TAB 1 · SNAPSHOT

Sunflag Iron and Steel Co Ltd

NSE: SUNFLAG · BSE: 500404 · CIN L27100MH1984PLC034003 · Sector: Iron & Steel Products (special/alloy long steel) · Non-index small-cap

One-line thesis. A ₹3,939 Cr-revenue, 12%-margin Indian special-steel bar maker whose real economic weight sits in a 6.00 crore-share (10.66%) stake in Lloyds Metals & Energy (LMEL) worth ≈₹10,872 Cr at LMEL's ₹1,812 — i.e. ~1.35x Sunflag's own ₹8,031 Cr market cap. The market therefore ascribes zero-to-negative value to the steel business once the LMEL stake is counted even after capital-gains tax. [Analyst View]

FY26 Revenue (cons.)

₹3,939 Cr

+11.4% YoY · TTM ₹3,995 Cr [Fact]

FY26 PAT (cons.)

₹202 Cr

EPS ₹11.23 · +24.9% YoY [Fact]

FY26 EBITDA margin

12.1%

EBITDA ₹477 Cr (FY25 11.0%) [Fact]

Reported RoE / RoCE

2.4% / 4.1%

Depressed by ≈₹6,698 Cr LMEL carrying value (net of DTL) in equity; ex-LMEL RoE ≈9% [Est.]

Market data (as of 12 Oct 2026, 12:40 IST, Screener)

Metric	Value
CMP	₹446 (+1.17% intraday)
Market cap	₹8,031 Cr
Shares outstanding	18,02,19,448 (FV ₹10)
52-week high / low	₹479 / ₹192 (low 30-Mar-2026)
P/E (TTM, cons.)	37.8x
Book value / share · P/B	₹492 · 0.91x (Mar-26 book; incl. Q1 FY27 TCI ≈₹649 · ≈0.69x [Est.])
Dividend (FY26) · yield	₹1.00 · 0.23%
1-yr / 3-yr / 5-yr price CAGR	64% / 31% / 40%
Listed	BSE & NSE (company inc. 1984)
Index membership	None of NIFTY 50/100/Midcap; BSE SmallCap universe [Analyst View]

Company overview

Item	Detail
Registered office	33/1 Mount Road, Sadar, Nagpur 440001, Maharashtra
Works	Warthi, Bhandara Road, Bhandara 441905 (≈70 km from Nagpur)
Incorporated / ops start	Sep-1984 / 1989 (as a spring-steel producer)
Employees	1,318 permanent (31-Mar-2026)
Promoters	Bhardwaj family (Sunflag Group) — 51.16%; Sunflag Ltd (Channel Islands, UK) 36.21%
Strategic holder	Daido Steel Co. Ltd, Japan — 10.00% (since Sep-2014)
Chairman / MD	Ravi Bhushan Bhardwaj (Non-exec) / Pranav Bhardwaj
Credit rating	CRISIL AA-/Stable, A1+ (reaffirmed 2-Apr-2026)
Auditor	Lodha & Co. LLP (from FY26; replaced NSBP & Co.)

What the company does — plain English

Sunflag runs a single, backward-integrated special-steel plant at Bhandara, Maharashtra. Iron ore and coal go in through a sponge-iron (DRI) plant, a sinter plant and a 350 m³ mini blast furnace; the hot metal and DRI are refined in a 55-tonne EAF route with ladle furnaces, vacuum degassing and continuous/ingot casting; and the output is rolled into alloy, carbon, spring, bearing, valve, free-cutting, micro-alloyed, stainless and tool-steel bars, wire rods and bright bars — the raw material for gears, crankshafts, drive shafts, steering parts, bearings and springs. About 70–75% of sales go to the automotive chain (CARE, Feb-2026); the rest goes to railways, defence/ordnance, engineering, and — a small but strategic niche — aerospace/nuclear/defence super-alloys made through VIM/ESR/VAR vacuum-remelting units commissioned 2020–23. It also owns a captive underground coal mine (Belgaon), a 30 MW captive power plant and a portfolio of new mining blocks under development. Sitting above all this is a listed-equity stake in Lloyds Metals & Energy obtained via a 2022 arbitral award [Fact], worth ≈₹10,900 Cr at 12-Oct-2026 prices [Est.].

Quick Verdict Scorecard

Business

Medium

Management

Medium

Financial

Strong

Valuation

Fair

Overall

Neutral

Data freshness: prices 12-Oct-2026 12:40 IST (Screener.in); financials through Q1 FY27 (quarter ended 30-Jun-2026, results 11-Aug-2026); FY26 Annual Report (40th AR, Board's report dated 11-Aug-2026); CRISIL rationale 2-Apr-2026; CARE rationale 23-Feb-2026. Q2 FY27 (Sep-2026 quarter) results not yet published as of report date. ₹ Cr unless stated; FY = April–March.

TAB 2 · ANALYST NOTES

Analyst Notes — what is actually going on

1. This is two companies in one share. The first is a mid-sized, well-run but unspectacular special-steel bar mill: ₹3,939 Cr revenue, ₹477 Cr EBITDA (12.1%), ~4.7 lakh tonnes of rolled output, 70–75% auto exposure, a 9–13% ROCE through-cycle on its operating capital. The second is a passive, quoted 10.66% stake in Lloyds Metals & Energy — a fast-compounding iron-ore/DRI/pellet company in Gadchiroli whose FY26 PAT was ₹3,829 Cr and whose Q1 FY27 PAT alone was ₹1,734 Cr. At LMEL's ₹1,812 (12-Oct-2026), Sunflag's 6.00 crore shares are worth ≈₹10,872 Cr pre-tax and ≈₹9,470 Cr after the ~14.6% deferred tax the company already provides on the MTM gain. Sunflag's entire market cap is ₹8,031 Cr. [Est.]

2. The arithmetic of the discount. If one values the steel business conservatively at 6.5x FY26 EBITDA (≈₹3,100 Cr EV, ≈₹2,806 Cr equity after ≈₹294 Cr net debt), the market is paying only ≈₹5,225 Cr for an LMEL stake worth ≈₹9,470 Cr post-tax — a ~45% holding-company discount (≈52% on pre-tax value). Put differently, Sunflag trades at ≈85% of the post-tax value of its LMEL shares alone. Indian promoter-controlled holdcos with no stated monetisation plan routinely trade at 40–60% discounts, so this is "normal", not an anomaly that must close. [Analyst View]

3. Why the stock re-rated in 2026. The share went from ₹192 (30-Mar-2026, 52-week low) to ₹479 high and ₹446 today (+132%). The drivers are mechanical rather than operational: (a) LMEL rose from ≈₹1,272 at 31-Mar-2026 (implied by the ₹7,630 Cr fair value in the FY26 balance sheet) to ≈₹1,810 by 30-Jun-2026 — Sunflag's Q1 FY27 standalone total comprehensive income was ₹2,825.5 Cr against PAT of just ₹64 Cr; (b) a ₹60 Cr bulk purchase (20 lakh shares at ₹300 by Vallabh Roopchand Bhanshali, early May 2026) triggered a 29% two-day move to ₹428; (c) the long-standing 11% public holder Bhupendra G. Sanghavi & group sold 51.3 lakh shares (SAST filing, Jun-2026), which supplied the float. The company told BSE on 30-Sep-2026 that the price move was "purely due to market conditions". [Fact]/[Analyst View]

4. The steel business is improving, modestly. FY26 revenue +11.4%, EBITDA +22.6%, PAT +24.9%, interest cost −20% (₹90 Cr → ₹72 Cr) as term debt was repaid, OCF doubled to ₹390 Cr and FCF was ₹262 Cr — the best cash year in a decade. Q1 FY27 continued: revenue ₹1,079 Cr (+5.5% YoY, +7.8% QoQ), EBITDA ₹119 Cr (11.0%), PAT ₹66 Cr. But margins are stuck in the 10–14% band that has prevailed since FY23; super-alloy offtake is "slower than envisaged" (CARE); a secondary source (Univest) puts Q1 FY27 material cost at ~62% of sales — unverified, and not evidently a deterioration given FY26 full-year RM + inventory change was 63.0%. This is a cyclical, price-taking business with a technology edge in clean steel, not a compounder. [Fact]/[Analyst View]

5. What could close the gap — and what makes it permanent. The discount narrows only if (i) the stake is partly monetised and the cash is returned or reinvested at good returns, (ii) LMEL starts paying meaningful dividends, or (iii) Sunflag's own ROCE rises enough to make the market care. None is announced. Management has used the stake as collateral (74 lakh LMEL shares pledged to Indian Bank), dividends remain token (₹1/share, 9% payout), there are no earnings calls and minimal investor disclosure, and ~37% of the share capital is still in physical form. These are the features of a family-controlled company that does not court minority investors — the reason the discount exists. [Analyst View]

6. The swing factor is LMEL itself. A 10% move in LMEL moves Sunflag's look-through NAV by ≈₹1,087 Cr pre-tax / ≈₹930 Cr post-tax (≈₹52/share, ~12% of CMP). LMEL's own 52-week range is ₹1,043–₹2,127. Anyone buying Sunflag is, in substance, buying LMEL at a discount with a modest steel business as a free option — and taking on LMEL's single-mine (Surjagarh), single-region, iron-ore-price risk. If you would not own LMEL, you should not own Sunflag for the discount. [Analyst View]

7. Things to watch in the next 12 months: Q2 FY27 results (Nov-2026) and the size of OCI; any board resolution on LMEL monetisation or pledge changes; LMEL's own Q2 delivery and dividend policy; development milestones on the new mining portfolio (Bhivkund coal, Tambia South coal, Bajna and Surjagad-6 iron ore, Surajpura phosphorite); defence/aerospace order wins from the super-alloy line; and resolution of the Khappa/Madanpur/C T Mining coal-block compensation claims dating from the 2014 Supreme Court de-allocation. [Analyst View]

What tempers enthusiasm: (1) ~45–52% holdco discount has no catalyst to close; (2) the stock has already more than doubled from its March low on LMEL's move; (3) reported RoE of 2.4% and no earnings calls/guidance; (4) P/E of 37.8x on steel earnings alone is not cheap versus Kalyani Steels (16x) or Jayaswal Neco (16x).

