There is a small capacity table in Erdemir’s activity report; almost the entire investment case is compressed into it. In the first quarter of 2026, the liquid steel capacity utilization rate was 98%, and the crude steel capacity utilization rate was 96%. The Ereğli and İskenderun plants produced 2.3 million tons of crude steel in three months. This is not a photograph of a shut factory.
But the income statement in the same file says the heat leaving the furnace cools before it reaches the shareholder. From TRY 59.7 billion in revenue, net profit attributable to the parent was TRY 384 million. In the activity report’s own ratio table, the net profit margin attributable to the parent is 0.6%.
That is why the market prices the company with two different eyes. The TRY 38.54 price on May 18, 2026 and roughly TRY 259.1 billion market value sit below TRY 295.5 billion of parent equity: about 0.88x P/B. The book discount is real. Yet when the same company’s quarterly EBITDA is annualized and net debt and non-controlling interests are added, EV/EBITDA comes out around 12.5x. Today’s profitability is not cheap; the cheapness lies in the possibility that the furnace will leave a better spread.
The Machine Working on Two Shores
EREGL looks like a single ticker; economically it is Ereğli, İskenderun, mining, service center, energy, port, scrap, coke, and rolling mill order. The ultimate parent is OYAK; the parent shareholder is ATAER Holding. One of the largest operational pieces in consolidation is İsdemir, with an effective ownership rate of 94.87%. So reading EREGL means reading not only the parent company, but the integrated production machine working on two shores.
The strong side of the machine is tonnage. In 2026Q1, flat product output was 1.846 million tons, and long product output was 265 thousand tons. Sales included 1.888 million tons of flat products and 235 thousand tons of long products; exports were 15% of total sales. The Group says it produced 23% of Türkiye’s crude steel output in the first two months of 2026. If a plant of this scale stands idle, the problem is one thing; if the plant is full and the net margin remains 0.6%, the problem is more instructive.
Domestic iron and steel sales were TRY 48.4 billion, and foreign iron and steel sales were TRY 8.35 billion. EREGL’s revenue is not abstract “industrial growth”; it is sheet, slab, billet, coil, pellet, ore, magnesite, and by-products sold ton by ton. In 2026Q1, revenue over flat and long product sales tonnage was roughly TRY 28,113/ton. EBITDA from the same tonnage was roughly TRY 2,823/ton. So the investment question is simple: the tonnage is there; will the profit skin over each ton thicken?
Profit Is Thin, Cash Is Better
At first glance, the income statement shows recovery. Revenue was TRY 59.7 billion; gross profit was TRY 4.81 billion; EBITDA was TRY 5.99 billion. The EBITDA margin was 10.0%, compared with 6.7% in the same period last year. But operating profit falls to TRY 2.43 billion, pre-tax profit to TRY 896 million, and net profit attributable to the parent to TRY 384 million. Finance expense was TRY 3.94 billion; finance income was TRY 1.61 billion. Without the TRY 727 million net monetary position gain, the net profit line would have looked even weaker.
That is why net profit alone is a weak compass in EREGL. Cash flow tells a better story, but not a clean heroic one. Cash flow from operating activities was TRY 18.1 billion. Behind it are a TRY 3.68 billion depreciation adjustment and TRY 12.84 billion of working capital support. Cash outflow for purchases of property, plant, equipment and intangible assets was TRY 2.85 billion; simple free cash flow was roughly TRY 15.2 billion.
That is good news. But in steel, working capital can be a friend in one quarter and a creditor in the next. Inventory release, receivables collection, or longer trade payables are not by themselves proof of durable profitability. 2026Q1 lets us say this: the company is strong on the balance sheet, breathing in cash terms, but the income statement is not yet thick enough to justify the old dividend memory.
| Metric | 2026Q1 | Read-through |
|---|---|---|
| Revenue | TRY 59.7bn | Large volume and sales base |
| Parent net profit | TRY 384mn | Only 0.6% of sales reached parent shareholders |
| EBITDA | TRY 5.99bn | 10.0% margin; 6.7% in 2025Q1 |
| Operating cash flow | TRY 18.1bn | Includes TRY 12.8bn working-capital support |
| Simple free cash flow | About TRY 15.2bn | Operating cash flow less cash outflow for PP&E and intangibles |
Book Discount and EBITDA Multiple in the Same Stock
Any analysis that tries to describe EREGL as cheap or expensive in one word remains incomplete. Here, two truths stand at once.
The first truth: market value is roughly TRY 259.1 billion, while equity attributable to the parent is TRY 295.5 billion. The stock trades about 12% below book value. Cash and cash equivalents are TRY 123.9 billion; total borrowings are TRY 155.6 billion. Adding short- and long-term financial investments, net debt is roughly TRY 31.3 billion. This balance sheet shows the muscle to carry a low-margin quarter.
The second truth: the market does not treat the company’s current EBITDA as cheap. Market value, net debt, and non-controlling interests together lead to an enterprise value of roughly TRY 299.7 billion. 2026Q1 EBITDA was TRY 5.99 billion; straight annualization gives TRY 24.0 billion. That means about 12.5x EV/EBITDA. In the steel cycle, that multiple does not shout “already cheap.”
| Lens | Calculation | Result |
|---|---|---|
| Book value | TRY 259.1bn market value / TRY 295.5bn parent equity | 0.88x P/B; about 12% below book |
| Net debt | TRY 155.6bn borrowings - TRY 123.9bn cash - TRY 0.4bn financial investments | About TRY 31.3bn net debt |
| Current EBITDA multiple | Market value + net debt + TRY 9.35bn non-controlling interests / annualized TRY 24.0bn EBITDA | About 12.5x EV/EBITDA |
| Revenue per ton | TRY 59.7bn revenue / 2.123mn tons flat+long product sales | About TRY 28,113/ton |
The resolution of this contradiction lies in margin sensitivity. If the EBITDA margin stays at 10% on the same sales base, annualized EBITDA is roughly TRY 23.9 billion and EV/EBITDA is about 12.6x. If the margin rises to 12%, the multiple falls to about 10.5x; if it rises to 14%, it falls to about 9.0x. The stock’s cheapness thesis is born not from the sentence “tonnage increased,” but from this margin staircase.
