Paints/Varnish

Q3 FY2026 Healthcare Equipment and Supplies Outlook

2 March 2026

Sector analysis of Indian Healthcare Equipment and Supplies highlighting market growth, financial performance, regulatory dynamics, innovation, and export-driven expansion across medical devices, dental, labware, and homecare.

Iron & Steel Sector Analysis: A Deep Dive into Sarda Energy & Minerals Ltd. (SEML)

This report provides an exhaustive analysis of the Iron & Steel sector, primarily through the lens of Sarda Energy & Minerals Ltd. (SEML), an integrated Energy-plus-Minerals enterprise. It synthesizes financial performance, operational characteristics, strategic initiatives, and market positioning to offer a comprehensive understanding of the company and the broader industry dynamics it operates within. The analysis highlights SEML's robust financial health, strategic diversification into energy and mining, and its disciplined approach to the cyclical metals business, all set against the backdrop of a growing Indian steel market and evolving power sector.

A. Industry Overview & Market Landscape

The Indian Iron & Steel sector is characterized by robust growth, driven by sustained infrastructure spending, increasing urbanization, and a burgeoning manufacturing base. India's crude steel production demonstrated significant momentum, growing by over 10% in calendar year 2025. This growth propelled India's steel consumption to approximately 160 million tons in the same period, underscoring strong domestic demand. The market has also seen a shift in trade dynamics, with India becoming a net exporter of steel after six consecutive quarters of net imports, largely attributed to the imposition of safeguard duties. This policy intervention has provided a crucial shield against cheaper imports, fostering domestic production and improving the competitive landscape for local manufacturers.

The industry's value chain is increasingly integrating, with companies like SEML evolving from pure metal manufacturers into vertically integrated "Energy-plus-Minerals" platforms. This integration, encompassing captive power generation, coal and iron ore mining, and steel/ferro alloys production, helps companies absorb market volatility and maintain stability across their diverse business segments. The energy component, particularly thermal and hydro power, plays a critical role in ensuring cost-efficient operations for energy-intensive steel production, while also serving as a significant revenue and profit generator through independent power sales. The mining segment provides crucial raw material security, mitigating price fluctuations and supply chain risks.

The power sector, a key input for steel manufacturing, is experiencing its own dynamics. Average power prices on exchanges (IEX) were INR 3.33 per unit in Q3 FY26, a decrease from INR 3.79 per unit in the previous year, indicating a relatively benign fuel cost environment. However, power prices have shown signs of recovery since December, suggesting potential upward pressure on energy costs. The Union Budget's allocation of INR 20,000 crores toward carbon capture, utilization, and storage (CCUS) signals a growing focus on greener technologies and sustainability within the energy and heavy industries, which could drive future investments in environmentally friendly production methods.

B. Financial & Economic Profile

Sarda Energy & Minerals Ltd. (SEML) has demonstrated a strong financial performance, particularly in its consolidated results, reflecting the benefits of its integrated business model. While Q3 FY26 saw some moderation due to operational shutdowns and subdued commodity prices, the 9M FY26 performance highlights significant year-on-year growth.

**Consolidated Financial Performance (Q3 FY26 vs. 9M FY26)**

| Metric | Q3 FY26 (INR Cr) | YoY Change (Q3) | 9M FY26 (INR Cr) | YoY Change (9M) | | :--------------------- | :--------------- | :-------------- | :--------------- | :-------------- | | Net Revenue | 1,276 | -3% | 4,437 | +30% | | EBITDA | 395 | +7% | 1,672 | +53% | | EBITDA Margin | 29.1% | | 35.8% | | | EBIT | 297 | -14% | 1,350 | +47% | | PBT | 255 | +13% | 1,239 | +64% | | PAT | 190 | -5% | 954 | +58% | | PAT Margin | 14.0% | | 20.4% | | | Cash PAT | 338 | +7% | 1,496 | +58% | | EPS (INR) | 5.40 | | 26.90 | |

In Q3 FY26, SEML's consolidated net revenue saw a slight decline of 3% year-on-year to INR 1,276 crores, primarily influenced by subdued metal and energy prices and operational shutdowns. Despite this, EBITDA grew by 7% to INR 395 crores, with margins expanding to 29.1%, showcasing operational resilience. However, EBIT declined by 14%, and PAT decreased by 5% to INR 190 crores, with a PAT margin of 14.0%. Cash PAT, a better indicator of cash generation, increased by 7% to INR 338 crores.

