Recommendation from Metals & MiningSector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon [EasyDNNnews:PaidContentStart]

Kamdhenu Ltd : RIDING INDIA’S BRANDED STEEL GROWTH STORY

HERE IS WHY
✓  Strong retail steel presence
✓  Royalty income improves profitability
✓  Branded TMT demand remains strong

I ndia’s steel industry continues to benefit from a structural demand cycle, supported by infrastructure spending, housing, urbanisation, Real Estate activity and manufacturing expansion. Steel remains a core input for roads, Railways, energy projects, industrial facilities and residential Construction. At the same time, the market is gradually moving from unorganised suppliers to branded, certified and quality-focused products, especially in the retail TMT segment.

Kamdhenu Limited is well placed to benefit from this shift. The company has built a strong position in TMT bars, structural steel and colour-coated sheets through its franchise-based, asset-light model. This allows it to expand across regions without committing large capital to owned manufacturing capacity. Over the years, Kamdhenu has developed strong brand recall among dealers, builders, contractors and homebuyers, making it one of the recognised names in India’s branded retail steel market.

Its distribution reach strengthens this position further. In FY26, Kamdhenu had more than 100 franchisees, over 12,500 dealers and more than 500 distributors across India. This network gives the company access to urban, semi-urban and rural markets, where branded steel demand is rising steadily. Its focus on quality, availability, dealer engagement and brand visibility has helped it stay relevant in a competitive industry where trust plays an important role.

The broader industry backdrop remains supportive. In FY26, India’s finished steel consumption increased 7.6 per cent year-on-year to 163.7 million tonnes, while finished steel production grew 9.7 per cent to 160.9 million tonnes. This is favourable for TMT bars and structural steel, which are directly linked to construction and infrastructure activity. For Kamdhenu, the rising preference for reliable steel products provides an added growth lever as organised demand expands across retail construction channels.

Kamdhenu’s key growth triggers include its scalable franchise model, rising royalty income, wider dealer reach and demand from Tier-II and Tier-III markets. In FY26, total sales volume grew 10 per cent year-on-year to 39 lakh MT. Franchisee volume stood at 37.9 lakh MT compared with 34.4 lakh MT in FY25, reflecting healthy traction in its core business. Royalty income stood at around ₹175 crore, supported by higher franchisee volumes and stronger brand adoption. Since royalty income grows with franchisee sales, the model supports profitability without requiring heavy capital expenditure.

Risks, however, need to be monitored. A slowdown in construction, housing or infrastructure activity can affect demand. Raw material volatility, softer steel prices and competition from national as well as regional brands may pressure growth. Since the company depends heavily on franchise partners, strict quality control and consistent execution are important to protect brand trust.

Financially, Kamdhenu reported a resilient FY26 performance. Revenue stood at ₹763 crore against ₹747 crore in FY25. PBT rose 31 per cent to ₹106 crore, while PAT increased 29 per cent to ₹78 crore. The company remained debt-free, with ROCE of 26.8 per cent and ROE of 19.8 per cent.

At a P/E of 11.6 times against the industry P/E of 21.7 times and a PEG ratio of 0.48, valuations appear attractive. The company has maintained a regular Dividend-paying track record, with a current dividend yield of around 0.8 per cent. Considering the sector tailwinds, asset-light model, improving profitability, debt-free balance sheet and reasonable valuation, we recommend BUY on Kamdhenu Limited.

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