CARE maintains fundamental grade of 3/5 to Sarda Energy

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26 Aug, 2025 12:21

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CARE Equity Research's report on Sarda Energy and Minerals (SEML)

SEML is a midsized, integrated steel and ferro alloys producer with diversification plans into power and natural resources. The company is primarily engaged in the manufacturing and selling of pellets, sponge iron, steel billets, wire rods and ferro alloys from its plant located at Raipur, Chhattisgarh. The operations of the facility are supported by 81.5 MW, captive thermal power plant and an operational coal mine (average production of 1.2 MTPA) at Raigarh, Chhattisgarh. The company is further expanding into value added ferro alloy business, primarily focused at exports, with a capacity of 2x33 MVA located at Vishakhapatnam and supported by 80 MW captive power plant.

During Q2FY14, standalone revenue declined by 21.0 percent y-o-y and 9.7 percent q-o-q to Rs 279 crore. The decline in revenue was led by lower sales from both the business segments –steel and ferro alloys. In Q2FY14, the company reported standalone EBITDA of Rs.39 crore, registering a decline of 46.5 percent y-o-y. Consequently, SEML's EBITDA margin plummeted by 661bps on y-o-y basis to 13.8 percent. SEML's net profit decreased significantly by 75.8 percent y-o-y to Rs.7 crore on account of lower revenue and operating performance. As a result, SEML's Q2FY14 net profit margin on standalone basis, witnessed a decline of 541bps y-o-y to 2.4 percent.

During Q2FY14, SEML's steel segment reported a revenue decline of 24.0 percent y-o-y to Rs.180 crore, (65 percent of the total revenue) while company's ferro alloys business reported revenue of Rs.97 crore, i.e. a decline of 12.3 percent y-o-y. Steel segment reported PBIT margin of 15.3 percent (up 25 bps y-o-y) while PBIT margin for ferro alloy segment were down by 156 bps y-o-y, also at 15.3 percent.

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