For the nine months ending December 2025 (9M FY26), the consolidated performance was significantly stronger. Net revenue surged by 30% year-on-year to INR 4,437 crores. EBITDA witnessed a robust 53% growth to INR 1,672 crores, with an impressive EBITDA margin of 35.8%. PBT and PAT also saw substantial increases of 64% and 58% respectively, reaching INR 1,239 crores and INR 954 crores. The PAT margin for 9M FY26 stood at 20.4%, indicating strong profitability.

**Segment Contribution to Consolidated Financials (Q3 FY26 vs. 9M FY26)**

| Segment | Q3 FY26 Revenue | Q3 FY26 EBIT | 9M FY26 Revenue | 9M FY26 EBIT | | :------------ | :-------------- | :----------- | :-------------- | :----------- | | Energy | 41% | 57% | 44% | 69% | | Ferro Alloys | 23% | 24% | 32% | 20% | | Steel | 35% | 19% | 29% | 14% |

The energy segment has emerged as the dominant contributor to SEML's profitability, accounting for 57% of EBIT in Q3 FY26 and a substantial 69% in 9M FY26. Its revenue contribution was 41% in Q3 FY26 and 44% in 9M FY26. This highlights the success of SEML's diversification strategy, with energy now contributing more than two-thirds of the company's EBITDA. The ferro alloys segment contributed 23% to revenue and 24% to EBIT in Q3 FY26, while steel contributed 35% to revenue but only 19% to EBIT, reflecting the challenges faced by the steel business during the quarter.

**Historical Consolidated Financials (FY21-FY25)**

| Metric (INR Cr) | FY21 | FY22 | FY23 | FY24 | FY25 | | :-------------- | :---- | :---- | :---- | :---- | :---- | | Revenue | 2,199 | 3,914 | 4,212 | 3,868 | 4,643 | | EBITDA | 664 | 1,406 | 1,110 | 982 | 1,410 | | PAT | 376 | 807 | 604 | 524 | 702 |

SEML's historical performance shows a growth trajectory, with revenue increasing from INR 2,199 crores in FY21 to INR 4,643 crores in FY25. EBITDA and PAT have also shown significant growth, albeit with some cyclicality, reflecting the inherent nature of the metals and energy sectors. The FY25 performance indicates a strong recovery, surpassing previous highs in revenue, EBITDA, and PAT.

**Standalone Financial Performance (Q3 FY26 vs. 9M FY26)**

| Metric (INR Cr) | Q3 FY26 | YoY Change (Q3) | 9M FY26 | YoY Change (9M) | | :--------------------- | :------ | :-------------- | :------ | :-------------- | | Revenue from Operations| 918 | -12% | 3,317 | +34% | | Total Income | 1,017 | -3% | 3,556 | +38% | | EBITDA | 308 | -2% | 1,305 | +63% | | EBITDA Margin | 30.3% | | 36.7% | | | PBT | 221 | -4% | 1,047 | +62% | | PAT | 163 | -14% | 789 | +60% | | PAT Margin | 16.0% | | 22.2% | | | Cash Profit | 274 | | 1,202 | | | EPS (INR) | 4.63 | | 22.39 | |

Standalone financials for Q3 FY26 mirrored the consolidated trend, with revenue from operations declining by 12% to INR 918 crores and PAT decreasing by 14% to INR 163 crores. However, for 9M FY26, standalone revenue from operations grew by 34% to INR 3,317 crores, and PAT increased by a robust 60% to INR 789 crores, with an EBITDA margin of 36.7% and PAT margin of 22.2%.