What amplifies it: (1) LMEL compounding (Q1 FY27 PAT ₹1,734 Cr, ≈₹6,900 Cr annualised) — Sunflag's look-through share (10.66%) ≈₹740 Cr annualised, 3.6x its own PAT (on LMEL's TTM PAT of ₹4,921 Cr, Screener, the look-through is ≈₹525 Cr, 2.6x); (2) AA- balance sheet, net debt ≈₹294 Cr; (3) steel FCF ₹262 Cr in FY26; (4) defence/aerospace/nuclear approvals (VSSC, LPSC, HAL, BrahMos, DRDO, NPCIL) are an under-appreciated optionality. [Est.]

TAB 3 · BUSINESS DEEP-DIVE

Business Deep-Dive

Products

Product family	Grades / forms	End-use	Comment
Alloy & carbon engineering steel bars	Case-carburising (e.g. 17CrNiMo6 RCS blocks), through-hardening, micro-alloyed, CHQ	Transmission gears, drive shafts, crankshafts, steering, axle parts	Core volume; preferred-vendor status with major auto OEMs/Tier-1s (CARE) [Fact]
Spring steel	Flats & rounds	Leaf/coil springs (auto, railways)	Original 1989 product
Bearing steel	High-carbon chromium, new ball-application grades (FY26)	Bearings	New grades developed FY26 [Fact]
Valve steel	Incl. high-temp 21-4N (FY26)	Engine valves	Import-substitution grade
Free / semi-free cutting steel	Leaded / sulphurised	Machined fasteners, fittings
Stainless steel	Long products	Exhaust, engineering
Tool & die steel	Large-size tool/die steels; new market in Al/Cu extrusion, seamless tube, press/hammer forging dies (FY26)	Tooling	Overlaps with Daido D.M.S. India JV
Super-alloys & aerospace steels	Inconel 625, Incoloy, Nimonic; AMS 6509 (FY26); bars, billets, now plates & rings	Aero-engines, fighter & commercial aircraft, space vehicles, nuclear reactors, gas turbines, petrochem	VIM/ESR/VAR route; approvals from VSSC, LPSC, HAL, BrahMos, DRDO, DRDL, NPCIL, Solar Industries, Paras Defence, HYT Innovatives, Adani Defence & global OEMs (FY26 AR) [Fact]
Wire rods & bright bars	Round/hex coils; peeled, drawn, ground bars	CHQ fasteners, precision parts	Supplies JV Ramesh Sunwire (₹32.7 Cr FY26)
Intermediates	Pig iron, billets/blooms, ingots	Merchant sales	Declining share as rolled volume rises (CARE)

Facilities — Warthi, Bhandara (single integrated site)

Unit	Capacity	Technology	FY26 output	FY25 output
Direct Reduction Plants I+II (sponge iron)	2,62,000 tpa	Krupp Codir (coal-based)	1,56,397 t	1,52,937 t
Sinter plant (33 m²)	3,64,000 tpa	SSIT / JSMDI (China)	n.d.	n.d.
Mini blast furnace (350 m³) + pig caster 800 tpd	3,00,000 tpa hot metal (website)	MECON	4,71,652 t*	4,02,530 t*
Steel melt shop: 55 t EAF (40 MVA), 2 LHF, VD-1/2 (VD-3 under install), AOD, CCM-1/2, ingot casting	7,50,000 tpa special steel (company brief)	Mannesmann Demag	4,97,506 t	4,79,429 t
Rolling: bar & section mill, alloy steel mill, blooming mill + HV mill, wire-rod block	5,00,000 tpa rolled (CARE/CRISIL)	—	4,67,540 t	4,49,117 t
Super-alloy: VIM (1–6 t), ESR-1/2 (1.8–22 t), VAR (2–16 t), 2,000 t forging press	n.d.	Commissioned 2020–23	n.d.	n.d.
Captive power plant (WHRB on DRP flue gas + FBC boiler)	30 MW	—	1,577.16 lakh kWh	1,550.49 lakh kWh
Belgaon underground coal mine (Chandrapur)	≈0.27 mtpa rated	De-pillaring stage	1,03,860 t	1,17,820 t
Bright bar, heat treatment, testing (PAUT, MFL, eddy current, immersion UT, SEM)	—	NABL labs	—	—

Source: FY26 AR Board's Report §7 (production), company website (capacities). *Hot-metal figure exceeds the website's 3 lakh tpa nameplate; the AR table is laid out in two columns and the PDF text extraction may have mis-aligned rows — treat MBF line as unverified. Implied utilisation: rolling ≈94%, SMS ≈66%, DRP ≈60% [Est.]. FY25 rolled-product sales were 4.02 lakh t vs 3.55 lakh t FY24 (CARE); H1 FY26 rolled deliveries 2.74 lakh t.

Certifications & approvals

ISO 9001, IATF 16949, ISO 14001, ISO 45001, EN 9100:2018 (aerospace), NADCAP (heat treating), AD 2000-Merkblatt W0 / PED, NABL ISO/IEC 17025 labs, DSIR-recognised R&D centre [Fact: sunflagsteel.com/certificates]. Defence/space/nuclear vendor approvals listed in Products table above.

Moat / USP

Ore-based clean steel: 100% iron-ore route (DRI + hot metal), "no scrap sourced from outside" — lower residual elements (Cu, Sn) valued for critical auto parts. [Fact: company brief]
Daido Steel technical collaboration (since Nov-2010) and 10% equity (2014): process know-how, grade development, localisation for Japanese OEMs; royalty ₹2.36 Cr paid FY26. [Fact]
OEM qualification lock-in: auto-grade approvals (PPAP) take 12–24 months; switching is costly. [Analyst View]
Vacuum-remelting capability (VIM+ESR+VAR) shared in India by only a handful (MIDHANI, PTC/Aerolloy, Kalyani group) [Analyst View]
Captive coal, power, sinter — partial cost insulation; captive 30 MW CPP plus 71.34 MW solar (ReNew JV, Dec-2024) and 11 MW AC solar (Sunsure, PPA Apr-2025).

Customers, distribution, exports

Named customer list not disclosed. Auto OEMs and Tier-1s are "primary customers" (CARE); top-10 customers 25–30% (CARE) / ≈35% of FY25 revenue (CRISIL). Marketing offices: Delhi, Ludhiana, Faridabad, Mumbai, Pune, Nagpur, Bengaluru, Chennai. Exports (FOB) ₹114.0 Cr FY26 vs ₹48.6 Cr FY25 [Fact, AR Annexure I; column mapping est.] — ≈2.9% of revenue; markets: SE Asia, Americas, South Africa, EU, Japan, Taiwan, Australia, Switzerland, UK, Ireland. Imports (CIF) ≈₹411 Cr FY26 vs ≈₹541 Cr FY25 (ferro-alloys, coking coal, LAM coke, refractories, fluorspar).

