crores EBITDA target that we are taking for FY '27, what is the bottom line are you anticipating there?

So I think let's calculate here only. Other income, Suraj will be like what, INR 40 crores, INR 50 crores for the full year next year?

Less than that INR 500 crores...

INR 500 crores. So INR 30 crores interest rates are going down. So INR 40 crores -- so INR 400 crores is Naman the -- INR 400 crores is the EBITDA with other income, okay? Then interest expense will be how much...

Somewhere around INR 50 crores.

INR 50 crores.

And depreciation is somewhere around INR 15 crores.

INR 15 crores, INR 335 crores into 0.23. So we'll be around INR 250 crores PAT.

More or less like it will also be growing in the direction -- direction of EBITDA? Understood. And sir, last quarter, when we spoke on this EBITDA run rate, so you mentioned very clearly like Q4 will be the one where our business dynamics will get defined in the terms of the EBITDA that we will be doing going ahead because of the product mix change. As you mentioned, we are a little bit more focusing on the service center business and the emphasis will go down on the B2B business. And that's why the steel prices impact will be -- over the quarters will be negligible, right? So if that time has arrived or not, like Q4 run rate will -- can we assume it to be a next base for SG Mart?

Sir, that's why with a lot of conservativeness, we are giving this number, although our internal target is high, right? So INR 60 crores is something which we shall achieve definitely. I mean you should have -- I mean, we could have delivered performance in Q3 also if there was no inventory write-down. So yes, INR 60 crores here and then INR 65 crores, INR 70 crores, INR 80 crores, INR 90 crores, that's how Q1 FY '27 to Q4 will slow down to for us to achieve INR 350 crores. So we don't see much of error in these numbers.

Understood. And just last one clarification on the demand outlook, maybe a little bit on the longer side. I went through the PPT of your group company as well, there also the Chairman has highlighted the ongoing slowdown in the construction and particularly on the government CapEx side. So how do you see this? And how do you see the picture shaping up from here? Like is -- are you also witnessing these kind of slowdowns to continue maybe for the next few quarters?

I mean macro should be better than what it is. There is no doubt about it, okay? But for us to be able to achieve our guidance, what we are focusing on is that I mean, either we are launching new products, we are getting into new entries or we are opening service centers in new locations. So it's like new customer acquisition or new product addition. So we are not cannibalizing the existing business, right? I mean the sales volume from service centers, we have already taken peak number of INR 8,000 per tonne from the existing operational service centers. Now it may INR 9,000, INR 10,000, INR 11,000 if demand is good. So that's the upside. But while giving you FY '27 guidance, we are factoring in 8,000 tonne only per month from one service center because -- I mean, factoring in the demand slowdown. If there is upside, that numbers can definitely go up.

Our next question comes from the line of Vishal Mehta from Oaklane Capital.

Am I audible?

Yes, Vishal, please go ahead.

Sir, my question was regarding the renewable division. Now I just wanted to understand, if I'm having my calculations right, this quarter, we did about INR 45 crores per month revenue with a 5,000, 6,000 volume. And what we are effectively guiding for FY '27 is for the solar business, this will become INR 110 crores and there will be a 15,000 volume per month.

So Vishal, 17,000 tonnes in renewable...

That's for the quarter, right? About INR 5,000 per month. So what I'm saying is from 17,000. So basically, if I multiply that by 4, it's close to about 80,000. So 80,000, we are expecting 80,000 to go to 180. So I'm just trying to understand how do we bridge this gap from 80 to 180 in the solar business. As in do we -- so because we have orders only worth INR 300 crores, INR 400 crores. So is there a visibility that we have for that? That is the first question. And I can come back for the second one, I'll ask that once this is done.