**Product Realizations (Q3 FY26)**

| Product | Average Realization (INR per MT) | | :---------------------------- | :------------------------------- | | Pellets | 9,805 | | Sponge Iron | 24,808 | | Steel Billet | 35,310 | | Wire Rods | 38,796 | | HB Wires | 41,837 | | Ferro Manganese (Domestic) | 71,083 | | Silico Manganese (Domestic) | 71,145 |

These realization figures provide insight into the pricing environment for SEML's metal products. Steel prices touched multi-year lows earlier in Q3 FY26, but showed signs of recovery with a 10-15% increase towards the end of December. Power tariffs for IPP averaged lower than INR 5 per unit in Q3 FY26, while IEX average power prices were INR 3.33 per unit, down from INR 3.79 per unit last year. However, new PPAs for the Rehar project are at INR 7.42 per unit, and for the IPP, medium-term PPAs are at ~INR 5.25/unit and long-term at ~INR 5.60-5.80/unit, indicating better future realizations. Management expects IPP average tariff to be above INR 5 per unit in FY27.

**Balance Sheet and Capital Structure**

SEML has significantly strengthened its balance sheet, demonstrating strong liquidity and low leverage. As of 31st December 2025, consolidated net debt was below INR 500 crores, a substantial reduction from approximately INR 1,500 crores as of 31st March 2025. This translates to negligible consolidated net gearing and a consolidated Net Debt to EBITDA ratio well below 1x. At the standalone level, the company is cash positive.

**Debt Profile (INR Cr)**

| Metric | Mar-25 | Sep-25 | Dec-25 | | :--------------------- | :----- | :----- | :----- | | Consolidated Gross Debt| 2,823 | 2,642 | | | Consolidated Net Debt | 1,566 | 411 | <500 | | Standalone Gross Debt | 1,499 | 1,408 | | | Standalone Net Debt | 655 | -307 | Cash Positive | | Consolidated TOL/NW | 0.58x | 0.55x | |

The company's strong financial position is further underscored by its credit ratings, which were reaffirmed in November/December 2025: SEML (Parent Company) holds CRISIL AA- / Positive / A1+, while its ferro alloys subsidiary (SMAL) has CRISIL A / Positive / A1. Hydro power subsidiaries also hold strong ratings (Chhattisgarh Hydro Power LLP: ICRA A+ / Stable; Madhya Bharat Power Corporation: IND A+ / Stable/A1). This robust financial health and strong liquidity position (~INR 2,300 crore) enable SEML to fund its growth largely through internal accruals.

**Dividend Policy**

SEML has a consistent dividend payout history, reflecting its commitment to shareholder returns.

| Fiscal Year | Dividend per Share (INR) | | :---------- | :----------------------- | | FY21 | 0.75 | | FY22 | 0.75 | | FY23 | 0.75 (plus special dividend for golden jubilee year) | | FY24 | 1.00 | | FY25 | 1.50 |

The increasing dividend per share from FY24 to FY25 signals growing confidence in sustained profitability and cash generation.

C. Competitive Structure & Dynamics

Within the Indian Iron & Steel sector, SEML operates as a unique integrated player, distinguishing itself through its "Energy-plus-Minerals" platform. This vertical integration provides a significant competitive advantage, allowing the company to manage input costs, ensure raw material security, and diversify revenue streams. The energy segment, now contributing over two-thirds of EBITDA, acts as a stable cash flow generator, cushioning the cyclicality inherent in the metals business.

The broader steel industry in India is characterized by a mix of large integrated players and numerous smaller, regional producers. The market has seen increased competitive intensity, but government interventions like safeguard duties have helped domestic players by making imports less attractive. This policy support enabled India to become a net exporter of steel in CY25, reversing a trend of net imports.

SEML's strong liquidity position (approximately INR 2,300 crore) and significantly reduced net debt (below INR 500 crore as of Dec 2025) provide a strong competitive moat. This financial strength allows the company to fund growth through internal accruals, pursue strategic expansions, and withstand market downturns more effectively than highly leveraged competitors. The diversified asset base, including thermal, hydro, and mining assets, delivers stable cash flows, further enhancing its resilience.

The company's focus on both domestic and export markets for ferroalloys, based on realization and supply continuity, indicates a flexible and market-responsive approach to sales. While specific market share data for SEML across all its product categories is not provided, its integrated model and strategic expansions position it to capture growth opportunities in both the energy and minerals sectors, which are critical inputs for the steel industry. The ongoing litigation regarding the SKS Power acquisition, while a risk, also represents a significant potential inorganic growth opportunity that could further enhance its energy footprint and competitive standing.