R&D / IP

R&D spend ₹1.04 Cr FY26 (0.026% of turnover) vs ₹1.21 Cr FY25 — negligible; technology is largely in-house process development aimed at import substitution plus Daido know-how. No patents disclosed. FY26 developments: bearing grades, 17CrNiMo6 large RCS via ingot route, 21-4N valve steel, large tool/die steels, Inconel 625, AMS 6509. [Fact]

Mining portfolio (FY26 AR status)

Block	Mineral	Area (ha)	Status
Belgaon, Chandrapur (MH)	Coal (UG)	383.56	Operating; reserves 8.152 Mt, extractable balance ≈3.5 Mt; de-pillaring in progress
Navegaon, Bhandara (MH)	Manganese	48.78	Lease lapse sub-judice, Bombay HC (Nagpur)
Warpani, Nagpur (MH)	Manganese	1,419.65	Lease lapse sub-judice
Bande, Gadchiroli (MH)	Iron ore	236.75	Lease lapse sub-judice
Lohardongri, Chandrapur (MH)	Iron ore	35.73	Suo-motu PIL 07/2026 & PIL 14/2026 on forest land in tiger corridor — pending
Bhivkund, Chandrapur (MH)	Coal	802.00	EC & CTO obtained; mining lease executed 21-Apr-2026; Gram Panchayat NOC & NA conversion pending. Axis Bank ₹162.5 Cr term-loan sanctioned for mine assets
Bajna, Chhatarpur (MP)	Iron ore	96.00	FRA clearance received; EC & Stage-I FC expected ≈end Sep-2026 (per AR dated 11-Aug-2026; receipt not confirmed as of 12-Oct-2026)
Surjagad-6, Gadchiroli (MH)	Iron ore	658.00	Composite licence executed 5-May-2025; exploration (60 boreholes) commenced 29-May-2026
Surajpura, Chhatarpur (MP)	Phosphorite (CL)	1,027.29	LoI 13-Feb-2026; survey complete, report in progress
Tambia South, Chhindwara (MP)	Coal	1,490	Declared successful bidder 7-May-2026; CMDPA signed 15-May-2026

Row-to-status mapping for rows 6–8 inferred from the AR's two-column layout [Est.]. Mines under development CWIP: ₹0.44 Cr "temporarily suspended" (AR Note 3). Capital commitments ₹120.5 Cr (31-Mar-2026).

TAB 4 · SEGMENT ANALYSIS

Segment Analysis

Sunflag reports a single operating segment — "Iron & Steel", primarily in India (Ind AS 108). No revenue/EBITDA split by product or end-market is published. The breakdowns below are from rating agencies and AR disclosures. [Fact]

Economic "segments" — what we can reconstruct

Line	FY24	FY25	FY26	Q1 FY27	Source / note
Rolled products revenue (₹ Cr)	3,093	3,334	n.d.	n.d.	CARE; ≈90% of net sales
Rolled products sales volume (lakh t)	3.55	4.02	≈4.7 (production 4.68)	n.d.	CARE; FY26 = AR production [Est.]
Net sales realisation (₹/t)	80,226	77,365	≈84,000 (overstated: includes intermediates)	n.d.	CARE; FY26 = rev ÷ rolled output [Est.]
EBITDA/t (₹)	≈10,500	≈9,700	≈10,200	—	EBITDA ÷ rolled volume [Est.]
Intermediates (pig iron, billets)	≈320	≈200	n.d.	n.d.	Total less rolled [Est.]
Exports (₹ Cr)	n.d.	48.6	114.0	n.d.	AR Annexure I

End-market mix

End market	Share	Trend	Comment
Automotive OEM & auto-ancillary	70–75% (CARE) / 60–65% (CRISIL)	Declining share	Gears, shafts, bearings, springs, valves; EV transition flagged by management as a long-term threat
Railways	25–30% combined (CARE)	Rising	Bottom-poured ingots for critical rail parts; improved product quality for rail in FY26
Defence, aerospace, space, nuclear		Rising from small base	Super-alloy offtake "slower than envisaged"; samples delivered; approvals multiplying
Heavy engineering, oil & gas, power, tooling		Stable	Thermal-power boilers, die steels

Fastest grower: non-auto special steels (defence/aero/rail/tool) — management's stated strategic focus "to protect the Company from dependency on Automobile sector" and the reason for the ₹339 Cr FY22 capex (super-alloy plant, blooming mill expansion). Revenue contribution still unquantified. [Analyst View]

Under pressure: merchant intermediates (pig iron, billets) — being consumed captively as rolled volume rises; and realisations (NSR −3.6% in FY25) amid Chinese/Korean/Japanese import pressure noted in the FY26 Board's report.

Associates / JVs as "mini-segments"

Entity	Stake	Business	FY26 income	FY26 PAT	FY25 PAT
Ramesh Sunwire Pvt Ltd (JV with 3S Applied Technologies, Bengaluru)	49%	Alloy steel wire for auto	₹40.08 Cr	₹1.08 Cr	₹1.01 Cr
Daido D.M.S. India Pvt Ltd (JV with Daido Steel & Daido Die & Mold Steel Solutions)	17.56%	Die/mould/tool steel distribution & processing (Haryana)	₹73.87 Cr	(₹2.84 Cr)	(₹0.07 Cr)
ReNew Green (MPR Three) Pvt Ltd	31.2%	71.34 MW solar SPV, Yavatmal (captive)	₹52.71 Cr	₹4.60 Cr	(₹0.84 Cr)
Sunsure Solarpark Thirty Seven Pvt Ltd	36.27%	11 MW AC / 16.5 MWp solar, Dhule (captive)	—	—	—

Daido DMS 17.56%, Ramesh Sunwire 49% and C T Mining 31.80% are corroborated by Sunflag's earlier related-party disclosures on BSE/NSE (FY20–FY21); ReNew, Sunsure and Madanpur percentages come from the FY26 AR alone and are not independently verified. Share of JV profit in consolidated P&L: ₹1.65 Cr FY26 vs ₹0.28 Cr FY25.

TAB 5 · FINANCIALS — P&L

Profit & Loss

Revenue (₹ Cr) and EBITDA margin, FY19–FY26 (consolidated)

5-year annual P&L (consolidated, ₹ Cr)

Item	FY22	FY23	FY24	FY25	FY26	TTM Jun-26
Revenue from operations	2,698	3,488	3,415	3,536	3,939	3,995
Growth YoY	+42.6%	+29.3%	−2.1%	+3.5%	+11.4%	+9%
Gross profit (Rev − RM − Δinventory)	n.a.	n.a.	n.a.	1,328 (37.6%)	1,458 (37.0%)	—
EBITDA	398	446	375	389	477	476
EBITDA margin	14.8%	12.8%	11.0%	11.0%	12.1%	11.9%
Other income	5	1,201*	8	17	9	12
Depreciation	76	81	103	104	113	116
EBIT (EBITDA − D&A)	322 (11.9%)	365 (10.5%)	272 (8.0%)	285 (8.1%)	364 (9.2%)	360
Finance cost	42	81	97	90	72	66
PBT	285	1,485	183	212	301	307
Tax rate	24%	25%	22%	23%	33%	—
PAT	217	1,115	144	162	202	206
PAT margin	8.0%	32.0%	4.2%	4.6%	5.1%	5.2%
EPS (₹)	12.04	61.89	7.96	8.99	11.23	11.42
PAT ex-one-offs [Est.]	217	≈222	144	162	≈209	—
OCI (mainly LMEL MTM, net of tax)	—	n.a.	n.a.	+3,441	−72	Q1: ≈+2,762 (standalone-derived) [Est.]

*FY23 includes an exceptional ₹1,192.86 Cr (₹892.6 Cr net of tax) — the arbitral award against LMEL settled through 6 crore OFCDs. FY26 includes exceptional −₹8.70 Cr (new Labour Codes, notified 21-Nov-2025). FY26 tax 33% vs 23% because Q4 FY26 tax rate was 58% on prior-period tax adjustments (AR shows earlier-year current/deferred tax lines). Source: Screener (consolidated), FY23 & FY26 ARs. [Fact]

FY26 cost structure (consolidated, ₹ Cr)

Cost line	FY26	% rev	FY25	% rev
Raw materials & components	2,351.8	59.7%	2,229.0	63.0%
Other manufacturing (power, fuel, stores)	625.2	15.9%	627.2	17.7%
Change in inventories	129.1	3.3%	(21.5)	−0.6%
Employee benefits	151.1	3.8%	137.3	3.9%
Other expenses	205.4	5.2%	174.2	4.9%
Finance cost	72.2	1.8%	89.9	2.5%
Depreciation	113.2	2.9%	104.5	3.0%

Last 9 quarters (consolidated, ₹ Cr; table shows latest 8)

Revenue & EBITDA margin

PAT (₹ Cr)

Quarter	Revenue	YoY	QoQ	EBITDA	EBITDA %	Other inc.	Interest	PBT	Tax %	PAT	PAT YoY	EPS ₹
Q2 FY25 (Sep-24)	866	+0.9%	−3.2%	98	11.3%	8	25	55	26%	41	+5%	2.26
Q3 FY25 (Dec-24)	892	+4.4%	+3.0%	110	12.3%	3	22	66	24%	50	+39%	2.78
Q4 FY25 (Mar-25)	883	−3.9%	−1.0%	100	11.3%	3	22	55	22%	43	0%	2.40
Q1 FY26 (Jun-25)	1,023	+14.3%	+15.9%	120	11.7%	10	21	82	24%	63	+125%	3.47
Q2 FY26 (Sep-25)	973	+12.4%	−4.9%	101	10.4%	2	17	59	23%	46	+12%	2.53
Q3 FY26 (Dec-25)	942	+5.6%	−3.2%	132	14.0%	−6	17	78	23%	60	+20%	3.33
Q4 FY26 (Mar-26)	1,001	+13.4%	+6.3%	124	12.4%	3	18	81	58%	34	−21%	1.90
Q1 FY27 (Jun-26)	1,079	+5.5%	+7.8%	119	11.0%	13	14	88	25%	66	+5%	3.66

