Kirloskar Ferrous Industries LtdQ1 FY27
Kirloskar Ferrous Industries Ltd Q1 FY27 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹441P/E: 18.6Market Cap: ₹7.3K CrSector: Ferrous Metals
Management growth scorecard
Revenue
Category 3
Margin
Category 2
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 3- →Targeting revenue of INR 14,000 crores in the medium term with 3 lakh tons casting sales and 4 lakh tons tube sales.
- →Casting capacity to reach 3 lakh metric tons per annum within 3-4 years, including expansions like the sixth foundry and machining capacity.
- →Steel external sales expected to establish 2.4 lakh tons annually, linked with Koppal steel project in 2 years.
- →Tube capacity aiming to increase to 3.5 lakh tons per annum after expander mill completion (expander mill takes 2 years).
- →Volumetric growth guidance: ~15% overall, with castings growing around 17-20%, steel external sales 20%, and tubes about 10% compared to last year.
- →Large casting capacity expected to ramp up to 500-600 tons per month in 1-1.5 years.
- →Pig iron sales anticipated close to 7 lakh metric tons for the current year, maintaining around 0.5 million ton sales despite steelmaking conversions.
- →Capex planned at INR 600-700 crores annually, with overall INR 3,000-3,500 crores over next 4 years to support growth.
Margin guidance
Category 2- →The company expects volumetric growth of at least 15% overall in the coming three quarters, supported by growth in castings (up 19% in Q1) and steel (20%+ growth in external sales) and a 10% growth in tubes.
- →EBITDA margins are expected to improve, especially in pig iron and castings, with steel and tube EBITDA margins historically at 14-17%. Overall company-level EBITDA should improve beyond the current 12-12.25%.
- →Pig iron prices have stabilized with a slight delta improvement in realizations despite rising raw material costs, supporting profitability.
- →The company aims to increase sales volumes and realizations through price corrections and market recovery in tubes and castings.
- →Capex of around INR 600-700 crores in the current year, possibly higher next year, will support capacity expansions, leading to higher future earnings.
- →Long-term target includes INR 14,000 crores revenue with 3 lakh tons casting and 4 lakh tons tube sales in the medium term (3-4 years).
- →Management is cautiously optimistic given market volatility but expects improved earnings traction in upcoming quarters.
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Fundraise plans
Yes- →The transcript does not explicitly mention any current or planned new fundraising through debt or equity.
- →The company is undertaking several capex projects estimated at around INR 3,000 to 3,500 crores over the next 4 years.
- →Capex for the current year is expected to be around INR 600-700 crores, with higher spends likely in the subsequent years.
- →The management has indicated caution in capex execution due to geopolitical risks but did not mention any specific fundraising plans.
- →No direct references to equity issuance or new debt raising were made during the discussion.
- →Focus appears to be on internal cash flows and projects execution; regulatory and market volatility are being managed without new fundraising announcements.
Order book
- →The company has an orderbook of approximately 23,000 tons in the tube segment, including orders from ONGC and Oil India, which also includes couplings.
- →Execution of these orders is expected to be completed within the next 2 quarters.
- →Large casting foundry capacity is ramping up, targeting 500 to 600 tons per month within 1 to 1.5 years, with full capacity utilization a year after that.
- →The company is focused on increasing premium and high-value product offerings in tubes, including oil and gas segments.
- →Internal capacity expansions and new projects are underway to meet growing demand, including capacity increase for tubes from 10 inches to 18 inches to cover 100% of the market over 2 years.
- →Steel segment expansion at Koppal is planned with a 2-year timeline to increase external sales capacity substantially.
Capex plans
Yes- →Capex guidance for current year: INR 600-700 crores, with potential to increase as large projects trigger.
- →Total planned capex of INR 3,000-3,500 crores over next 4 years.
- →Key ongoing/upcoming projects:
- → - Expansion of Rajpura foundry in 2 phases to 70,000 metric tons per annum.
- → - Completion of 2-part foundry in Solapur (15,000 metric ton/annum capacity).
- → - Hiriyur pig iron plant upgrade (capacity to 360,000 metric tons) with efficiency improvements.
- → - Oxygen plant and enhanced pulverized coal injection at Koppal blast furnaces (completion expected Feb-Mar).
- → - Jejuri rolling capacity enhancement to 25,000 metric tons/month.
- → - New premium couplings manufacturing project at Baramati.
- → - Large projects: steel plant at Koppal, expander mill for large seamless tubes at Baramati, beneficiation and pellet plant, iron ore mine operationalization at Koppal.
- →Battery storage systems planned for renewable energy to mitigate regulatory impact; initial capacities around 50-70 MW.
How does Kirloskar Ferrous Industries Ltd rank vs peers in Ferrous Metals?
Pro feature1Kirloskar Ferrous Industries Ltd
Rev 3Mar 2
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