Sky Alloys & Power IPO

Sky Alloys & Power Limited IPO Strengths

Strategic Operations Hub in Chhattisgarh

The company’s manufacturing unit is strategically located in Raigarh, Chhattisgarh, which is the heart of India’s steel industry, particularly for the Sponge Iron (DRI) and Induction Furnace (IF) production route. This key position provides Sky Alloys & Power Limited with significant operational synergies, cost efficiencies, and logistical benefits, which are critical for the competitive production of its flagship “SKY TMT” brand.

Experienced and Stable Management

Sky Alloys & Power Limited benefits from experienced promoters and a senior management team with extensive exposure and acumen across the entire steel value chain. Their collective expertise covers raw material procurement, supplier/distribution management, business development, finance, and operations. This seasoned leadership provides a competitive advantage in managing operations, tapping new growth avenues, and ensuring the company’s stability and success.

Diversified Product Portfolio

The company maintains a diversified product mix primarily consisting of sponge iron, mild steel billets, ferro-alloy products, and TMT Bars (sold under the ‘SKY TMT’ brand). This range of offerings effectively de-risks its revenue streams by reducing dependency on any single product. The varied portfolio ensures resilience and allows Sky Alloys & Power Limited to capitalize on multiple segments of the steel market.

More About Sky Alloys & Power Limited

Sky Alloys & Power Limited is a leading steel manufacturing company based in Raigarh, Chhattisgarh. Established with a strong industrial foundation, the company produces a wide range of steel products, including Sponge Iron, Mild Steel (MS) Billets, Ferro-Alloys such as Silico Manganese, and TMT Bars. The company began its operations with the installation of its first Direct Reduced Iron (DRI) plant in Raigarh, marking its entry into India’s competitive steel manufacturing sector.

Expansion and Recognition

In line with its growth strategy, Sky Alloys & Power Limited undertook a major capacity expansion in Fiscal 2022, approved by the Directorate of Industries, Government of Chhattisgarh. Recognised as a “Mega Manufacturing Enterprise”, the company benefits from incentives under the Chhattisgarh State Industrial Policy 2019–24.

Post-expansion capacities include:

• Sponge Iron: Increased from 60,000 to 1,20,000 MT

• MS Billets: Increased from 66,666 to 1,00,000 MT

• Ferro-Alloys: Increased from 15,000 to 30,000 MT

The company also enhanced its captive power generation capacity to 16 MW, using Waste Heat Recovery and Atmospheric Fluidized Bed Combustion Boilers. This expansion created 168 new jobs, growing total employment from 141 in FY 2021 to 309 in FY 2022.

Brand Development: SKY TMT

Sky Alloys introduced its flagship brand “SKY TMT”, registered in March 2024. A state-of-the-art rolling mill with a capacity of 95,000 TPA, established at a cost of ₹911.5 million, supports in-house TMT bar production.

Milestones include:

• March 8, 2024: Trademark registration of “SKY TMT”.

• September 5, 2024: Approval from the State Housing Authority for supply in development works.

• June 19, 2025: Approval from the Public Works Department for infrastructure projects.

• June 30, 2025: Agreement with a major Indian conglomerate for state-wide TMT distribution.

Financial Performance Highlights 

For FY 2025, Sky Alloys & Power Limited reported Revenue from Operations of ₹8,192.40 million and Profit After Tax (PAT) of ₹530.46 million, with an EBITDA margin of 13.46%. The company maintained a Debt-to-Equity ratio of 1.24x and ROE of 27.83%, reflecting operational strength, efficiency, and financial stability.

Industry Outlook

The Indian steel industry is poised for strong expansion, supported by robust domestic demand, government-led infrastructure development, and capacity augmentation. India is currently the world’s second-largest producer of crude steel with a capacity of nearly 200 million tonnes and aims to reach around 300 million tonnes by 2030–31. Domestic steel demand is expected to rise by approximately 8–10% in 2025, surpassing global averages.