Source: Screener.in consolidated (YoY/QoQ computed). Standalone Q1 FY27: revenue ₹1,078.95 Cr, PBT ₹85.92 Cr, PAT ₹63.96 Cr, EPS ₹3.55, total comprehensive income ₹2,825.51 Cr (implying ≈₹2,762 Cr OCI from LMEL MTM net of tax; pre-tax MTM ≈₹3,232 Cr per Univest summary of filing [Est.] — cross-check: 6 cr × (₹1,810 − ₹1,272) × (1 − 14.55%) ≈ ₹2,760 Cr). Q3 FY26 other income −₹6 Cr likely forex/MTM. [Fact]

Growth decomposition & quality of earnings

Organic only — no acquisitions in the period. FY25 growth was volume-led (+13% rolled volume) offset by −3.6% NSR; FY26 growth (+11.4%) mixes volume (+4.1% rolled production) and price/mix (≈+7%) [Est.].
Margin trend: peak 14.8% (FY22 commodity upcycle) → 11.0% FY24–25 → 12.1% FY26; Q3 FY26 14.0% best quarter in four years; Q1 FY27 back to 11.0%. Univest attributes this to raw-material cost (≈62% of revenue vs ≈57% a year earlier) — not verifiable against the filing and hard to reconcile with only a 0.7pp YoY EBITDA-margin decline (11.7% → 11.0%); treat as unverified.
One-time items: FY23 arbitral award ₹1,192.86 Cr; FY26 labour-code charge ₹8.70 Cr; Q4 FY26 prior-period tax.
Cash backing: 5-yr (FY22–26) CFO ₹1,147 Cr vs PAT ex-award ≈₹947 Cr → ≈121% conversion [Est.]. FY22 was weak (CFO ₹43 Cr) on an inventory build; FY26 strongest (₹390 Cr). No divergence flag.
Directors' commission provided in FY26 books: ₹8.22 Cr (vs ₹4.16 Cr for FY25) — ≈4% of PAT. [Fact]

TAB 6 · BALANCE SHEET, CASH FLOW & RATIOS

Balance Sheet, Cash Flow & Ratios

5-year balance sheet (consolidated, ₹ Cr, 31-March)

Item	FY22	FY23	FY24	FY25	FY26
Net fixed assets	1,252	1,591	1,525	1,485	1,577
CWIP	373	193	281	297	214
Investments (≈all LMEL at FV)	17	1,726	3,642	7,779	7,692
Goodwill	—	—	—	—	—
Other assets (inventory, receivables, cash)	1,449	1,432	1,574	1,626	1,809
Cash & equivalents + other bank balances	n.a.	n.a.	n.a.	≈158	≈230
Total borrowings	587	609	727	624	524
of which term loans (banks+NBFC)	—	—	—	270	155
of which interest-free promoter loan	—	—	—	13.75	13.75
Deferred tax liability (net)	—	—	446	1,101	1,108
Net worth	1,749	3,342	5,164	8,766	8,872
Net worth ex-LMEL carrying value net of DTL [Est.]	1,749	—	—	≈1,989	≈2,174

CRISIL's adjusted net worth (excl. LMEL MTM) was ₹2,871 Cr at 31-Mar-2025 (methodology differs). DTL on LMEL fair-value gain: ₹932.4 Cr (Mar-26) vs ₹946.0 Cr (Mar-25). Source: Screener, FY26 AR Notes 9, 15, 18.

Investments line (₹ Cr) — the LMEL effect

Cash flow (consolidated, ₹ Cr)

Item	FY22	FY23	FY24	FY25	FY26
Cash from operations	43	278	244	192	390
Capex (CFO − FCF)	339	169	125	88	128
Free cash flow	−296	109	119	104	262
FCF yield on current mcap (₹8,031 Cr)	—	—	—	1.3%	3.3%
Cash from investing	−335	−219	−83	−91	−122
Cash from financing	289	−63	21	−194	−188
CFO / EBITDA [Est.]	11%	62%	65%	49%	82%

Working capital (days)

Metric	FY22	FY23	FY24	FY25	FY26
Debtor days	37	33	37	37	31
Inventory days	186	142	137	154	144
Payable days	102	93	87	79	80
Cash conversion cycle	122	83	88	112	95
Working capital days	54	40	23	34	30

Screener method (inventory days on cost basis). CARE computes FY25 operating cycle at 84 days (inventory 105, debtors 36); CRISIL GCA 134–156 days FY23–25. Both agencies expect the cycle to lengthen as super-alloys (imported nickel/cobalt inputs, long qualification) scale.

Key ratios (standalone, per FY26 AR)

Ratio	FY26	FY25	Comment
Debtors turnover	11.24x	9.99x
Inventory turnover	2.60x	2.50x
Interest coverage	5.06x	3.35x	+51% on term-loan repayment
Current ratio	1.47x	1.45x
Debt/equity (reported)	0.05x	0.06x	Flattered by LMEL MTM; ≈0.24x on ex-LMEL equity [Est.]
Operating profit margin (AR def.)	9.01%	8.06%
Net profit margin	5.09%	4.57%
Return on net worth	2.35%	2.00%	≈9.3% on ex-LMEL equity [Est.]
ROCE (Screener)	4%	4%	Steel-ops ROCE ≈13–14% (EBIT ₹364 Cr / ≈₹2,700 Cr ex-LMEL capital) [Est.]

Debt structure, lenders & rating

Term loans outstanding 31-Mar-2026: ₹154.97 Cr (₹270.20 Cr a year earlier); ROI 8.00–9.65%. Lenders: SBI, Axis Bank (incl. ₹162.5 Cr sanctioned for Bhivkund coal mine assets), Indian Bank, Bajaj Finance (₹55 Cr secured on New Delhi KG Marg property), Tata Capital, South Indian Bank. Working capital: SBI ₹226 Cr, Bank of India ₹119.6 Cr, Canara ₹104.7 Cr, Indian Bank ₹104.7 Cr, IDBI ₹52.1 Cr CC limits; LC/BG ₹673.65 Cr. CRISIL-rated facilities ₹1,850 Cr. Average fund-based utilisation ≈30–35%. No defaults. [Fact: FY26 AR Note 15; CRISIL rationale 2-Apr-2026]

Security notes: 74 lakh LMEL shares (12.3% of the holding; ≈₹1,341 Cr at ₹1,812) pledged exclusively to Indian Bank. Charge modifications on ₹176 Cr and satisfactions on ₹12.47 Cr facilities pending ROC filing (AR note 15(f)).

Agency	Rating	Date	Action
CRISIL	AA-/Stable; A1+	2-Apr-2026	Reaffirmed; CCR withdrawn
CRISIL	AA-/Stable; A1+; CCR AA-	13-Nov-2025	Assigned
CARE	A+/Stable; A1+	23-Feb-2026	Reaffirmed & withdrawn at company request
CARE	A+/Stable	Jan-2023 → Nov-2024	Reaffirmed (multiple)

CRISIL triggers — up: margin >13% with volume growth; down: margin <9% or large debt-funded capex.

Equity dilution / share count

Event	Date	Shares	Comment
Pre-Daido share base	pre-2014	≈16.22 crore	Derived [Est.]
Preferential allotment to Daido Steel	Sep-2014	+1,80,21,945	10% post-issue; ≈¥1 bn (Monoist, Aug-2014)
Current	FY15–Oct-2026	18,02,19,448	No QIP, warrants, ESOPs, buybacks or bonus since; zero dilution for 12 years [Fact]

Key balance-sheet risks: (1) ≈86% of book equity is a single listed stock marked to market (₹7,630 Cr gross fair value; ≈75% net of DTL); (2) contingent liabilities: tax/legal ≈₹17.4 Cr, LCs ₹104.8 Cr, bank guarantees ₹140.5 Cr, plus ₹15 Cr civil matters not provided (incl. ₹11 Cr arbitral award under s.34 challenge); (3) ₹7.37 Cr loan to Khappa Coal fully provided; (4) inventory 140+ days ties up ≈₹1,000 Cr+.

