Sky Alloys and Power IPO

Strengths · 7

• 01Revenue from operations grew from Rs 553.71 crore in FY2023 to Rs 819.24 crore in FY2025, and profit after tax grew from Rs 37.60 crore to Rs 52.95 crore.
• 02The TMT bar rolling mill started in 2024 and already gave Rs 298.08 crore, or 36.39% of FY2025 revenue from operations, adding a branded product under SKY TMT.
• 03Four manufactured products (sponge iron, MS billets, TMT bars, ferro alloys) are made at one Raigarh location, and no single manufactured product gave more than 36.39% of FY2025 revenue.
• 04Customer dependence is moderate: the top 5 customers gave 23.92% of FY2025 revenue and 19.94% in the nine months to December 2025, and the top customer gave 5.27% in the nine months.
• 05Net worth rose from Rs 119.69 crore on 31 March 2023 to Rs 218.35 crore on 31 March 2025, and Rs 263.00 crore on 31 December 2025.
• 06EBITDA margin stayed between 12.69% and 14.17% across all four periods reported, with EBITDA at Rs 108.46 crore in FY2025.
• 07The promoters and promoter group hold 96.11% of the company before the issue, so they keep a large stake after the offer.

Risks · 10

• 01Borrowings rose from Rs 132.33 crore on 31 March 2023 to Rs 311.13 crore on 31 December 2025, and the debt to equity ratio was 1.23 in FY2025.
• 02Operating cash flow was only Rs 5.10 crore in FY2025 against profit after tax of Rs 52.95 crore, while investing outflow was Rs 64.65 crore and financing inflow Rs 70.07 crore.
• 03Return on equity fell from 38.15% in FY2023 to 27.59% in FY2025 and 10.37% in the nine months to December 2025. ROCE fell from 24.13% to 18.67% and 9.11%.
• 04Income tax litigation is pending against the company, some promoters and group members. It includes a challenge to the Settlement Commission order of 21 January 2021 before the High Court of Chhattisgarh and proceedings after the December 2021 search and seizure. Tax proceedings against the company are unascertainable.
• 05Chhattisgarh gave 82.76% of FY2025 revenue and 70.05% in the nine months to December 2025, so one state drives most sales.
• 06The company has no long term agreements with customers or brokers, and its top 10 suppliers gave 57.60% of purchases in FY2025 without long term contracts with most of them.
• 07Steel prices are cyclical, and the company depends mostly on sponge iron, MS billets, TMT bars and ferro alloys. Trading gave 22.32% of FY2025 revenue in MS billets alone.
• 08The registered office is leased from promoter Ravi Singhal. The company signed an agreement on 18 March 2026 to buy it for Rs 2.16 crore and has paid Rs 1.50 crore as advance.
• 09Selling promoters Ravi Singhal and Nisha Singhal have an average acquisition cost of Rs 2.82 and Rs 2.31 per share, against a face value of Rs 10.
• 10The use of fresh issue money beyond Rs 190.00 crore of debt repayment is general corporate purposes, which can be up to 25% of gross proceeds and is not yet specified.

Sky Alloys and Power Limited is an integrated steel manufacturer based in Raipur, Chhattisgarh. Its products are sponge iron, MS billets, TMT bars and ferro alloys. The company also trades in sponge iron, MS billets and some raw materials used in steelmaking. Its manufacturing units are at Raigarh, Chhattisgarh, close to the raw material sources.

The company built its plants in steps. The first DRI plant for sponge iron started in 2013. A ferro alloys plant making silico manganese followed in 2014. The steel melting shop and continuous casting plant for MS billets started in 2015. A rolling mill for TMT bars began in 2024. TMT bars are sold under the brand SKY TMT.

The product mix has changed fast. TMT bars gave Rs 298.08 crore, or 36.39% of FY2025 revenue from operations, against Rs 23.71 crore, or 3.77%, in FY2024. In the nine months ended 31 December 2025, TMT bars gave Rs 219.37 crore, or 40.44%. MS billets from own manufacturing fell from Rs 382.90 crore in FY2024 to Rs 172.19 crore in FY2025.

Products are sold in 18 States and 2 Union Territories. Chhattisgarh is the main market with 82.76% of FY2025 revenue and 70.05% in the nine months ended 31 December 2025. Other markets include Madhya Pradesh, Maharashtra, Odisha, Uttar Pradesh, West Bengal and Haryana. Sponge iron, billets and ferro alloys are sold on a B2B basis to other steel makers, directly and through brokers. The company has no long term agreements with its customers or brokers.

The company served 512 customers in FY2025 and 359 in the nine months ended 31 December 2025. It had an average of 732 employees in FY2025 and 786 in the nine months to December 2025. It is also building a solar power project at Mopka, and has solar plant sites in Durg and Baloda Bazar districts. Ravi Singhal is the Chairman and Managing Director and has more than 25 years of experience.

The industry

The Crisil report in the document says domestic steel demand grew at a CAGR of 8.7% between fiscal 2020 and fiscal 2025, from 100.2 million tonnes per annum to 152 million tonnes per annum. Finished steel production rose from 102.6 MT to 146.6 MT over the same period. Long steel output grew from 52.7 MT to 81.0 MT, a CAGR of 9.0%, while flat steel grew from 49.9 MT to 65.6 MT, a CAGR of 5.6%. The share of long steel in total production rose from 51.4% to 55.2%. The report links this demand to the automobile, infrastructure and construction sectors.

Customer concentration: Top 5 customers gave 19.94% of revenue from operations in the nine months to 31 December 2025 and 23.92% in FY2025 (26.37% in FY2024).