1 day ago
Rajratan Global Wire Bets on Expansion Beyond Bead Wire
Rajratan Global Wire makes a special steel wire that helps keep tyres attached to their wheels.
Tyre companies must carefully test and approve this wire, so they may keep using a trusted supplier for a long time.
Rajratan is adding more factories and equipment, especially at its Chennai plant.
It also has a factory in Thailand, which helps it serve tyre makers in different countries.
The company had a strong first quarter, with sales and profit growing.
It hopes to sell about 155,000 tonnes of products in the current financial year.
Rajratan is also testing a new product for conveyor belts.
However, it has borrowed money to expand, generated negative free cash flow last year and still needs to prove that its growth will create strong returns.
Rajratan Global Wire supplies bead wire to major tyre manufacturers after nearly 37 years in the business.
The company plans to raise installed capacity from 162,000 to 192,000 tonnes by expanding its Chennai facility.
Q1 FY27 sales volume rose 16%, revenue increased 29%, EBITDA grew 35%, and profit rose 70% year-on-year to Rs 22.96 crore.
Management is targeting roughly 155,000 tonnes of total sales in FY27, supported by domestic growth, exports and higher plant utilisation.
The company is entering conveyor-belt steel cord, but investors still face risks from leverage, weak free cash flow, margin pressure and valuation.
- Who
- Rajratan Global Wire and its tyre-manufacturer customers, including Bridgestone, Michelin, Goodyear, Continental, Yokohama, MRF, CEAT, Apollo Tyres and JK Tyre.
- What
- The company is expanding bead-wire capacity, growing exports and entering the adjacent conveyor-belt steel-cord market.
- Where
- Its manufacturing operations are in Pithampur and Chennai in India, and Thailand; it has also secured land in Ratchaburi, Thailand.
- When
- Rajratan reported results for Q1 FY27 and is targeting approximately 155,000 tonnes of sales in FY27.
- Why
- The expansion aims to serve existing approved customers, increase utilisation, grow market share and build a larger business around its wire-manufacturing capabilities.
Expansion and Competitive Advantages
Risks and Investor Concerns
Customer approvals
Expansion and Competitive Advantages
Multi-year qualification processes and the need to requalify tyre products can make Rajratan difficult to replace once approved.
Risks and Investor Concerns
Approval barriers do not protect the company from a weak tyre cycle, pricing pressure or competitive challenges.
Capacity expansion
Expansion and Competitive Advantages
The Chennai plant has crossed break-even, and higher utilisation could increase volumes, improve efficiency and reduce unit costs.
Risks and Investor Concerns
The company must show that new capacity produces healthy margins, stronger cash generation and adequate returns on capital.
Growth beyond India
Expansion and Competitive Advantages
Thailand, rising exports and the planned conveyor-belt steel-cord business could diversify and enlarge Rajratan’s addressable market.
Risks and Investor Concerns
The steel-cord project is still early, export growth may face changing global conditions and the stock’s valuation leaves limited room for disappointment.
Key facts
- Current installed capacity
- 162,000 tonnes per annum across Pithampur, Thailand and Chennai.
- Planned capacity
- 192,000 tonnes per annum after Chennai capacity is doubled from 30,000 to 60,000 tonnes.
- Q1 FY27 profit
- PAT rose 70% year-on-year to Rs 22.96 crore.
- FY27 sales target
- Management expects total sales of approximately 155,000 tonnes if global conditions remain normal.
- FY26 borrowings
- Borrowings increased to Rs 324 crore from Rs 237 crore in FY25.
- FY26 returns
- ROCE was 13.5% and ROE was approximately 11.5%.
- FY26 cash flow
- Operating cash flow was Rs 75 crore, while Rs 113 crore was spent on investing, resulting in negative free cash flow.
Sources
Related news
Titan sees positive July momentum, on track for FY30 targets
Regional Jewellery Retailers Outgrow Titan Despite Steep Valuation Discounts
Three B2B Jewellery Players Could Be the Bigger Story
India’s Rs 7,280-Crore Magnet Scheme Draws Three Diverse Bidders
India’s Grid Expansion Highlights Three CTC Supplier Stocks
Yokohama India Launches Geolandar X-CV Tyres For Crossovers, Premium SUVs
Yokohama India to scale tyre capacity to 6.3 million units
Yokohama India targets deeper OEM tyre supply growth
Yokohama Expands in India's Premium Tyre Market