TAB 7 · MANAGEMENT, PROMOTERS & GOVERNANCE

Management, Promoters & Governance

Promoter group — the Bhardwaj family (Sunflag Group, Nagpur)

Person	Role	Background
Late Shri Satyadev Bhardwaj	Founder (per website)	Founder of Sunflag Group
Late P. B. Bhardwaj & Ravi Bhushan Bhardwaj	Promoters ("Bhardwaj brothers")	5+ decades in iron & steel (CARE). Group also linked to Haryana Television Ltd, Supra Corporation Ltd, Surjagarh Metals & Minerals Ltd (related parties)
Ravi Bhushan Bhardwaj (DIN 00054700)	Non-executive Chairman	Commission ₹1.11 Cr (FY26 disclosure, for FY25); retires by rotation, re-appointed at 40th AGM (25-Sep-2026)
Pranav Bhardwaj (DIN 00054805)	Managing Director (KMP)	Age 52, B.Sc. (Chemistry & Business Mgmt), 27 yrs, joined 1-Dec-1998; re-appointed 5 yrs from 17-Jan-2026; remuneration ₹6.12 Cr (41.05x median; +15.6%); holds 16,12,140 shares (0.89%)
Suhrit Bhardwaj (DIN 02318190)	Non-exec, non-independent director	Holds 1,32,17,398 shares (7.33%) — largest individual promoter

Key management

Name	Role	Profile
Ramchandra Vasant Dalvi	Director (Technical), WTD	Age 75, B.Tech (Metallurgy), 43 yrs; joined 3-Aug-2015; ₹1.96 Cr (+41.8%); re-appointed 3 yrs from 14-Aug-2026
S. Mahadevan Iyer	CFO	Age 60, MBA (Fin), PGDFM, 41 yrs; with company since 14-Sep-1990 (ex-Safari Sales Industries); ₹1.07 Cr
CS Ashutosh Mishra	Head Company Secretary	₹0.72 Cr
S. K. Chanda	Head – Marketing	Age 57, MBA, BE (Met), ex-Mukand Ltd; ₹1.32 Cr
Two "Chief Executive Officer" hires	Top-10 employee list	Joined 27-Nov-2024 (ex-Jayaswal Neco) and 14-Nov-2025 (ex-Jai Raj Ispat); names not legible in the AR text available to us — Not Available

Board (as of 12-Oct-2026)

Director	Category	Tenure / note
Ravi Bhushan Bhardwaj	Chairman, Non-exec, Promoter	Long-standing
Pranav Bhardwaj	MD, Executive, Promoter	To Jan-2031
Ramchandra V. Dalvi	Director (Technical), Executive	To Aug-2029
Suhrit Bhardwaj	Non-exec, Non-independent (Promoter)	Rotational
CA M. A. V. Goutham	Independent	2nd term 12-Aug-2025 → 11-Aug-2030
CA Vinita Bahri	Independent (woman director)	2nd term 21-Sep-2025 → 20-Sep-2030
Tirthnath I. Jha	Independent	2nd term 3-Sep-2025 → 2-Sep-2030
Mukund P. Chaudhari	Independent (appointed 11-Aug-2026)	40-month term to 10-Dec-2029
Exits	Sajiv Dhawan (ID) resigned 10-Aug-2025 (personal reasons); CA Neelam Kothari (ID) term ended 20-Sep-2025; Anand S. Kapre (ID) ceased 20-Sep-2026

Board: 8 members, 4 independent (50%) — the regulatory minimum where the chairman is a promoter. 5 board meetings in FY26.

Shareholding trend

Quarter	Promoters	FIIs	DIIs	Public (incl. Daido 10%)	# holders
Sep-2025	51.16%	0.64%	0.18%	48.01%	64,003
Dec-2025	51.16%	0.47%	0.17%	48.22%	56,631
Mar-2026	51.16%	0.54%	0.04%	48.27%	56,098
Jun-2026	51.16%	0.86%	0.21%	47.78%	55,328

Sep-2026 pattern not yet published as of 12-Oct-2026 (due by 21-Oct-2026 under SEBI LODR Reg. 31; the company IR page and Screener show Jun-2026 as latest). Promoter holding unchanged at 51.16% since at least Mar-2021.

Promoter entity (31-Mar-2026)	Shares	%
Sunflag Ltd, Channel Islands, UK	6,52,53,582	36.21
Suhrit R. B. Bhardwaj	1,32,17,398	7.33
Supra Corporation Ltd	85,21,425	4.73
Veena Bhardwaj	35,90,281	1.99
Pranav R. Bhardwaj	16,12,140	0.89
Total promoter group	9,21,94,826	51.16

Large non-promoter holders	%	Note
Daido Steel Co. Ltd, Japan	10.00	Strategic; "deemed related party"
Bhupendra G. Sanghavi & others (incl. Dhirendra B. Sanghavi 7.11% at Mar-26)	8.98 (post Jun-2026)	Sold 31.9 lakh (Jul-2025) and 51.3 lakh (Jun-2026)
IEPF Authority	2.42	43.6 lakh unclaimed shares
Vallabh R. Bhanshali	≈1.1 (bought)	20 lakh @ ₹300, May-2026 bulk deal

Pledge, insider & SAST

Promoter pledge: none reported (Screener/Trendlyne/MarketsMojo show no pledged promoter shares; Jun-2026 SHP is the latest filed). Note the company has pledged 74 lakh LMEL shares to Indian Bank.
Promoter buying history: Veena Bhardwaj bought 15.94 lakh (Nov-2019, ₹31.4), 9.35 lakh (Mar-2020), 10.62 lakh (Aug-2020, ₹45.6); Supra Corp bought 1.88 lakh (Jan/Feb-2019, ₹48). Inter-se transfer 7 lakh Ravi → Pranav (Dec-2016). No promoter selling.
Independent-director/relative selling: Sajiv Dhawan sold 3,500 (Mar-2025, ₹221); Dhawan relatives, Bahri relatives, Kapre small sales 2020–24 — immaterial.

Related-party transactions (FY26)

Counterparty	Relationship	Nature	Amount
Ramesh Sunwire Pvt Ltd	49% JV	Sale of wire rods / purchase of scrap / equity	₹32.70 Cr / ₹0.77 Cr / ₹3.43 Cr
Daido Steel Co., Japan	10% holder (deemed RP)	Royalty / technical services	₹2.36 Cr / ₹0.02 Cr
Haryana Television Ltd	Common director >2% holder	Lease rent (Faridabad office & godown) / security deposit	₹0.57 Cr / ₹0.28 Cr
Supra Corporation Ltd	Promoter group	Rent received	₹0.014 Cr
Surjagarh Metals & Minerals Ltd	Common director	Rent received	₹1,416
Sunflag Foundation	WOS (Sec 8)	CSR spend	₹4.63 Cr
KMP remuneration (all)	—	Salary + commission	≈₹11.3 Cr; FY26 directors' commission provided ₹8.22 Cr

Subsidiaries, JVs & group structure

Entity	Type / stake	Purpose	Status
Sunflag Power Ltd	Subsidiary, 99.88% (+₹10.5 Cr zero-coupon CCDs)	Hanol-Tuini hydro project, Uttarakhand	Non-operational; sub judice since 2023
Khappa Coal Company Pvt Ltd	Subsidiary, 63.27%	Khappa & Extn. coal block (MH)	Block de-allocated by SC order 24-Sep-2014; awaiting BG/compensation; ₹3.16 Cr equity + ₹7.37 Cr loan fully provided
Sunflag Foundation	WOS, Sec-8	CSR agency	Active
Madanpur (North) Coal Block Pvt Ltd	JV, 11.73%	Chhattisgarh coal block	De-allocated 2014; provided
C T Mining Pvt Ltd	JV, 31.80%	Jharkhand coal block	De-allocated 2014; partly provided
Daido D.M.S. India Pvt Ltd	JV, 17.56% (with Daido Steel & Daido DMSS)	Die/mould steel	Operating; FY26 loss ₹2.84 Cr; ₹1.5 Cr provided
Ramesh Sunwire Pvt Ltd	JV, 49%	Alloy wire	Operating; profitable
ReNew Green (MPR Three) Pvt Ltd	JV, 31.2%	71.34 MW captive solar	Operating since Dec-2024
Sunsure Solarpark Thirty Seven Pvt Ltd	Investment, 36.27% (commitment up to ₹5.78 Cr)	11 MW captive solar	PPA 22-Apr-2025
Lloyds Metals & Energy Ltd	Investment, 6,00,00,000 sh = 10.66% (11.89% at allotment Mar-2023; 11.02% Dec-2025)	FVOCI; cost ₹1,226.10 Cr	Fair value ₹7,630.2 Cr (31-Mar-26); ≈₹10,872 Cr at ₹1,812

Clarifications on commonly cited entities: (a) the Daido JV is Daido D.M.S. India, not "Daido D&J"; (b) Khappa is a de-allocated coal block in a 63% subsidiary, not an active asset; (c) no titanium or separate "Sunflag Aero" entity exists — aerospace/defence capability sits inside the parent's super-alloy (VIM/ESR/VAR) facility. [Fact]

Auditors

Statutory: Lodha & Co. LLP (FRN 301051E) appointed at 39th AGM (26-Sep-2025) for FY26–FY30, replacing NSBP & Co. on completion of term. FY26 reports unqualified; no fraud reported. Secretarial: Mukesh Parakh & Associates resigned 3-Jun-2025 (personal reasons) → DM & Associates LLP. Internal: PricewaterhouseCoopers Services LLP. Cost: G. R. Paliwal & Co.

