Producers of long steel products in the secondary sector are expected to see a 7 % growth in their revenues in the ongoing financial year, Crisil Ratings said on Thursday. Secondary steel makers produce recycled products using electric arc furnace (EAF) and induction furnace (IF).
Secondary steel players witnessed 4 % rise in their revenues in preceding 2023-24 fiscal year, the ratings agency said in its report.
“Secondary long steel producers will see revenue grow 7 % this fiscal, up from 4 % last fiscal, riding on robust domestic demand fuelled by central government spending on housing and infrastructure,” it said.
This fiscal, the central government’s spending on rural and urban housing and infrastructure projects, particularly under Pradhan Mantri Awas Yojana and the National Infrastructure Pipeline, will sustain demand. The uptick seen in the first half of the fiscal will pick up pace in the second half.
Rahul Guha, Director, Crisil Ratings, said: “Steady realisation and increased volume will propel revenue of secondary long-steel producers this fiscal. Owing to higher volume, the sector’s capacity utilisation will rise to 83 % this fiscal from 80 % last fiscal. As a result, Ebitda (earnings before interest, tax, depreciation and amortisation) per tonne will increase to Rs 4,000 from Rs 3,700, leading to significantly higher cash accrual.”