So Vishal, this 17,000 tonnes, which we did, it only -- we only did it from one plant in Ghaziabad. Now we -- our Raipur plant has started and our Pune plant is also starting in February, okay. So our capacity will be 3x of what it is right now, number one. Number two, we had the order book of like INR 250 crores to INR 280 crores. Now it is INR 300 crores. So we were just waiting for our capacities to start, right, new capacities in Raipur and Pune to start before we go aggressive on the order booking. Third is that, like I said, there has been increase in steel prices in the month of January. So all the solar companies, they have kind of delayed the purchases because they're adjusting to the new steel price, right? Everyone thinks that steel prices can't increase so sharply, they may come down. So they may see that how Feb pricing goes about, right, and then they will start taking the call. So order booking will come in Feb. We are not bothered about it. Number 4 is the kind of demand for solar structures, which is going to come up, right? Right now, the market is around 50,000 tonnes a month, okay? And we only did 5,000 tonnes, okay? And we are talking about 15,000, 20,000 tonnes to 180, meaning 15,000 tonnes a month, right? So I'm not -- I'm talking about like 20% market share, 20%, 25% market share with the capacity as a #1 leader, okay, that much capacity we have put in. And I mean you talk to like top 10 IPPs of India, the kind of installations they have in their business plan. Some of are listed also, you may get public data also. I mean that's insane. So we believe that this 40,000, 50,000 tonnes monthly market could go to 70,000, 80,000 tonnes in next 2, 3 years on a monthly basis.

Okay. And sir, in terms of the margin profile in the -- so we've spoken about INR 4,000 per tonne for this business. But in the presentation for the solar business, renewable business.

Yes, yes. So we gave 6% to 8%, EBITDA target.

In the presentation, it is 6% to 8%. So is there a disconnect because that turns out to be a little 6,000 odd...

So here, I mean, there are some products which are upcoming, right? So there, the NSR is a bit low. So the blended NSR will be INR 65,000 per tonne, and let's take average of 7%, so INR 4,500, INR 5,000.

Got it. Got it. So the NSR for the new products is a little lower?

Yes, because that's only zinc coating, whereas solar structures are zinc plus aluminum coating.

Our next question comes from the line of [Rajiv Bhat] from [indiscernible] Securities.

I just had a couple of questions. One is related to the current geopolitical environment, which is going on, right, between U.S., European Union, China and how it's impacting the trade within India? So knowing with this global dynamics being the background, I just wanted to understand how exactly would it be impacting the SG Mart's ability to deliver on the guidance of EBITDA, which you said INR 60 crores in Q4 and INR 80 crores per quarter going forward. And specifically, what measures are you taking to mitigate any kind of risk related to steel price volatility or any trade disruptions, et cetera.

So see, I mean, the -- in terms of risk management, okay, the steel prices in quarter 3 by end of December were at like almost low in the last 6 years. We saw that steel prices just before COVID. After that, there has been a massive rally in steel prices until 2023 and then they started coming down, right, 2024 and '25. And December '25 was the lowest. So we were like keeping inventory pretty low, right? And we were kind of confident, although it's very difficult to take a bet on commodity cycle, but we were fairly confident that steel prices should not be going lower than the levels what we saw in December. And today, there have been -- I mean, till today, there has been result from one steel mill, which came out. So the EBITDA spreads of that company also, they are pretty low. So Indian steel mills were sure that they had to increase pricing January onwards. So in risk mitigation, only thing what we can do is keep minimum inventory levels, right? We don't want to speculate or take bets on steel price movements because that's not part of our business plan, never was, never will be. Secondly, on geopolitical, I think how it can impact or how it is impacting global commodities is, I mean, the rise in pricing only, right? You take any commodity, the prices are going high only. So we work on pass-through model, right? Our products are fully linked to the steel prices, how they behave domestically or internationally. So yes, I mean, we don't expect it to hurt too much on a full year basis. In 1 quarter, like quarter 3 got hit because of like sharp correction. But it will not repeat again and again. So what encourages us is that we generated INR 40 crores of business EBITDA in Q3, which will go to INR 60 crores in quarter 4. I mean that's what we are thinking.