Governance flags [Analyst View]: (1) Only 62.74% of shares dematerialised at 31-Mar-2026 — ≈37% still physical, a large chunk likely the foreign promoter vehicle; SEBI expects promoter holdings in demat — worth questioning; (2) no earnings calls, no investor presentations, single-segment reporting; (3) directors' commission doubled (₹4.16 Cr → ₹8.22 Cr) while dividend is ₹18 Cr; (4) two independent-director exits in FY26 plus secretarial-auditor resignation; (5) promoter group entity named "Surjagarh Metals & Minerals" as a related party — nature of any link with the LMEL Surjagarh asset undisclosed; (6) pending ROC charge filings. Positives: no promoter pledge seen, no promoter selling, no SEBI orders found, unqualified audits, CRISIL AA-.

TAB 8 · SUPPLY CHAIN

Supply Chain

Value chain map

MineIron ore (merchant, Odisha/MH/Chhattisgarh; LMEL Surjagarh is a regional source), non-coking coal (Belgaon captive + linkage/auction), coking coal & LAM coke (imported)

→

Iron-makingDRI 2.62 lakh tpa + sinter 3.64 lakh tpa + MBF 350 m³

→

Sunflag SMSEAF/LF/VD/AOD + CCM/ingot; VIM/ESR/VAR for super-alloys; ferro-alloys, Ni, Co imported

→

Rolling & finishingBars, wire rods, bright bars, forgings

→

Forgers / Tier-1sBharat Forge-type forgers, gear/bearing/spring makers, Ramesh Sunwire

→

End usersAuto OEMs (PV/CV/2W/tractor), Indian Railways, ordnance & DPSUs, ISRO, NPCIL

↑ Upstream — what Sunflag depends on

Raw materials = 70–80% of costs (CARE); FY26 RM consumed ₹2,352 Cr (59.7% of revenue).
Iron ore / fines: purchased; captive iron-ore blocks (Bajna, Surjagad-6, Lohardongri) not yet producing. Single-region logistics (Vidarbha/Central India).
Coal: Belgaon UG mine ≈1.04 lakh t FY26, depleting (≈3.5 Mt extractable); Bhivkund and Tambia South blocks are the replacement pipeline.
Imported inputs: ferro-alloys, coking coal, LAM coke, refractories, fluorspar; CIF imports ≈₹411 Cr FY26 (≈₹541 Cr FY25) — ≈10–15% of costs exposed to USD; super-alloys add nickel/cobalt import dependence.
Power: 30 MW captive (157.7 million kWh FY26) + 71.34 MW solar JV + 11 MW AC solar PPA — grid dependence falling.
Technology: Daido Steel (royalty ₹2.36 Cr/yr) — single-source know-how partner.
Pass-through: finished-steel prices follow RM with a 1–2 month lag (CARE); auto contracts typically have quarterly RM-linked price resets [Analyst View].
Supplier concentration: named suppliers not disclosed.

↓ Downstream — who depends on Sunflag

Auto 70–75% of sales (CARE); top-10 customers 25–30% (CARE) / ≈35% FY25 (CRISIL) — moderate concentration. Named OEMs not disclosed.
End products: transmission gears, drive shafts, crankshafts, steering systems, bearings, exhaust systems, engine valves, leaf/coil springs, CHQ fasteners.
Railways & defence: bottom-poured ingots for critical rail and ordnance components; consistent orders from ordnance factories and government entities (CARE).
Aerospace/space/nuclear: VSSC, LPSC, HAL, BrahMos, DRDO, DRDL, NPCIL, Solar Industries, Paras Defence, HYT Innovatives, Adani Defence approvals.
Stickiness: OEM grade approvals and PPAP make Sunflag a qualified (often dual-sourced) supplier; contracts usually annual/schedule-based, not multi-year take-or-pay [Analyst View].
Exports only ≈3% of sales.

Where pricing power sits: with the iron-ore/coking-coal suppliers on the input side and the large auto OEMs on the output side. Sunflag is a price-taker in a fragmented special-bar quality (SBQ) market (CRISIL: "limited pricing power"); its edge is quality/approval, not price. Pricing power is higher in the small super-alloy/defence niche. [Analyst View]

TAB 9 · COMPETITIVE POSITION

Competitive Position

India's alloy/special-bar steel market is served by integrated majors (JSW Steel special bars, Tata Steel long products, Jindal Steel), and a set of specialist mid-caps. Sunflag, with ≈5 lakh tpa rolled capacity, is a mid-tier specialist, smaller than Jayaswal Neco and Mukand in tonnage but with more vacuum-metallurgy capability than most. No published market-share data. [Analyst View]

Peer comparison (12-Oct-2026, Screener; FY26)

Company	Mcap ₹ Cr	FY26 Rev	Growth	EBITDA %	PAT %	RoE	P/E	P/B	EV/EBITDA	Moat
Sunflag (cons.)	8,031	3,939	+11.4%	12.1%	5.1%	2.4%	37.8	0.91	17.5 (neg. ex-LMEL)	Ore-based clean steel, Daido, VIM/VAR
Kalyani Steels	4,361	1,846	−6.9%	20%	14.0%	13.2%	16.2	2.07	≈13.4	Captive to Bharat Forge/Kalyani group forging demand
Vardhman Special Steels (SA)	3,677	1,754	−0.6%	9%	7.0%	11.6%	25.6	2.88	≈23.9	Aichi Steel (Toyota group) partnership; scrap-EAF
Jayaswal Neco (SA)	9,008	7,085	+19.0%	19%	8.0%	18.0%	15.7	3.17	≈8.3	Integrated, captive iron ore (Chhattisgarh), scale
Mukand Ltd	2,619	4,890	0%	3.5%	12.4%*	5.6%	4.1*	1.72	≈25	Alloy/stainless bars; Bajaj group
MIDHANI (SA)	8,230	1,209	+12.6%	20%	10.8%	8.9%	61.3	5.45	≈35.7	Defence PSU monopoly in super-alloys/titanium

Peer EV/EBITDA = (mcap + gross borrowings) ÷ FY26 EBITDA, cash not deducted [Est.]; Sunflag's 17.5x is net of ≈₹230 Cr cash (≈17.9x on the same gross basis as peers). *Mukand FY26 PAT inflated by ₹553 Cr other income. Prices per Screener, 12-Oct-2026 ≈12:46 IST. Vardhman, Jayaswal Neco, MIDHANI standalone. Peer set also includes JSW/Tata/Jindal special-bar divisions (not separately listed) and private Aerolloy/PTC in super-alloys.

Sunflag vs each peer

Peer	Sunflag stronger	Sunflag weaker
Kalyani Steels	Larger scale (2.1x revenue), vacuum remelting, AA- vs similar	Margin 12% vs 20%; RoE far lower
Vardhman Special	2.2x scale, integrated ore route, defence/aero approvals	Vardhman has Aichi/Toyota anchoring and higher RoE
Jayaswal Neco	Cleaner balance sheet (Neco debt ₹2,109 Cr), more specialised grades	Neco margin 19% vs 12%; larger scale, captive ore
Mukand	Far better operating margin (12% vs 3.5%), lower debt	Mukand has stainless-long depth
MIDHANI	Lower cost base, commercial auto volume, trades at 0.9x book vs 5.4x	MIDHANI's entrenched defence/space franchise, titanium capability

Industry structure & Porter's Five Forces

Industry size: India finished-steel consumption 163.7 Mt in FY26 (77 Mt in FY15); crude steel 153.6 Mt Apr–Feb FY26; NSP target 300 Mt capacity by 2030-31 (FY26 AR). Specialty steel PLI outlay ₹6,322 Cr.
Structure: SBQ/alloy bars fragmented — integrated majors plus ~10 specialists.
Policy: PLI 1.1/1.2 for specialty steel; DMI&SP preference policy; safeguard/anti-dumping on imports; QCO regime (partially relaxed).

Supplier power: High — iron ore, coking coal, ferro-alloys.
Buyer power: High — auto OEMs, annual negotiations.
Threat of substitutes: Low–Medium — EVs reduce gear/engine steel content (management flag).
New entrants: Medium — majors expanding SBQ; approval cycles are the barrier.
Rivalry: High — plus Chinese/Korean/Japanese imports (FY26 AR).
Moat durability: Narrow; strongest in vacuum-remelted niche. [Analyst View]

