ARDEE — Q1 FY27 earnings call

Call held 31 Aug 2026

Management summary

Ardee Industries reported a strong 35.2% YoY revenue growth to ₹338.8 crores in Q1 FY27, driven by increased sales volumes and expanded capacity. However, EBITDA remained flat YoY at ₹33.8 crores, with margins compressing to 10% due to geopolitical disruptions, increased raw material costs, and sequential volume decline. The company is focused on leveraging its enhanced capacity and export strategy while navigating supply chain challenges and maintaining a conservative outlook for the year.

Highlights

  • Revenue for Q1 FY27 was ₹338.8 crores, representing a YoY growth of 35.2% compared with ₹250.6 crores in Q1 FY26.

  • Sales volume during Q1 FY27 stood at 17,645 metric tons, reflecting continued growth from 15,529 metric tons in Q1 FY26.

  • Installed capacity increased by 50.9% from 1,04,025 MTPA to 1,56,950 MTPA, effective May 29, 2026, enhancing operating platform.

  • Profit after tax (PAT) grew 6% YoY to ₹19.9 crores, with a PAT margin of 5.9%.

  • The company maintains a strong export focus, with 38.7% of revenue derived from exports in Q1, and its brand is listed on LME and MCX.

Concerns

  • EBITDA for Q1 FY27 was ₹33.8 crores, slightly down from ₹33.9 crores in Q1 FY26, resulting in a flat YoY growth.

  • EBITDA margin for Q1 FY27 was 10%, a decline from 12.6% in FY26, with management guiding for a 10% range for the full year due to geopolitical issues.

  • Volume declined sequentially in Q1 FY27 due to ongoing disruptions from the war, impacting raw material imports and leading to a conservative approach.

  • Raw material costs, particularly for domestically procured materials and petroleum products, increased, contributing to a dip in gross profit and EBITDA per ton.

Key financials

  1. Revenue ₹338.8 Cr +35.2%YoY
  2. EBITDA ₹33.8 Cr -0.3%YoY
  3. EBITDA Margin 10%
  4. Profit Before Tax ₹26.7 Cr +5%YoY
  5. PAT ₹19.9 Cr +6%YoY
  6. PAT Margin 5.9%
  7. Sales Volume 17,645 metric tons +13.6%YoY
  8. Realization per Metric Ton ₹2,09,000

What they filed

₹ Cr · quarterly
Line itemQ1 FY26Q4 FY26Q1 FY27
Revenue251 354 339
EBITDA34 39 34
Net profit19 24 20
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex Capex disclosed
    • Brownfield capacity expansion (debottlenecking) in existing unit ₹15 Cr
    • Registration and handover of a 5.56 acre land parcel at Naidupeta, Andhra Pradesh for future expansion
    Nikunj Aggarwal: "Broadly, we did around Rs. 15 crores." (Page 9); Arun Kumar Mallik: "We also completed the registration and handover of a 5.56 acre land parcel at Naidupeta, Andhra Pradesh." (Page 5)
  • Debt Debt disclosed
    Arun Kumar Mallik: "We had two types of debt, long-term and short-term. Long-term, that was around Rs. 20 crores, which have been created on 14th August and working capital limit utilization is also almost zero due to IPO proceeds." (Page 10)
  • Liquidity Cash ₹150 Cr ₹150 crores in FDRs from IPO funds. ₹220 crores of IPO proceeds earmarked for incremental working capital requirements, primarily for scrap buying from new sources and higher credit for export origins.
    Arun Kumar Mallik: "Yes. We have around Rs. 150 crores FDR in the books as entry and use of IPO funds." (Page 10); Vivek Jhala: "around Rs. 220 crores of IPO proceeds has been earmarked for incremental requirements." (Page 7); Nikunj Aggarwal: "In this whole year, we expect it to kind of get utilized, mostly in terms of scrap buying from various new sources that we are trying to develop in various parts of the world. So, it will mostly cater to that. Also, certain export origins we are trying to develop, which would require higher credit, and higher debt that would increase the debtors a little bit." (Page 7)

Guidance & targets

Volume

  • Volume Growth Volume · FY27 · Medium confidence 10% to 20%
    Broadly, volume growth that we are targeting is a 10% to 20% range. But given the disruption and all, we are still seeing how things will pan out this year. We are more confident on H2, but still this is our target, 20%. But still, it all depends a lot on the overall scenario of the supply chain.