Yes. Sir, my second question is related to last year -- late last year, Mr. Rohan Gupta from your group, he had basically shown confidence in the stock and he had done a purchase, open market purchase of [ 329 ] or so. Now that we intend to kind of grow up the guidance which you have given, which kind of gives us also as investors confidence that if in case if the stock price were to correct basis what kind of guidance which was given in the past and the performance which you have clearly stated was because of situation which are outside the management's control, right? So if at all the stock were to kind of correct negatively, I presume that the management has got the confidence to kind of do a similar kind of buyback for the open market. Any kind of thoughts on that particular thing in terms of the conviction of sticking to the guidance and thereby also giving confidence in the extended investor community?

So definitely, I mean, that transaction happened in September 2025, right, where the family added 3.5 million shares. And I mean -- we were confident on -- we are confident on like how SG Mart earnings trajectory will look like, right? So yes, I mean, the family, the management, the promoters, everyone is pretty bullish on the long-term prospect of the company.

And we have fingers crossed that the guidance is something which we actually see on the ground.

Our last question comes from the line of [Vikas Mistry] from [Moonshot Ventures].

So first of all, very congratulations on expanding your portfolio in terms of renewable and structures. So we have given the market share across this renewable and structures. And how we are confident enough to get that much amount of market share? And what is the competitive intensity across the segments?

So here, there are 2 sales points. Number one is OEM, which are India's IPPs, okay, or solar EPC players. Number two, these other structures, which are sold through trade. So APL Apollo Group has 800 dealers across India, which further sell to 50,000 retail shops and those 50,000 retail shops sell to 200,000 fabricators. The channel to sell steel pipe or any other product which the group has been doing. So what we found out is the channel is safe, okay? So -- and if you look at the Slide #15, there are 2 products on the left side, which are operational. Number one is the utility, which is OEM sales point business. And second is it's called [indiscernible], which goes on the rooftop of residential structures, okay? So this is sold through trade. We launched this product last month, December. And I mean, we are already selling like 1,500 tonnes per month, okay, per day, 1,500 tonnes per day. I mean we only got like 1 mill. 3 more mills are coming. So 1 mill is already full. So it's the vast network, which will drive the sales for these products, okay? And as far as the IPP is concerned, the OEM-led business, like I said, in last 8, 9 months since we started, we have already supplied structure to install 1.5 gigawatts of solar energy of solar power, which gives enough confidence to the industry that SG Mart has established itself as a serious player to supply long-mounted solar structures for the industry. Here, the right to win is again, steel, which comes from Tata, JSW, right coated steel, and we are already buying in bulk getting advantage in terms of pricing and some benefit we pass it on to the customer to win the order.

Okay. So Anubhav, apart from these products, what we mentioned in the presentation, do we have other products which are lined up, which are of similar size and which are of high value addition? Do we have them?

So maybe in service centers, we are exploring selling of -- right now, we sell HR-led sheets, metal sheets. We are working on some coated sheets also, right? Maybe in next earnings call or maybe 1 quarter further, we will come back -- we will come with a business plan that how within the existing service centers, we can expand the portfolio from normal, or I would say, HR metal sheets to coated metal sheets also.

Yes. Good to hear that. So my last question is itself on volatility towards that is dragging inventory losses, making inventory losses. So at what run rate of EBITDA where we feel comfortable with the 5% to 10% drawdown on maybe quarterly EBITDA level drag due to 3% to 4% drag in the price.

This will keep on going down as our absolute EBITDA keeps on increasing. Like I said, we are...

Sorry for interruption. Anubhav, I'm just trying to pick your brains on the fact that at what EBITDA level it becomes pretty small. So my -- our internal understanding says that at roughly INR 150 crores of EBITDA level, that becomes pretty insignificant. So what's your take on that?

I think INR 350 crores we hit in FY '27, okay? We should be fairly okay. Then when we go INR 500 crores plus, then the hit -- the pinch will be very, very less.

Kudos to the team. And we hope that you continue to bring new products, high-margin products.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Anubhav Gupta from SG Mart Limited for closing comments.

Thanks, everyone, for joining in. I know that numbers look disappointing. But in real, we have done much better, and we will do much better in quarter 4, which will give a lot of confidence to the investors that how we are going to achieve INR 350 crores EBITDA next year. Thanks so much.

Thank you. On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.