Sarda Energy and Minerals: A Powerhouse in Steel and Energy

Sarda Energy & Minerals Limited (SEML) is fast emerging as a key player in India’s steel and energy sector. In a country that is currently the second-largest producer of crude steel globally, Sarda Energy is well-positioned to ride the growth wave of India’s infrastructure and manufacturing boom. The company’s diversified portfolio, strong captive resources, and increasing capacity in renewable and thermal power make it one of the most promising companies to watch in the coming years.

India’s Steel Industry and SEML’s Strategic Role

India is experiencing robust demand in steel due to rapid urbanization, infrastructure expansion, and an aspirational young population. With low per capita steel consumption compared to global averages, the growth runway remains long and sustainable.

In this context, Sarda Energy and Minerals stands out due to its fully integrated operations, spanning mining, power generation, ferro alloys, and steel manufacturing. Its ability to control raw material sources—like iron ore and coal mines—ensures cost efficiency and reliability, especially important in a volatile global commodity market.

Business Overview: A Diversified Industrial Player

1. Steel Segment

Sarda Energy manufactures sponge iron, billets, wire rods, and HB wire through its integrated facilities. It has seen significant output growth in this segment, with steel billets and wire rod production increasing by 18% year-on-year.

2. Ferro Alloys

SEML is a leading producer and exporter of manganese-based ferro alloys, essential for steelmaking. With a production of over 200,000 MT last year, the company enjoys both domestic and international market demand.

3. Power Generation

The company operates captive thermal power plants to meet its energy needs and is actively expanding its renewable energy portfolio.

• Hydro Power: 142 MW installed capacity, with another 25 MW expected by FY25.
• Solar Energy: A 50 MW solar plant is under development in Chhattisgarh.
• Thermal Power: Acquisition of SKS Power’s 600 MW plant marks a massive leap in power generation capacity.

4. Minerals

SEML has captive mines for iron ore and coal, ensuring raw material security.

• Coal Production: 1.43 million tonnes in FY24 (53% YoY growth).
• Iron Ore Production: 375,470 MT (29% growth).
• Mines like Gare Palma IV/7 and Shahpur West are being ramped up to significantly boost future output.

Financial Highlights: Consistent Growth

In Q2FY25, SEML showcased impressive growth:

• Revenue: ₹1,159 crore (25% QoQ growth)
• EBITDA: ₹393 crore (17% growth), margin at a healthy 32%
• Profit After Tax: ₹203 crore (3% QoQ increase)
• Operating EBITDA: ₹332 crore, maintaining 29% margin

This growth was driven largely by the SKS Power acquisition and operational efficiencies across segments.

Segment-wise Revenue (FY24)

Product Revenue Breakdown:

• Ferro Alloys: 38.03%
• Steel: 26.38%
• Power: 9.35%
• Coal: 6.50%
• Pellet & Sponge Iron: ~20%
• Others: <1%

Geographical Revenue:

• Domestic: ₹2,956.95 crore
• Exports: ₹911.18 crore

Despite pricing pressure, the company has maintained revenue stability through volume growth and cost optimization.

Mining & Capacity Expansion Plans

Sarda Energy’s future growth is backed by aggressive capacity expansion and mining activities:

• Gare Palma IV/7: Capacity increasing from 1.68 MT to 5.2 MT in future phases.
• Shahpur West Coal Mine: 13.4 MT in extractable reserves; production expected within 2 years.
• Kalyani Coal: 5.8 MT reserves; approvals underway.
• Bartunga Hill: JV formed; 40 MT reserves.
• Surjagarh-1: Composite license issued; exploration to begin.
• Coal Washery: Capacity to increase from 0.96 MT to 5.2 MT.

Power Expansion:

• Rehar Hydro: 24.9 MW
• Kotaiveera SHP: 24.9 MW under construction
• New Turbine: 30 MW energy-efficient turbine planned by FY27

Steel & Alloys Expansion:

• Wire Rod Mill capacity increased to 250,000 MT
• HB Wire capacity up to 45,000 MT
• Pellet capacity raised to 900,000 TPA
• Mineral Fiber plant under setup from ferro alloy waste

Sarda Energy Share Price: Market Sentiment

The Sarda Energy share price has gained significant attention due to its expansion strategy, strong financials, and entry into the power sector. Investors tracking Sarda Energy and Minerals share price see long-term potential, especially post the SKS Power acquisition. With growing interest in renewable energy and steel demand in India, share price of Sarda Energy may reflect further upside.

Latest news around the company—especially regarding SKS Power resolution and coal mine expansion—suggests strong triggers for future re-rating.

Growth Drivers & Future Outlook

• Captive Resource Advantage: Mines located close to plants reduce logistics costs and provide price stability.
• Power Sector Expansion: The 600 MW SKS Power plant can generate ₹2,000 crore revenue and over ₹500 crore profit.
• Renewable Energy Entry: Solar and hydro initiatives offer stable, long-term annuity-like revenue with high margins.
• Rising Steel Demand: With India’s infrastructure push, steel and ferro alloys demand will remain strong.
• Export Market: A balanced domestic and international footprint helps diversify revenue.

Management expects EBITDA per unit to range between ₹1.5 to ₹2.5 for the SKS thermal project, adding significant value to earnings.