D. Operational Characteristics

SEML's operational strength lies in its diverse and integrated asset base, spanning energy generation, mining, and metals production. This integration allows for significant captive consumption, optimizing costs and ensuring supply chain stability.

**Energy Capacity (as of FY26)**

| Type | Capacity (MW) | Ongoing/Expected (MW) | Total Expected (MW) | | :-------------- | :------------ | :-------------------- | :------------------ | | Thermal Power | 761.50 | | 761.50 | | Hydro Power | 166.80 | 75 | 241.80 | | Solar Power | 0 | 50 | 50 | | **Total Energy**| **928.3** | **125** | **1,053.3** |

SEML's energy portfolio includes the 600 MW SKS Power IPP (operating at 81% PLF), 81.5 MW captive power plant (CPP) at Siltara (including 21.5 MW Waste Heat), and an 80 MW CPP at Visakhapatnam. The hydro power portfolio includes operational projects like Parvatiya Power (4.8 MW), Chhattisgarh Hydro Power (24 MW), Rehar (24.9 MW), and Madhya Bharat Power Corporation (113 MW). Significant expansion is underway with 75 MW of hydro projects and a 50 MW captive solar power project expected in Q1 FY27.

**Mining Capacities (as of FY26)**

The company is actively enhancing its mining integration. Approval for Gare Palma IV/7 coal mine capacity enhancement from 1.68 MT to 1.8 MT is in its final stage, with the enhanced output expected within the current financial year. Development of the Sahapur West high-grade coal mine is on schedule for commissioning before end of FY27. Captive coal prices from Gare Palma might be INR 0.10 higher per GCV compared to SHAKTI coal.

**Metals Products & Capacities**

| Product | Capacity (MT) | Captive Consumption | | :------------ | :------------ | :------------------ | | Pellets | 900,000 | ~35% | | Sponge Iron | 360,000 | ~85% | | Steel Billet | 300,000 | ~85% | | Wire Rods | 250,000 | ~20% | | HB Wires | 45,000 | | | Ferro Alloys | 45 MVA (Chhattisgarh) & 102 MVA (Visakhapatnam) | |

High captive consumption percentages for Sponge Iron and Steel Billet highlight the integrated nature of SEML's steel manufacturing process, reducing reliance on external markets for intermediate products.

**Production and Sales Volumes (Q3 FY26)**

| Product/Segment | Production ('000 MT/Mn KwH) | Sales ('000 MT/Mn KwH) | | :-------------------- | :-------------------------- | :--------------------- | | Iron Ore Pellet | 225 | 115 | | Sponge Iron | 83 | 34 | | Steel Billet | 48 | 9 | | Wire Rod | 37 | 30 | | H. B Wires | 10 | 11 | | Ferro Alloys | 54 | 54 | | Thermal Power, IPP | 883 | 798 | | Hydro Power | 139 | 136 | | Coal Domestic | 466 | 39 | | Coal Indonesia | 351 | 376 | | CPP Production (Mn units) | 328 | 12 (Mn units) |

**Production and Sales Volumes (9M FY26)**

| Product/Segment | Production ('000 MT/Mn KwH) | Sales ('000 MT/Mn KwH) | | :-------------------- | :-------------------------- | :--------------------- | | Iron Ore Pellet | 650 | 369 | | Sponge Iron | 254 | 99 | | Steel Billet | 159 | 32 | | Wire Rod | 123 | 95 | | H. B Wires | 29 | 29 | | Ferro Alloys | 156 | 152 | | Thermal Power, IPP | 3194 | 2881 | | Hydro Power | 621 | 604 | | Coal Domestic | 1431 | 150 | | Coal Indonesia | 1169 | 1222 |

Operational events in Q3 FY26 included an annual maintenance shutdown of one 300 MW IPP unit for 45 days and a shutdown of one 30 MW captive power unit at Siltara from December 1st for equipment replacement. These temporary shutdowns affected power generation and, consequently, steel production at Raipur, contributing to the subdued performance in the quarter. Despite these, 9M FY26 hydropower generation increased by 28% YoY to 621 million units.