TAB 10 · RISKS & RED FLAGS

Risk Register

Risk	Category	Severity	Explanation	Mitigant
LMEL price concentration	Financial	High	LMEL stake ≈135% of mcap; 10% LMEL move = ≈₹930 Cr post-tax / ≈₹52 per share (~12% of CMP). LMEL 52-wk range ₹1,043–₹2,127. LMEL is a single-mine (Surjagarh, Gadchiroli), iron-ore/DRI story exposed to ore prices and Naxal-area/forest/legal risk.	Stake is liquid (LMEL mcap ₹1.02 lakh Cr); DTL already provided
Persistent holdco discount	Governance	High	No stated plan to monetise or distribute LMEL value; 45–52% discount could persist or widen.	Any partial sale/special dividend would be a catalyst
Auto-cycle dependence	Business	High	70–75% auto; slowdown hits volume and mix.	Diversification into rail/defence/aero
EV transition	Business / tech	Med	Management flags EVs need fewer steel-intensive engine/transmission parts.	Bearing, steering, chassis grades still needed
Raw-material & spread volatility	Macro	Med	RM 70–80% of cost; Q1 FY27 margin 11.0% (vs 12.4% in Q4 FY26); imports of coking coal, ferro-alloys, Ni.	1–2 month lagged pass-through; captive coal/power
Import competition	Macro	Med	Rising imports from China/Korea/Japan pressured pricing (FY26 AR).	Safeguard/anti-dumping; DMI&SP
Super-alloy ramp-up risk	Execution	Med	Plant commissioned FY22; offtake "slower than envisaged" (CARE Feb-2026); longer WC cycle.	Growing approvals list
Mining pipeline delays	Regulatory / Execution	Med	4 legacy leases sub-judice; Lohardongri under tiger-corridor PIL; Bhivkund needs NOC/NA; Belgaon depleting.	Multiple blocks diversify outcome
Legacy coal-block write-offs	Regulatory	Low	Khappa, Madanpur, C T Mining de-allocated 2014; compensation/BG outcomes pending.	Mostly provided already
Sunflag Power hydro project	Regulatory	Low	Hanol-Tuini (Uttarakhand) sub judice since 2023; ₹10.5 Cr CCDs + equity.	Small exposure
Disclosure / minority treatment	Governance	Med	No concalls; single segment; 37% physical shares; directors' commission doubled; ID churn.	Unqualified audits; PwC internal audit; AA- rating
Pledge of LMEL shares	Financial	Med	74 lakh LMEL shares pledged to Indian Bank — encumbers part of the asset.	Low leverage; could be released
Working-capital intensity	Financial	Med	Inventory 140–150 days; super-alloys lengthen cycle.	Utilisation only 30–35% of CC limits
Single-site operations	Business	Med	All production at Bhandara; outage = revenue loss.	Insurance; multiple furnaces
Litigation / contingent	Regulatory	Low	Tax/legal ≈₹17 Cr; ₹11 Cr arbitral award under challenge; ₹3.2 Cr stamp duty matter.	Stays granted
Environmental / carbon	ESG	Med	Coal-based DRI + MBF = high CO₂ intensity; CBAM for any EU exports; CARE rates emissions "High".	Solar PPAs, ESP/FES systems
Key-person / succession	Governance	Med	Technical director aged 75; family-run.	New CEO-level hires 2024–25
Tax on monetisation	Financial	Med	Any LMEL sale crystallises ≈₹1,400 Cr+ capital-gains tax at today's price.	Already reflected in DTL

TAB 11 · CONCALL HIGHLIGHTS & GUIDANCE

Management Commentary & Guidance

No earnings calls held. Searches of BSE/NSE filings, Screener's concall section, Trendlyne and the company IR page found no concall transcripts or investor presentations for Sunflag in the last six quarters (or earlier). Management communicates only through results filings, the Annual Report (Board's Report and MD&A) and the AGM. The section below therefore substitutes the AR, board-meeting outcomes and rating-agency interactions (which reflect management discussions). [Fact]

Quarter-by-quarter disclosures

Quarter	Board date	Key highlights
Q1 FY26 (Jun-25)	11-Aug-2025	Revenue ₹1,023 Cr (+14% YoY); PAT ₹63 Cr (2.2x YoY); EBITDA 11.7%
Q2 FY26 (Sep-25)	13-Nov-2025	Revenue ₹973 Cr; margin dip to 10.4%; H1 rolled deliveries 2.74 lakh t (≈5 lakh t run-rate, CARE). CRISIL assigns AA- (13-Nov-2025)
Q3 FY26 (Dec-25)	13-Feb-2026	Best margin 14.0%; Labour-code exceptional ₹8.7 Cr (notified 21-Nov-2025); CARE A+ reaffirmed then withdrawn (23-Feb-2026)
Q4 FY26 (Mar-26)	29-May-2026	Revenue ₹1,001 Cr; PAT ₹34 Cr hit by 58% tax; FY26 PAT ₹202 Cr; ₹1 dividend recommended; LMEL MTM −₹93 Cr for FY26
Q1 FY27 (Jun-26)	11-Aug-2026	Revenue ₹1,079 Cr (+5.5%); PAT ₹66 Cr; finance cost ₹14 Cr (−32% YoY); TCI ₹2,825 Cr (standalone) on LMEL MTM; new ID appointed; Dalvi re-appointed
Post-Q1	Sep-2026	40th AGM 25-Sep-2026 approved accounts and ₹1 dividend; Kapre exit 20-Sep; exchange price-movement query 29-Sep, company reply 30-Sep: "purely due to market conditions"

Management's own words (FY26 Annual Report)

"Despite industry-wide challenges—ranging from raw material volatility and energy cost escalation to supply chain disruptions and economic uncertainty due to middle east crisis— [the Company] has delivered excellent financial performance…"
"The Company is also expanding its presence in high-value sectors such as Aerospace, Defence, Nuclear Power, Thermal Power Boilers and Super Alloys, which offer superior margins and significant growth opportunities."
"…continues to evaluate opportunities for securing strategic raw material resources, including coal and iron ore mines…"
"[The Company] continues to primarily cater to the automotive sector… there has been a temporary moderation in growth… EVs… require fewer conventional steel-intensive components."
On super-alloys: "This capability significantly reduces the Company's dependence on the automotive and auto ancillary sectors."

Guidance vs outcome (credibility check)

Stated / implied expectation	Source	Outcome	Verdict
FY26 rolled volume ≈5 lakh t run-rate (H1 2.74 lakh t)	CARE Feb-2026 (mgmt interaction)	FY26 rolled production 4.68 lakh t	Partly met
Operating margin ≈11–12% medium term	CRISIL Apr-2026	FY26 12.1% (largely known when CRISIL wrote); Q1 FY27 11.0% — in range	Met
Improving interest cover, debt repayment ≈₹100–120 Cr/yr	CARE/CRISIL	Term loans ₹270 → ₹155 Cr; interest −20%	Met
Super-alloy offtake to drive growth	AR FY23–FY26	"Slower than envisaged" (CARE)	Missed
Mines to provide raw-material security	AR (multi-year)	New blocks still pre-production; legacy leases sub-judice	Delayed

Tone over time: consistently optimistic boilerplate; little quantification; no numerical guidance. Recurring themes: import substitution, auto dependence, raw-material security, super-alloys. Contradiction: repeated "superior margins" in high-value sectors, yet blended margin unchanged at 11–12% since FY24. [Analyst View]

TAB 12 · GROWTH, OUTLOOK & VALUATION

Growth, Outlook & Valuation

Order book & visibility

Not disclosed — Sunflag does not report an order book. Business is schedule-based supply to OEMs (repeat orders) plus tender-based defence/rail supply. Revenue visibility ≈1–3 months of OEM schedules [Analyst View].

Expansion & capex

Project	Status	Comment
Super-alloy line: 10 t solution annealing furnace, 20 t electric annealing furnace	Ongoing	Enables plates/rings and aerospace heat-treat
Forging plant: 20 t post-forging furnace, CNC lathe, 5 t manipulator	Ongoing	Forged defence/aero products
SMS: VD-3, 3rd ladle reheating furnace with bag house, FES, auto billet grinder	Ongoing	Clean-steel capacity, debottlenecking
Bright bar: auto pickling line, bar-to-bar drawing, rib-bar pickling	Ongoing	Value addition
MBF: coke drying, new pulverised coke injection; Auto UT line-4; RO plant	Ongoing	Cost reduction
Mines: Bhivkund (coal), Tambia South (coal), Bajna & Surjagad-6 (iron ore), Surajpura (phosphorite)	Pre-production	Axis ₹162.5 Cr TL for Bhivkund; capex quantum not disclosed

FY26 capex ≈₹128 Cr; outstanding capital commitments ₹120.5 Cr (31-Mar-2026); CRISIL proposed TL ₹88.9 Cr. No large greenfield announced.

12-month catalysts

LMEL Q2/Q3 FY27 results and price
Q2 FY27 results (due by 14-Nov-2026)
Any LMEL monetisation / pledge release / special dividend
Bhivkund coal mine opening; Tambia South mine plan
Defence/aero orders for super-alloys
Steel safeguard duty decisions

3–5 year drivers

Specialty-steel PLI and import substitution
Defence indigenisation (positive-indigenisation lists, DMI&SP preference)
Rail and auto volume growth
Captive ore/coal lowering cost by an unquantified amount
LMEL's expansion (Surjagarh to 26 MTPA approvals per MPCB notices) compounding the stake

Consensus

No sell-side coverage, consensus estimates or published target prices were found (searched Trendlyne, Screener, Univest, MarketsMojo, broker sites). MarketsMojo carries an algorithmic "Hold" score (last updated 27-Apr-2026) — a quant screen, not analyst coverage. [Fact]

Multiples

Multiple	Current	Context
P/E (TTM, cons.)	37.8x	Screener-reported; ₹446 ÷ TTM EPS ₹11.42 (table in Tab 5) = 39.1x. Univest quotes 40.2x on 7-Oct; ≈30x in Sep-2026 at ₹346; ≈17x at ₹192 low (Mar-2026) [Est.]
P/B	0.91x	On Mar-26 book ₹492; ≈0.69x on Jun-26 book incl. Q1 FY27 TCI (≈₹649/sh) [Est.]; 0.72x mid-Sep 2026; historic 3-yr average not available — book itself tripled with LMEL MTM
EV/EBITDA (headline)	≈17.5x	(8,031 + 524 − 230) / 477
EV/EBITDA ex-LMEL (post-tax)	negative	8,031 + 294 − 9,468 = −₹1,143 Cr
Dividend yield	0.23%	₹1.00 (FY26), ₹0.75 (FY25), nil FY20–FY24
Buybacks	None	—

Sum-of-the-parts (look-through) [Est.]