That is why my verdict is Cheap. But this cheapness is not finding a factory for free; it is a margin-recovery option bought at a low P/B. The investor is not buying today’s profitability, but the possibility that a better spread will close the book discount.
The Debt Calendar and the OYAK Table
The risk path does not begin with fear of bankruptcy. It begins with a working factory failing to heat capital enough.
Total borrowings are TRY 155.6 billion. TRY 38.0 billion matures within one year, and TRY 58.3 billion matures between one and two years. The offshore bond issues completed in 2024, with nominal amounts of 750 million dollars and 200 million dollars, mature on July 23, 2029; the coupon rate is 8.375% annually. The Group states that, as of the reporting date, it has met the bond’s financial ratio obligations. This is not a debt alarm; it is the calendar showing how finance expense thins shareholder profit in low-spread quarters.
| Risk line | 2026Q1 data | Why it matters |
|---|---|---|
| Total borrowings | TRY 155.6bn | Finance cost can thin parent earnings quickly in low-margin quarters |
| Maturity within one year | TRY 38.0bn | Refinancing price touches the income statement |
| Maturity in one to two years | TRY 58.3bn | The debt calendar is concentrated near term |
| Purchases from related parties | TRY 6.38bn | Control structure and capital allocation can explain part of the discount |
| Legal provisions | TRY 1.20bn | The legal file around the factory is not empty |
| Long-term employee benefit provisions | TRY 7.28bn | In heavy industry, labor is not only an expense but also a balance-sheet obligation |
The governance side should be read with the same calm. OYAK control brings scale, access to financing, and industrial discipline to EREGL; it also brings related-party traffic into the investment thesis. In 2026Q1, significant purchases from related parties were TRY 6.38 billion, and trade payables to related parties were TRY 6.56 billion. The purchases are stated to arise from service, fixed asset, energy, and scrap transactions. Period-end balances are unsecured and cash-based; no doubtful receivables provision has been set aside for related-party receivables.
This picture does not require an alarm sentence. But the EREGL investor should remember that cheap book value may look cheap not only because of the steel cycle, but also because of a control and capital allocation discount.
The Ledger Around the Factory
The factory does not produce only steel; it also produces litigation, collateral, employee obligations, municipal files, and investment calendars. As of March 31, 2026, lawsuits filed against the Group totaled TRY 707.7 million; the provision set aside for these lawsuits was TRY 1.20 billion. There is a long local legal file with Kdz. Ereğli Municipality under the headings of property tax, building suspension minutes, and zoning administrative fines. Management says it has not recognized provisions for some municipal cases because it does not expect significant cash outflows.
Employee obligations are also a real industrial line item. The Group’s headcount is 12,833. Long-term employee benefit provisions are TRY 7.28 billion; TRY 5.66 billion of this is severance pay provision. In addition, the total amount of guarantees, pledges, and mortgages given is TRY 42.9 billion. None of these is large enough to break the thesis alone. But together they describe the factory reality living inside the number called “book value.”
Dividend memory is the oldest part of investor psychology. From 2025 profit and prior-year profits, a total TRY 3.85 billion cash dividend decision was taken, equal to TRY 0.55 gross per share; payment begins on June 3, 2026. Because of the company’s 3.97% treasury shares, the dividend attributable to those shares is netted. This discipline is valuable; but EREGL’s question today is not the will to pay dividends, but whether the new profit engine can carry the old dividend expectation.
The Strongest Counterargument
The bear thesis is this: “What more do you want?” Capacity is 96%. Tonnage has returned. The EBITDA margin has risen from last year’s 6.7% to 10.0%. Cash flow is strong. Despite all this, net profit attributable to the parent is TRY 384 million and the net margin is 0.6%. If this is the good quarter, the book discount is not an opportunity; it is a penalty for return on capital.
This counterargument is fair. In fact, it is the most important brake in the report. EREGL is not a stock to buy simply because it trades at 0.88x P/B. For book value to close, the market must say, “this asset base will generate higher cash returns.” If high capacity meets low margins, the stock can look cheap for years and sell the investor not patience, but inertia.
The bull thesis is just as clear. The market is not paying today for a full recovery. The cash buffer is large, net debt is manageable, capacity is running, the position in flat steel is strong, and the book discount exists. If the margin settles in the 12-14% band, working capital does not turn into cash burn, and the debt calendar does not swallow profit, today’s price will look too cautious.
Three data points will change the thesis in the next report. One: while capacity remains high, does the EBITDA margin truly settle above 10%? Two: does operating cash remain positive even without working capital support? Three: do finance expense and debt maturities stop crushing profit attributable to the parent?
This stock is not for the impatient dividend hunter. The investor buying only because they see low P/B is also playing the wrong game. EREGL is for the investor who believes in the large asset base, but will question profit per ton every quarter.
Final verdict: Cheap. Owning EREGL means putting money on the belief that one day the full furnace will leave a warmer profit for the shareholder.