E. Growth Dynamics & Drivers

SEML's growth trajectory is underpinned by a combination of robust operational performance, strategic execution across its integrated platform, and favorable industry tailwinds.

**Key Growth Drivers:** 1. **Integrated Energy-plus-Minerals Platform:** The company's diversified model provides stability and resilience, with the energy business acting as a significant growth engine. Improved plant reliability and fuel availability for thermal power, coupled with above-average monsoon conditions for hydropower, have boosted energy segment performance. 2. **Strategic Energy Expansion:** Commissioning of the 24.9 MW Rehar Hydro Power Project with a 40-year PPA at INR 7.42 per unit provides long-term revenue visibility. The upcoming 50 MW captive solar power project (Q1 FY27) and 30 MW TG set replacement (mid-FY27) will further enhance energy capacity and efficiency. Pursuing approvals for expansion of the existing 600 MW IPP thermal power project and securing medium-term (200 MW at ~INR 5.25/unit for 5 years) and long-term (100 MW at ~INR 5.60-5.80/unit for 25 years) offtake for IPP ensures stable power sales. The potential doubling of SKS Power capacity, following the resolution of litigation, represents a massive growth opportunity. 3. **Strengthening Mining Integration:** Capacity enhancement of the Gare Palma IV/7 Coal Mine from 1.68 MT to 1.8 MT, expected shortly, will boost captive coal availability. The development of the Sahapur West high-grade coal mine, targeted for commissioning before end of FY27, along with ongoing approval processes for other coal mines (Gare Palma IV/5, Bartunga, Sinduri), will significantly increase raw material security and reduce reliance on external sources. The long-term plan to expand captive coal mine capacity to 3 MT and then to 5.2 MT will further solidify this integration. 4. **Positive Steel Market Dynamics:** India's crude steel production grew by over 10% in calendar year 2025, with consumption reaching approximately 160 million tons. Sustained infrastructure spending (INR 12 lakh crores budget allocation) and steady manufacturing activity are key demand drivers. The imposition of safeguard duties has turned India into a net steel exporter, improving the domestic pricing environment. Steel prices showed a 10-15% recovery towards the end of December from multi-year lows earlier in Q3 FY26. 5. **Favorable Economic and Policy Environment:** Policy continuity, ongoing expansion of India's manufacturing bases, and recent firmness in commodity and ferrous metal prices contribute to a positive outlook. Moderated coal index prices have led to a relatively benign fuel cost environment. Power prices have also shown signs of recovery since December. Government support for technological upgrades will improve the efficiency of steel plants, and the Union Budget's INR 20,000 crores allocation for CCUS supports greener technologies. Free trade agreements (EU, US) are expected to support exports and enhance overall economic activity.

**Historical Growth Trajectory:** SEML's 9M FY26 consolidated net revenue grew by 30% YoY, and PAT by 58% YoY, indicating strong current growth. Historically, revenue grew from INR 2,199 Cr in FY21 to INR 4,643 Cr in FY25, demonstrating a consistent upward trend with some cyclical variations. The growth is driven by both volume expansion in its energy and mining segments and improved realizations in certain periods.

F. Risk Landscape

While SEML and the broader Iron & Steel sector benefit from strong growth drivers, several risks could impact performance:

1. **Cyclicality and Commodity Price Volatility:** The Iron & Steel sector is inherently cyclical, heavily influenced by global economic conditions, demand from end-user industries (construction, automotive), and raw material prices. Subdued metal and energy prices, as experienced in Q3 FY26, can significantly impact revenue and profitability. Steel prices touched multi-year lows earlier in Q3 FY26, highlighting this volatility. 2. **Operational Disruptions:** Planned and unplanned shutdowns can affect production and sales. SEML experienced an annual maintenance shutdown of one 300 MW IPP unit for 45 days and a 30 MW captive power unit shutdown in Q3 FY26, which temporarily impacted steel production and power generation. Such events can lead to revenue loss and increased costs. 3. **Regulatory and Environmental Risks:** Obtaining environmental clearances (ECs) and other regulatory approvals for capacity expansions (e.g., coal mines, SKS Power doubling) can be time-consuming, with processes taking a minimum of 2 years, including forest clearance. Delays in these approvals can defer growth plans. The Union Budget's focus on CCUS, while an opportunity, also implies potential future regulatory pressures or investment requirements for greener technologies. 4. **Power Price Fluctuations:** While SEML benefits from long-term PPAs, a portion of its power sales are exposed to open market prices (IEX). Q3 power price realizations are typically lower due to seasonal factors, whereas Q1 (summer season) generally sees better prices. Significant drops in IEX prices can impact the profitability of the energy segment. 5. **Litigation Risks:** The ongoing litigation regarding the SKS Power acquisition, with appeals filed by unsuccessful resolution applicants heard by the Supreme Court, presents a legal and operational risk until a final order is reserved. While SEML is confident, an unfavorable outcome could impact its strategic growth plans. 6. **Input Cost Volatility:** Although coal index prices have moderated, any upward trend in global coal prices or changes in domestic coal allocation policies could impact the cost of power generation and steel production, even with captive mines. The slight premium of captive coal prices (Gare Palma) over SHAKTI coal (INR 0.10 higher per GCV) indicates a potential cost differential.

G. Capital Allocation & Investor Returns

SEML demonstrates a prudent and growth-oriented capital allocation strategy, primarily funding its expansions through internal accruals and maintaining a strong balance sheet.

**Capital Expenditure (Capex):** * For 9M FY26, SEML incurred over INR 400 crores in Capex. * The Capex guidance for FY26 is INR 550 crores to INR 600 crores, which management believes is comfortably achievable. * This Capex is directed towards strategic initiatives such as the commissioning of the 24.9 MW Rehar Hydro Power Project, the 50 MW captive solar power project, the 30 MW TG set replacement, and the development of new coal mines like Sahapur West. * Long-term Capex will be required for the planned doubling of SKS Power capacity and the significant expansion of captive coal mines to 3 MT and then to 5.2 MT.

**Debt Management and Gearing:** A key highlight of SEML's capital allocation is its aggressive debt reduction. * Consolidated net debt significantly reduced from approximately INR 1,500 crores as of 31st March 2025 to below INR 500 crores as of 31st December 2025. * This has resulted in negligible consolidated net gearing and a consolidated Net Debt to EBITDA ratio well below 1x. * At the standalone level, the company is cash positive, indicating exceptional financial health and flexibility. * This strong balance sheet provides the company with significant financial headroom for future growth and resilience against market downturns.

**Dividend Policy:** SEML has a consistent and growing dividend payout policy, reflecting its commitment to returning value to shareholders. * Dividends per share have steadily increased from INR 0.75 in FY21 to INR 1.50 in FY25, with a special dividend also paid in FY23. * This upward trend in dividends signals management's confidence in sustained profitability and strong cash flow generation.

**M&A Activity and Diversification:** SEML is actively looking for both inorganic and brownfield expansion opportunities, particularly in its core energy and mining segments. * The SKS Power acquisition litigation, if resolved favorably, represents a significant inorganic growth avenue. * The company is also open to opportunities in emerging areas like nuclear energy, critical mineral mining, and battery storage, indicating a forward-looking approach to diversification and long-term value creation. * Pursuing Greenfield coal mines and hydro power projects further underscores its organic growth strategy.

Overall, SEML's capital allocation strategy is characterized by disciplined investment in high-growth and integrated assets, aggressive debt reduction, and a consistent return of capital to shareholders, all aimed at enhancing long-term investor returns.

H. Future Outlook & Projections

The future outlook for SEML and the broader Iron & Steel sector in India remains positive, driven by strong domestic demand, strategic expansions, and a favorable policy environment.

**Industry Growth Projections:** * India's steel consumption is expected to continue its upward trajectory, supported by the government's massive infrastructure spending (INR 12 lakh crores) and ongoing expansion of manufacturing bases. * The focus on "Make in India" and various production-linked incentive (PLI) schemes will further boost demand for steel. * The Union Budget's allocation for CCUS indicates a long-term shift towards greener steel production, which could drive technological upgrades and new investment opportunities in sustainable practices.