Component	₹ Cr	₹/share	Basis
LMEL 6.00 crore shares @ ₹1,812 (12-Oct-2026)	10,872	603	Market
Less tax on gain over ₹1,226 Cr cost @ ≈14.55% (DTL rate implied by AR)	(1,404)	(78)	AR Note 18
LMEL post-tax	9,468	525
Steel business EV @ 6.5x FY26 EBITDA ₹477 Cr	3,100	172	Discount to Kalyani/Neco given lower margins
Less net debt (₹524 Cr gross − ≈₹230 Cr cash/bank)	(294)	(16)	31-Mar-2026
JVs/other investments	≈60	3	Book value
Gross NAV	≈12,334	≈684
Current market cap	8,031	446
Discount to NAV	≈35% (≈45% on the LMEL piece alone)

Scenario values (12–18 months) [Est.]

Scenario	LMEL price	Holdco discount on LMEL	Steel EV/EBITDA × EBITDA	Equity ₹ Cr	₹/share	vs CMP
Bear	₹1,270 (≈Mar-26 level)	50%	5.0x × ₹450 Cr	5,301	294	−34%
Base	₹1,812 (flat)	40%	6.5x × ₹500 Cr	8,637	479	+7%
Bull	₹2,100 (≈52-wk high)	30%	8.0x × ₹550 Cr	11,768	653	+46%
Probability-weighted (25/50/25)					≈476	+7%

Net debt ₹294 Cr deducted in all cases; LMEL tax at 14.55% of gain over cost. These are analyst constructs, not company guidance.

TAB 13 · FINAL VERDICT

Final Verdict

Business Quality

Medium

Management Quality

Medium

Financial Quality

Strong

Valuation

Fair

Overall View

Neutral

Bull case

LMEL keeps compounding (Q1 FY27 PAT ₹1,734 Cr); stake ≥₹12,600 Cr at ₹2,100.
Board unlocks value — partial sale, buyback or special dividend narrows discount to ~30%.
Super-alloy/defence ramps and margins break above 13% (CRISIL upgrade trigger). Value ≈₹650.

Bear case

LMEL falls back to ₹1,270 (Mar-26 level) — NAV −₹2,800 Cr.
Discount widens to 50% as the post-May speculative flow reverses.
Auto slowdown + imports push margin to 9–10%. Value ≈₹295.

Base case

Steel EBITDA grows to ≈₹500 Cr, LMEL range-bound around ₹1,800, discount ~40%. Fair value ≈₹480 (+7%). Stock tracks LMEL with a beta >1 to it.

5 things to remember

6.00 crore LMEL shares (10.66%) ≈₹10,872 Cr > ₹8,031 Cr mcap.
Steel ops: ₹3,939 Cr revenue, 12.1% margin, ₹262 Cr FCF, AA- rating.
Promoters 51.16% (unchanged), Daido Steel 10% since 2014, no dilution in 12 years.
70–75% auto; super-alloy upside unproven.
No concalls, token dividend, 37% shares physical — minority-unfriendly.

5 questions before investing

Does the board intend to monetise or distribute any LMEL value, and why are 74 lakh shares pledged?
What is super-alloy/defence revenue today and its margin?
Why is ~37% of share capital still in physical form, and is the promoter holding fully dematerialised?
What is the capex budget and timeline for Bhivkund/Tambia South/Bajna, and the cost saving targeted?
What is the relationship (if any) between promoter-group Surjagarh Metals & Minerals and LMEL's Surjagarh operations?

Sunflag is a cheap way to own LMEL, not a cheap steel company. At ₹446 the market already prices a ~45% holdco discount that is typical and has no visible catalyst to close; the steel business is solid, cash-generative and AA-rated but low-return. Neutral — accumulate only as a discounted LMEL proxy, sized to one's view on LMEL, and below ≈₹400 for a margin of safety. [Analyst View]

TAB 14 · SOURCES

Sources (accessed 12-Oct-2026)

Company filings & annual reports

Sunflag 40th Annual Report FY2025-26 (Board's Report dated 11-Aug-2026): https://www.bseindia.com/xml-data/corpfiling/AttachHis/1e359055-7133-4531-afaa-26925e9541de.pdf
Sunflag Annual Report FY2022-23 (LMEL arbitral award, OFCD conversion): https://www.bseindia.com/xml-data/corpfiling/AttachHis/ce858a97-e23a-4b16-848a-efea1b7da5a8.pdf
BSE clarification on price movement, 30-Sep-2026: https://www.bseindia.com/xml-data/corpfiling/AttachHis/0ce4622e-4519-4e76-9a79-f80496999025.pdf
40th AGM outcome, 25-Sep-2026: https://www.bseindia.com/xml-data/corpfiling/AttachHis/888880d5-9ca0-4d22-a8af-65c7090f892d.pdf
Independent director cessation (Anand Kapre), 21-Sep-2026 — BSE filing 282c43f9-a4a0-485d-8747-53bacf665c32 (listed on Screener)
Earlier ARs FY2014–FY2025 (BSE links via Screener documents section)

Financial databases

Screener.in — Sunflag consolidated: https://www.screener.in/company/SUNFLAG/consolidated/ ; standalone: https://www.screener.in/company/SUNFLAG/
Screener.in — Lloyds Metals & Energy: https://www.screener.in/company/LLOYDSME/consolidated/
Screener.in peers: KSL, VSSL, JAYNECOIND, MUKANDLTD, MIDHANI
Trendlyne insider/SAST log: https://trendlyne.com/equity/insider-trading-sast/all/SUNFLAG/1314/sunflag-iron-steel-company-ltd/

Credit ratings

CRISIL rationale, 2-Apr-2026: https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/SunflagIronandSteelCompanyLimited_April%2002_%202026_RR_392308.html
CRISIL rationale, 13-Nov-2025 (listed on Screener)
CARE Ratings press release, 23-Feb-2026: https://www.careratings.com/upload/CompanyFiles/PR/202602130242_Sunflag_Iron_And_Steel_Co_Limited.pdf
CARE Ratings releases 26-Nov-2024, 28-Aug-2024, 4-Jan-2024 (listed on Screener)

Company website

https://sunflagsteel.com/ ; /manufacturing-unit/ ; /company-brief/ ; /certificates/ ; /management/

News & secondary

Univest — Q1 FY27 results: https://univest.in/blogs/sunflag-iron-steel-q1-results-fy27-pat-63-crore
Univest — 1-year rally, bulk deal, FY26 data: https://univest.in/blogs/alloy-steel-stock-rises-31-percent-in-1-year
Univest — 52-week high, 7-Oct-2026: https://univest.in/blogs/why-sunflag-iron-and-steel-company-ltd-share-near-52-week-consecutive-high-2026
Investywise — Q1 FY27 standalone/consolidated figures: https://www.investywise.com/?p=104527
Business Standard — LMEL 11.89% stake (Mar-2023): https://www.business-standard.com/article/markets/sunflag-iron-up-15-in-two-days-on-acquiring-11-89-stake-in-lloyds-metals-123032000205_1.html
Monoist (ITmedia) — Daido 10% investment ≈¥1 bn (Aug-2014): https://monoist.itmedia.co.jp/mn/articles/1408/08/news036.html
Valorem Advisors LMEL coverage (Surjagarh lease to 2057); MPCB notices (Surjagarh expansion)
Stockgro / MoneyWorks4Me / Kalkine price pages (Sep-2026 price moves)

Data gaps (searched, not found)

Earnings-call transcripts / investor presentations — none exist.
Named customers and suppliers; product/segment revenue split for FY26.
Sep-2026 shareholding pattern — not yet filed as of 12-Oct-2026 (due by 21-Oct-2026).
FY26 AR production table (MBF hot-metal row) and mining-block status rows — PDF layout could not be verified line-by-line.
Full Q1 FY27 filing line items (OCI amount taken from TCI less PAT).
Capacity of VIM/ESR/VAR in tonnes per year; super-alloy revenue.
Underlying nature of the LMEL dispute pre-2022 (AR describes it only as "past period claims").
Sell-side estimates and target prices — no coverage.

Items that could not be independently verified are flagged in-line as [Est.] or "unverified".