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Data Centers Fuel Steel Maker's Growth
25 Oct
Summary
- Data centers require specialized structural steel beyond typical warehouses.
- M&B Engineering is investing in capacity for complex construction projects.
- Profitability hinges on winning orders at attractive margins and managing costs.
India's rapidly expanding data center sector presents a significant opportunity for steel manufacturers, including M&B Engineering. These advanced facilities have stringent structural requirements that go beyond standard industrial buildings.
M&B Engineering is strategically investing Rs 30 crore in a new automated heavy structural steel processing line, aiming to boost capacity from 12,000 to 22,000 tonnes annually by Q1FY28. This expansion is targeted at specialized structures like data centers and high-rise buildings.
While the company's revenue grew 22.5% year-on-year in Q1FY27, its operating EBITDA margin saw a decline to 11.4% from 14.2%. Management attributes this pressure to increased freight and transportation costs, compounded by geopolitical uncertainties.
As of June 2026, M&B Engineering held an order book of Rs 1,053 crore, indicating a healthy pipeline. The company is targeting over 25% revenue growth in FY27 and aims for compound annual growth exceeding 20% in the next three to four years, with an expectation of improving profitability.
The company's financial health shows a stronger balance sheet with reduced borrowings to Rs 84 crore in FY26. However, cash flow from operating activities turned negative in the same period, highlighting the cash demands of growth and expansion.
Valued at approximately 14.8 times earnings, M&B Engineering trades below its five-year average. This valuation may reflect market concerns about margin pressure and cash generation, with a potential upside if growth materializes profitably.