**Management Guidance and Company-Specific Projections:** * **FY26:** * SEML is confident of achieving enhanced output of 1.8 MT from the Gare Palma IV/7 coal mine within the current financial year. * SKS Power generation is on track to achieve 400 crore units. * Capex guidance of INR 550-600 crores is expected to be met. * Energy is projected to remain the prominent contributor to the bottom line, contributing more than two-thirds of EBITDA. * **FY27:** * The Sahapur West mine is targeted for commissioning before the end of FY27. * The 50 MW captive solar power project is expected to be commissioned in Q1 FY27. * The 30 MW TG set replacement is expected to be commissioned by mid-FY27. * SKS Power generation is guided to be slightly higher than the current year, at 410-420 crore units. * The overall financial outlook for FY27 is projected to be "better than 2026," indicating continued growth and improved profitability. * IPP average tariff is expected to be above INR 5 per unit, reflecting better power price realizations. * **Long-term:** * The SKS Power capacity doubling initiative, following the resolution of litigation, is a significant long-term growth lever, though approvals are expected to take 2 years after the MOU. * Captive coal mine expansions to 3 MT and then to 5.2 MT are planned, with the first phase (3 MT) requiring a minimum of 24 months for ECs, including forest clearance. This will ensure long-term raw material security. * The Minerals Business Vertical is seen as the second major lever of growth after Energy, indicating continued strategic focus on mining assets. * SEML is actively exploring diversification into nuclear energy, critical mineral mining, and battery storage, positioning itself for future energy and resource trends.

**Transformation Themes and Inflection Points:** * The transition towards a more integrated "Energy-plus-Minerals" model is a key transformation theme, providing stability and diversified growth. * The increasing focus on renewable energy (solar, hydro) within SEML's portfolio aligns with global sustainability trends and India's energy transition goals. * Technological upgrades in steel plants, supported by government initiatives, will drive efficiency and reduce environmental footprint. * The resolution of SKS Power litigation could be a significant inflection point, unlocking substantial growth in the energy segment.

I. Company-by-Company Profiles

Sarda Energy & Minerals Ltd. (SEML)

**Company Description:** Sarda Energy & Minerals Ltd. (SEML) has evolved from a metal manufacturer into a vertically integrated "Energy-plus-Minerals" enterprise. It operates across three core segments: Energy (thermal, hydro, solar power), Mining (coal, iron ore), and Metals (ferro alloys, steel products like pellets, sponge iron, billets, wire rods, HB wires). The company's integrated model aims to absorb market impacts and maintain stability across its businesses, with energy now contributing more than two-thirds of its EBITDA.

**Scale Metrics:** * **Market Cap (as on 6-Feb-26):** INR 18,640 Cr * **Consolidated Net Revenue (9M FY26):** INR 4,437 Cr * **Total Energy Capacity (as of FY26):** 928.3 MW (expected to reach 1,053.3 MW with ongoing projects) * Thermal Power: 761.50 MW (including 600 MW SKS Power IPP, 81.5 MW Siltara CPP, 80 MW Visakhapatnam CPP) * Hydro Power: 166.80 MW (expected 241.80 MW with 75 MW ongoing) * Solar Power: 0 MW (50 MW ongoing) * **Total Coal Mining Capacity (as of FY26):** 1.80 MTPA (Gare Palma IV/7), with planned expansion to 5.51 MTPA with upcoming mines. * **Iron Ore Mine Capacity:** 1.50 MTPA * **Metals Capacities:** * Pellets: 900,000 MT * Sponge Iron: 360,000 MT * Steel Billet: 300,000 MT * Wire Rods: 250,000 MT * HB Wires: 45,000 MT * Ferro Alloys: 147 MVA (45 MVA Chhattisgarh, 102 MVA Visakhapatnam)

