India's steel boom to drive strong demand for ramming mass: Report

India's steel industry is set for strong growth, with production projected to hit 255 MnT by FY31. This expansion, particularly in induction furnaces, is expected to drive recurring, volume-based demand for consumables like ramming mass.

India's steel industry is set for strong growth over the next five years, creating steady demand for key consumables such as ramming mass, according to Choice Institutional Equities.

Steel Production and Ramming Mass Demand

The brokerage said, "India's crude steel production is expected to increase from 168.4 MnT in FY26 to 255 MnT by FY31, with the induction furnace (IF) route remaining a key contributor to growth."

As production through induction furnaces rises from 45.8 MnT to 69.4 MnT, demand for ramming mass, used to line furnaces, is expected to grow alongside steel output.

Key Trends Supporting Refractory Sector

Unlike steelmakers, whose profits are affected by raw material price swings, refractory suppliers benefit from recurring, volume-driven demand. Choice highlighted three major trends supporting the sector. These include the formalisation of the unorganised market, higher refractory consumption due to increased furnace utilisation, and logistics advantages for manufacturers located near steel-producing clusters in Eastern India.

The brokerage added that the "AI-energy nexus" and global power and cooling constraints are encouraging steelmakers to improve furnace efficiency, increasing the importance of reliable refractory products.

According to the report, refractory companies serving the induction furnace segment could benefit from improving operating leverage as steel capacity expands. Demand is expected to remain "visible and recurring" as infrastructure, construction and manufacturing continue to support domestic steel consumption.

Spotlight on Monolith

Choice has initiated coverage on Monolith, noting that its manufacturing presence in Eastern India gives it an "ironclad logistics advantage" of Rs 800-1,200 per tonne over western competitors.

Expansion and Financial Projections

The company plans to increase installed capacity from 2,10,000 MTPA to 5,75,000 MTPA by early FY27.

Sales are projected to grow from 1,71,200 MT in FY26 to 4,87,300 MT by FY29E, while revenue is expected to rise from INR 1,353 Mn to INR 4,532 Mn during the same period.

Risks and Potential Upside

While risks include execution delays, customer concentration and working-capital pressures, Choice believes potential NSE Main Board migration and backward integration could provide additional upside.

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