Acquisition: Rama Steel Tubes acquires Automech for ₹728 Cr; Enters high margin fabrication

Synopsis: This small-cap steel stock is in focus today following the company’s announcement to acquire a UAE-based firm called Automech Group for Rs 728 crore to accelerate its 

Entry into High-Margin Fabrication with Engineering Segments. The company projects its consolidated revenue to grow by over 113% by FY27E. The shares of this company, which is one of the leading manufacturers of steel pipes & tubes, rigid PVC & G.I. pipes and square section products in India, had its shares in the news when the company in its press release stated plans to acquire a UAE-based high-precision manufacturing firm to strengthen its high-margin fabrication business.

With the market cap of Rs 1,730 crore, the shares of Rama Steel Tubes Ltd are trading at Rs 10.6. The shares are trading at a PE of 91.4, whereas its industry PE is at 21, and have given a return of 1,550% in the last 5 years. 

About the Acquisition. 

Rama Steel’s acquisition of the UAE-based Automech Group is a transformational step that takes the company well beyond its traditional steel tube business and into the high-value world of precision engineering and fabrication. With a deal size of AED 296 million (about Rs 728 crore), Rama Steel is not just expanding geographically into the GCC and MENA regions, but it is also gaining access to Automech’s award-winning manufacturing and machining capabilities. The company sees this as a defining milestone that supports its ambition to evolve from a pipe manufacturer into a solutions-led engineering player.

The financial impact of the acquisition is expected to be significant. Rama Steel projects its consolidated revenue to grow by over 113% by FY27E, rising from Rs 1,065 crore in FY25 to above Rs 2,200 crore, while EBITDA is expected to jump by nearly 415% due to operational synergies and a richer product-service offering.

Automech itself contributes strong fundamentals with FY25 revenue of Rs 611 crore and profit of Rs 101 crore, and the integration allows Rama Steel to further improve margins by shifting portions of Automech’s production to its Indian manufacturing setup. Dividends and royalty payments from the subsidiary are also expected to strengthen the company’s standalone financials.

Strategically, this acquisition opens the door to multiple high-margin engineering segments. Automech’s expertise spans CNC machining, heavy fabrication, dewatering systems, marine engine services, and oilfield equipment, which is backed by global certifications like API, ASME, and ISO, and its status as an ADNOC-approved vendor.

This gives Rama Steel immediate access to marquee clients in the energy, infrastructure, and industrial sectors. Ultimately, the deal acts as a launchpad for Rama Steel’s global ambitions and marks its evolution into a diversified engineering company with a far broader and more sophisticated capabilities portfolio.

Financials and more.  

The revenue from operations for the company stands at Rs 320.45 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 263.05 crores, growing by about 22 per cent YoY. However, the net profit stood at Rs 4.31 crore in Q2 FY25, which fell to Rs 1 crore in Q2 FY26. 

Rama Group is one of India’s long-standing and trusted manufacturers of steel pipes and tubes. Over the years, it has built a strong reputation by offering a wide range of MS ERW black pipes and G.I. pipes in multiple diameters, all manufactured to meet stringent IS standards. This commitment to quality has made Rama a respected name among customers, suppliers, partners, and stakeholders who associate the brand with reliability and value in the steel tube market.

At the heart of Rama’s success is its advanced manufacturing capability. The company operates a highly sophisticated plant in the industrial hub of Sahibabad, just 10 kilometres from New Delhi, equipped with modern machinery and comprehensive testing systems. While technology forms a strong backbone, Rama believes its people are its greatest asset, which is employing skilled engineers trained at leading institutions across India. Their expertise, combined with continuous investment in innovation and market-responsive practices, allows Rama to consistently deliver products that meet evolving industry standards while ensuring customer satisfaction.

Written by Leon Mendonca. 

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Acquisition: Rama Steel Tubes acquires Automech for ₹728 Cr; Enters high margin fabrication appeared first on Trade Brains.