**Financial Performance Summary (Consolidated):** * **9M FY26:** * Net Revenue: INR 4,437 Cr (+30% YoY) * EBITDA: INR 1,672 Cr (+53% YoY), Margin: 35.8% * PAT: INR 954 Cr (+58% YoY), Margin: 20.4% * EPS: INR 26.90 * **Q3 FY26:** * Net Revenue: INR 1,276 Cr (-3% YoY) * EBITDA: INR 395 Cr (+7% YoY), Margin: 29.1% * PAT: INR 190 Cr (-5% YoY), Margin: 14.0% * EPS: INR 5.40 * **Historical (FY21-FY25):** Revenue grew from INR 2,199 Cr (FY21) to INR 4,643 Cr (FY25); PAT from INR 376 Cr (FY21) to INR 702 Cr (FY25). * **Balance Sheet (as of 31st Dec 2025):** Consolidated Net Debt below INR 500 Cr (down from ~INR 1,500 Cr in Mar-25), Net Gearing negligible, Net Debt to EBITDA well below 1x. Standalone cash positive. * **Credit Ratings:** CRISIL AA- / Positive / A1+ (Parent Company).

**Strategic Priorities & Focus Areas:** 1. **Scaling the Energy Business:** Expanding thermal, hydro, and solar capacities, securing long-term PPAs, and resolving the SKS Power acquisition to double its capacity. Energy is the primary growth lever. 2. **Strengthening Mining Integration:** Enhancing existing coal mine capacities, developing new high-grade coal mines, and securing raw material supply for captive consumption. Minerals is the second major growth lever. 3. **Maintaining Discipline in Metals:** Focusing on domestic and export markets for ferroalloys based on realization and supply continuity, while leveraging captive consumption for steel products. 4. **Diversification:** Exploring opportunities in nuclear energy, critical mineral mining, and battery storage for future growth. 5. **ESG & Sustainability:** Investing in greener technologies (e.g., 50 MW solar project, EV vehicles), promoting health & safety, and extensive CSR initiatives in education, healthcare, and livelihood support.

**Competitive Advantages & Positioning:** * **Integrated Business Model:** "Energy-plus-Minerals" platform provides cost efficiencies, raw material security, and diversified revenue streams, mitigating cyclical risks. * **Strong Financial Health:** Low leverage, negligible net gearing, and significant liquidity (~INR 2,300 Cr) enable self-funded growth and resilience. * **Diversified Asset Base:** Thermal, hydro, and mining assets deliver stable cash flows. * **Strategic Location:** Operations primarily in Chhattisgarh, a resource-rich state, providing proximity to raw materials and end-markets. * **Long-term PPAs:** Secured PPAs for hydro and thermal power projects provide revenue visibility and stability.

**Key Metrics & KPIs Specific to the Company:** * Energy contribution to EBITDA (>2/3) and EBIT (57% in Q3 FY26, 69% in 9M FY26). * SKS Power PLF: 81%. * Captive consumption rates for metal products (e.g., Sponge Iron ~85%, Steel Billet ~85%). * Net Debt to EBITDA ratio (well below 1x). * IPP Average Tariff (expected >INR 5 per unit in FY27).

**Management Outlook & Guidance:** * **FY26:** Gare Palma IV/7 output to 1.8 MT; SKS Power generation 400 crore units; Capex INR 550-600 Cr. * **FY27:** Sahapur West mine commissioning; 50 MW solar project in Q1 FY27; 30 MW TG set replacement by mid-FY27; SKS Power generation 410-420 crore units; Overall financial outlook "better than 2026"; IPP average tariff above INR 5 per unit. * **Long-term:** Power to remain prominent; Minerals as second growth lever; SKS Power capacity doubling (2 years for approvals); Coal mine expansion to 3 MT (24 months for ECs).

**Recent Developments & Initiatives:** * Commissioned 24.9 MW Rehar Hydro Power Project (Jul-25) with 40-year PPA. * Secured 200 MW medium-term and 100 MW long-term offtake for IPP. * Approval for Gare Palma IV/7 coal mine capacity enhancement nearing completion. * Development of Sahapur West high-grade coal mine progressing. * Significant reduction in consolidated net debt. * Actively pursuing approvals for expansion of existing 600 MW IPP thermal power project. * Signed MOU with state government for SKS Power capacity doubling. * Exploring nuclear energy, critical mineral mining, and battery storage. * Awarded Appreciation Award for Best Company in Eastern Region in Safety category.