Key growth drivers include:

• Government investments in infrastructure such as roads, railways, ports, and housing.

• Expanding automobile, construction, and capital goods sectors.

• Automation, energy-efficient technologies, and the shift towards value-added steel products.

Outlook for Relevant Product Segments

Sky Alloys & Power Limited operates in multiple steel product categories, including Sponge Iron, Mild Steel (MS) Billets, Ferro-Alloys (Silico Manganese), and TMT Bars.

• Sponge Iron & MS Billets: India continues to lead global DRI production, accounting for nearly half of the world’s output. The increasing demand for billets for long steel products enhances the growth potential for these segments.

• Ferro-Alloys: The domestic ferro-alloys industry is projected to grow at a CAGR of 7–8% over the next five years, driven by rising steel production.

• TMT Bars: Long steel products such as TMT bars are witnessing strong demand growth, propelled by housing projects and nationwide infrastructure expansion.

Key Figures & Future Prospects

• Finished steel demand in India reached about 150 million tonnes in FY25.

• Per capita steel consumption remains low at around 80 kg, compared to the global average of 222 kg, indicating significant growth potential.

• The ferro-alloys industry, with a production capacity of 7.5 million tonnes and output near 6 million tonnes, still has room for expansion.

How Will Sky Alloys & Power Limited Benefit

• Rising infrastructure and housing projects across India will boost demand for TMT bars, directly strengthening Sky Alloys’ sales of its flagship “SKY TMT” brand.

• The government’s focus on domestic steel capacity expansion aligns with the company’s increased production of sponge iron, billets, and ferro-alloys.

• Being located in Chhattisgarh, a steel hub with rich mineral resources, provides the company with cost-efficient access to raw materials and logistics advantages.

• The company’s integrated operations, from sponge iron to finished TMT bars, allow better cost control and improved profit margins.

• Growth in ferro-alloy demand at a projected 7–8% CAGR supports expansion of Sky Alloys’ silico manganese production.

• With India’s per capita steel consumption expected to rise steadily, long-term demand for Sky Alloys’ products will remain strong.

• The company’s captive power generation capacity helps reduce production costs and maintain competitiveness amid rising energy prices.

Peer Group Comparison

Name of the Company	Total Income (₹ in Millions)	Face Value (₹)	P/E	EPS (Basic & Diluted)	Return on Net Worth (%)	NAV per share (₹)	PAT (₹ in Millions)
Sky Alloys & Power Ltd	8,210.92	10	[●]	8.49	27.83%	34.75	530.46
Peer Group
Godawari Power & Ispat Ltd	54,717.10	1	19.64	13.24	16.47%	80.55	8,129.80
Sarda Energy & Minerals Ltd	48,152.50	1	29.34	19.36	10.98%	181.39	7,021.90
Gallant Ispat Ltd	43,083.44	10	39.98	16.61	14.10%	117.81	4,007.42
Prakash Industries Ltd	40,398.20	10	8.46	19.85	10.71%	185.43	3,554.50

Key Strategies for Sky Alloys & Power Limited

Value-Added Capacity Expansion

Sky Alloys & Power Limited focuses on continuous capacity expansion, highlighted by the recent completion of its integrated facility in Raigarh. This scaling strategy doubles intermediate product capacity and enables forward integration into high-margin, value-added TMT bars to meet market demand and enhance overall profitability.

Operational Cost Optimization

The company actively pursues cost optimization and efficiency gains by upgrading its captive turbine to 20MW and planning a large-scale 50 MWp Captive Solar Power Project. This strategic investment will secure long-term power supply, mitigate volatile tariffs, and is expected to achieve significant power cost savings per unit.

Focused Brand Solidification

A core strategy is solidifying the “SKY TMT” brand as a symbol of quality through strategic brand building. This involves securing key approvals from high-value government infrastructure bodies and forging strategic alliances. These actions pre-qualify products for large-scale public projects, ensuring robust market penetration and growth.