Manaksia Coated Metals Falls 7% Despite Unveiling ₹445 Cr ‘MCMIL 2.0’ Growth Plan

Synopsis: Shares of Manaksia Coated Metals & Industries Ltd. fell nearly 7 percent despite the company unveiling ‘MCMIL 2.0’, its most ambitious transformation strategy aimed at tripling revenue, production and EBITDA by FY29 through more than Rs. 445 crore of investments in capacity expansion, backward integration and renewable energy.

While the announcement greatly enhances the company’s long-term growth prospects, investors appeared wary as most of the benefits are expected to be realised over the next two to three years, rather than immediately. The roadmap includes a 2.7x expansion in pre-painted steel capacity, doubling of Aluminium-Zinc coating capacity, setting up of a 3.6 lakh MTPA Cold Rolling Mill (CRM) and commissioning of a 7 MW captive solar power plant, all aimed at structurally improving margins, lowering costs and increasing value addition.

Shares of Manaksia Coated Metals & Industries Limited were trading at Rs 119.3, down by 7.62  percent from the previous close of Rs 129.14. The stock opened at Rs 127, touching an intraday high of Rs 127 and a low of Rs 118.56. The company currently commands a market capitalisation of Rs. 1,282 crore.

MCMIL 2.0: A Structural Transformation

Manaksia is no longer pursuing incremental growth. Instead, the company is redesigning its manufacturing model to capture a larger share of the value chain. The company switched from galvanised steel to Aluminium-Zinc coated steel, which has nearly three times the corrosion resistance, better aesthetics, and paint-free usability. Following this technological transition, the next phase focuses on becoming a fully integrated coated steel manufacturer with larger capacities and higher-value products. 

This strategy is important as steel processors often face pressure from fluctuating raw material prices and dependence on external suppliers. The company will create value for downstream products by integrating upstream operations, not just increasing volumes, to improve profitability.

Rs 445 Crore plus Expansion Pipeline

The transformation roadmap includes multiple projects spanning the entire manufacturing value chain. The first phase involves expanding pre-painted steel capacity from 86,000 MTPA to 236,000 MTPA, representing a 2.7x increase, through the commissioning of a second colour coating line during Q2 FY27. The new facility will feature advanced coating technology, higher operating speeds, multiple paint systems, and enhanced product customization capabilities, enabling the company to cater to premium customer segments.

The second phase focuses on expanding Aluminium-Zinc coating capacity from 1.8 lakh tonnes to 3.6 lakh tonnes annually by FY28, effectively doubling production capacity. The company has already upgraded its existing facilities from conventional galvanised steel technology to Aluminium-Zinc coating, positioning itself in higher-value specialised steel products. 

The Biggest Margin Driver

The proposed 360,000 MTPA cold rolling mill (CRM) marks a major backward integration initiative. Instead of procuring Cold Rolled Steel (CRC), Manaksia will convert Hot Rolled Steel (HRC) into CRC in-house, improving quality control and reducing supplier dependence and conversion costs while enhancing supply chain efficiency, value addition, product flexibility, and long-term operating margins. In simple terms, this means the company will manufacture an additional stage of production in-house instead of buying semi-finished material from external suppliers.

Apart from manufacturing expansion, management is also targeting structural cost reductions. The company is setting up a 7 MW captive solar power plant, which it expects to commission during Q2 FY27. According to management, the project will reduce electricity costs by up to 40 percent, offset nearly 50 to 55 percent of grid power dependence, generate annual savings of around Rs. 7 crore, and reduce the company’s carbon footprint through greater use of renewable energy. EPC execution has been awarded to Prozeal Green Energy.

Power represents a high operating cost for coated steel manufacturers. Therefore, lower electricity expenses can directly improve EBITDA margins over the medium term.

Q1 FY27 Performance

The company delivered an improvement in its Q1 FY27 performance, with revenue from operations increasing 4.8% YoY to Rs. 262 crore, compared to Rs. 250 crore in Q1 FY26, and also registering a 15.4% QoQ growth from Rs. 227 crore in Q4 FY26. Export sales made up 65% of total sales and rose 13% QoQ and 20% YoY. Pre-painted steel exports rose 25% as the company entered four new international markets-Latvia, Brazil, Jamaica, and Somalia-during the quarter.

Operating performance improved significantly, with EBITDA rising 16.6% YoY to Rs. 28 crore from Rs. 24 crore. On a sequential basis, EBITDA doubled from Rs. 14 crore, while OPM improved from 6% to 11%, reflecting better cost efficiencies and stronger operating leverage.

Profitability also strengthened during the quarter; net profit remained same in Q1 FY27 as compared to Q1 FY26, while also rising sharply from Rs. 5 crore in the previous quarter (Q4 FY26). EPS increased to Rs. 1.32, compared to Rs. 1.34 in Q1 FY26 and Rs. 0.51 in Q4 FY26, reflecting a substantial improvement in earnings generation.

The company continues to maintain a healthy financial position with cash and cash equivalents of Rs. 33.9 crore, a low debt-to-equity ratio of 0.33, and a comfortable current ratio of 1.79, indicating adequate liquidity to support future growth. 

It also generated healthy return ratios, with ROCE of 19.9% and ROE of 14.1%. Over the long term, the business has delivered a 5-year sales CAGR of 15% and a 5-year profit CAGR of 47%, highlighting consistent growth while maintaining operational efficiency.

MCMIL 2.0 represents a strategic shift from being a conventional coated steel manufacturer to becoming a fully integrated, technology-driven value-added steel producer. Importantly, management is executing this expansion from a position of improving profitability and lower leverage, rather than under financial stress.

If execution remains on schedule, the combination of higher capacities, greater value addition, renewable energy integration and stronger exports could materially improve return ratios and operating margins over the medium term. However, investors should monitor the successful commissioning of the CRM complex, the ramp-up of new capacities, and sustained export demand as key variables.

Manaksia Coated Metals & Industries Limited is a leading manufacturer and exporter of Aluminium-Zinc coated steel and pre-painted steel coils and sheets. The company operates an integrated manufacturing facility in Kutch, Gujarat, supplying customers across 20+ Indian states and 22+ countries. Its strategic location near Kandla and Mundra ports provides significant logistics advantages for both exports and domestic coastal shipments.

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