Growing EV Adoption And Urbanization Will Expand Indian Exports

Key Takeaways

• Rapid scaling of Chennai operations and wire ropes expansion could drive sharper profitability rebound and establish new high-margin growth engines well beyond current expectations.
  
• Strategic export positioning, advanced product investments, and strong customer ties forecast outperformance in premium segments and sustained revenue growth as auto demand rises.
  
• Mature markets, rising competition, automotive shifts, diversification risks, and input cost pressures threaten growth, margins, and profitability amid high concentration and execution challenges.

Catalysts

Engages in manufacturing and sale of tyre bead wires in India and Thailand.

• While analyst consensus expects cost savings and gradual margin improvement from higher Chennai utilization, strong evidence of rapid customer approvals and a fourfold ramp-up target-5,000 tonnes to 20,000 tonnes output in a single year-suggest the facility can reach optimal scale far sooner, driving a much sharper rebound in profitability and net margins from FY26 onward.
  
• Analyst consensus expects the 10,000-tonne wire ropes foray to diversify revenues and add incrementally to earnings, but management repeatedly references a strategy to further scale wire ropes and leverage deep existing customer relationships, implying that if the pilot proves successful, this high-margin segment could become a major revenue and margin engine in coming years well beyond current projections.
  
• The company is positioned to be a prime beneficiary of the global shift in supply chains towards India; with new capacity and fast-tracked customer approvals, Rajratan could capture export share from less competitive geographies, accelerating export-driven topline growth and potentially achieving market share gains above the industry average.
  
• With a rising focus on lighter, high-performance tires driven by EV adoption and fuel-efficiency standards, Rajratan's investment in advanced manufacturing and value-added products (like high-tensile bead wire) puts it in pole position to command premium pricing, boosting average selling prices and gross margins materially as automakers transition to new tire technologies.
  
• Strategic relationships with top tire makers, combined with proven agility in rapidly commercializing new capacity, position Rajratan to consistently outgrow the broader automobile wire market as urbanization and middle-class expansion in India and Southeast Asia drive auto sector demand higher, supporting sustained multi-year revenue and earnings compounding.

Rajratan Global Wire Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Rajratan Global Wire compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Rajratan Global Wire's revenue will grow by 19.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 5.9% today to 10.7% in 3 years time.
• The bullish analysts expect earnings to reach ₹1.8 billion (and earnings per share of ₹34.88) by about July 2028, up from ₹570.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 29.8x on those 2028 earnings, down from 36.3x today. This future PE is greater than the current PE for the IN Metals and Mining industry at 23.1x.
• Analysts expect the number of shares outstanding to grow by 0.05% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.91%, as per the Simply Wall St company report.

Rajratan Global Wire Future Earnings Per Share Growth

Risks

• The company has acknowledged that its main product, tyre bead wire, is facing a slowing addressable market and limited scope for continued rapid growth as the company's market share in India and Thailand has matured, which could limit future revenue growth.
  
• Management notes increased competitive intensity domestically with significant new capacity added by major competitors such as Tata, Bansal Wire, and Aarti Steel, along with international import pressures, all of which could restrict their ability to maintain margins and could result in pricing pressure, thus affecting profitability and EBITDA.
  
• There is a high degree of customer and product concentration, with increasing risks from the global automotive sector's transition towards electric vehicles and alternative materials, which may reduce long-term demand for steel bead wire and lead to a decline in core revenues.
  
• The company's efforts to diversify into wire rope entail execution risk, a slow ramp-up, and require time to gain necessary customer approvals, with only a small initial capacity and the need to build brand and technical credibility against entrenched players, which may delay meaningful contribution to revenues and earnings, especially if their pilot fails to scale.
  
• Rising raw material volatility, exposure to steel price swings, high capital expenditure commitments (including ₹240 crores in Chennai and ₹50 crores for wire rope), increased depreciation and finance costs, and higher working capital cycles all signal pressure on net margins and the risk of elevated debt or stagnating profits if demand does not materialize as expected.

Valuation

• The assumed bullish price target for Rajratan Global Wire is ₹714.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Rajratan Global Wire's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹714.0, and the most bearish reporting a price target of just ₹427.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be ₹16.5 billion, earnings will come to ₹1.8 billion, and it would be trading on a PE ratio of 29.8x, assuming you use a discount rate of 13.9%.
• Given the current share price of ₹408.35, the bullish analyst price target of ₹714.0 is 42.8% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.