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The Market – India's Steel Demand is Large, Broad-based and Growing at 7– 9% a Year:

SAMBHV is well-positioned to capitalise on India’s growing finished steel demand, driven by sustained government capex and expanding structural applications. Core market segments show robust growth: Hot-Rolled (HR) Steel is projected to expand by 7.0–9.0% annually; ERW Pipes & Tubes — SAMBHV’s main revenue driver (45% of FY26 revenue) — is set to grow at ~8.5% p.a. to 12.5–13.0 MT by FY29E. Additionally, India’s Stainless Steel market offers high-margin mix-upgrading potential, reaching ~INR 1,704 Bn by FY30E (8.2% CAGR). Supported by a 3.4x capacity expansion and integrated HR coil production, SAMBHV requires minimal market share gains to achieve scalable volume and margin growth.

Growth Engine – INR 20.5 Bn of Capex Lifts 3.4x Capacity:

SAMBHV is entering into a transformative growth cycle backed by an aggressive INR 20.5 Bn capex plan over FY27E–29E, which expands its finished-product capacity 3.4x, from 508 kt to 1,730 kt. The expansion — centred around the flagship Kesda facility — underpins a 33.2% volume CAGR (FY26–FY29E) to 937 kt by FY29E. Importantly, our financial model assumes a conservative blended capacity utilisation of just 49–54% in FY28E–29E (down from 78% in FY26), leaving substantial operational headroom for sustained long-term growth beyond the explicit forecast period. While FY27E will bear the initial drag of peak capex deployment, capacity commissioning from FY28E will unlock operating leverage and propel revenue at a 44.9% CAGR (FY26–FY29E) to INR 73.4 Bn by FY29E.

The Payoff – Value-added Mix Shift Enhances Profit Pool:

Beyond sheer volume growth, SAMBHV’s earnings trajectory is anchored by a structural shift towards high-value, margin-accretive product categories. Commercialisation of new lines — such as Seamless pipes earning INR 45,000/t EBITDA, SS CR coil earning INR 17,000/t and Galvalume (GAL) coils/pipes earning INR 5,000/t — will lift overall blended EBITDA per tonne from INR 6,901 in FY26 to INR 9,377 by FY29E. Backed by single-site integrated operations and captive power cost advantages, EBITDA and PAT are projected to compound at 47% CAGR each (FY26–FY29E) to reach INR 8,785 Mn and INR 4,481 Mn, respectively, by FY29E. As new assets start earning full revenue, return ratios will rebound sharply, pushing ROE back to ~25%.

Valuation:

We initiate coverage on SAMBHV with a ‘BUY’ rating (EV/EBITDA-based valuation for details; click here) and a Base Case target price of INR 210/share (10x TTM H1FY29E EV/EBITDA), implying 36.6% upside from CMP INR 154. Under our Bull Case, the target reaches INR 256/share on seamless Kesda commissioning and superior SS spreads. Conversely, our Bear Case yields INR 152/share, assuming capex execution delay or import margin pressure. At CMP, the stock trades at ~9.7x FY28E and ~7.9x TTM H1FY29E EV/EBITDA (EV is calculated after considering debt raising).

Key Risks: Possible execution delays, particularly at Kesda, remain the key upside trigger and risk.

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