    — Nikunj Aggarwal

Profitability

  • EBITDA Margin Profitability · FY27 · Medium confidence 10% range
    Basically, seeing the whole geopolitical scenario, which is not almost seeming to get over anytime soon, it would be better to for us to kind of say that 10% or 10% range would still be better for us to guide.

    — Nikunj Aggarwal

Capacity

  • Optimum Utilization Level Capacity · Next year (FY28) · Medium confidence 70% to 75%
    As a whole, 70% to 75% is optimum utilization level for the plant. You can expect in this range, basically. Not in the 70% to 75% range this year, lower than that a little bit, seeing the whole market scenario. But hopefully, in the next year, we would be able to achieve higher.

    — Nikunj Aggarwal

Return Ratios

  • ROCE Return Ratios · Coming years · Medium confidence 20-plus range
    Right now, once the new equity has come in, the return ratios will reduce. We believe we would be able to maintain 20-plus range in the coming years.

    — Nikunj Aggarwal

Working Capital

  • Working Capital Cycle Working Capital · Ongoing · High confidence 90 to 100 days

    From 110 days (currently 95 days) today

    Okay. As on date, our working capital is around 110 days. But currently, as the inventory has reduced somewhat due to purchases, as of today, our working capital is around 95 days. So, approximately, it will remain around this level. The gross working capital requirement that we are targeting for FY26-27 will be around Rs. 400 crores plus. Out of this, the proceeds are around Rs. 220 crore. The utilisation of the limit is currently on the lower side, which we are adjusting at present. ... It will remain around 90 to 100 days.

    — Arun Kumar Mallik / Nikunj Aggarwal

Sales

  • Sales for FY27 Sales · FY27 · Medium confidence ₹1,600-1,700 crores
    You could say that is the number basically.

    — Nikunj Aggarwal

What to watch in Q2 FY27

Volume Growth

Next quarter / H2 FY27
Current Sequential decline in Q1 FY27; 13.6% YoY growth
Target Progress towards 10-20% volume growth for FY27

Why it matters

Volume growth is key to leveraging expanded capacity and achieving revenue targets, especially given Q1 sequential decline.

Broadly, volume growth that we are targeting is a 10% to 20% range. But given the disruption and all, we are still seeing how things will pan out this year. We are more confident on H2, but still this is our target, 20%.

Risks & concerns

  • Geopolitical disruptions impacting raw material imports and supply chain

    high

    Ongoing war disruptions affect raw material imports, leading to strategic conservatism and sequential volume decline. Also causes increased freight costs and supply chain delays.

    Management acknowledged

  • Commodity price volatility

    medium

    Business operates in a commodity-linked environment, requiring effective spread management and hedging mechanisms.

    Management acknowledged

  • Domestic raw material sourcing challenges

    medium

    Challenges include availability, price, and GST-related issues due to prevalent unorganized sectors in the domestic market.

    Management acknowledged

Q&A highlights

8 direct
Reason for sequential volume decline in Q1 FY27 despite new capacity Direct
The volume decrease is basically because of the ongoing disruptions of the war, basically. As you know, a lot of the raw material is imported for us. Because of that, we have strategically decided to not go very aggressive and be purposefully maintained. Also, at the same time, the disruptions were there, which caused this. In terms of the new capacity, it has come May 2026 right now, and in this year, we hope to utilize part of it.

Addresses a key concern about underutilization of newly added capacity and links it to external geopolitical factors and strategic decisions.

Asked by Aniket Madhwani

Conservative volume growth guidance (10-20%) given new capacity Direct
Right now, the overall market scenario with the whole war and being into import and export, so it is better to be conservative this year rather than say a number. We would be happy to over-perform if that happens, but right now, I think this is what it is that we would like to guide.

Explains management's cautious stance on guidance, highlighting the impact of global market conditions and import/export dynamics.

Asked by Aniket Madhwani

Sustainability of inventory build-up and its cash flow impact Direct
Broadly, it was temporary. Sometimes inventory builds up at the quarter-ending when the OEMs require the material in the next quarter or something based on their planning. Some quarters it can be low, some quarters it can be high depending on the customers that we hold the inventory.

Clarifies that inventory fluctuations are normal and customer-driven, not indicative of a systemic issue, which impacts working capital and cash flow.

Asked by Sanyam

Customer concentration and its evolution Direct
Broadly, in this business, we have few large clients. It is kind of an inherent part of this business. There are top four, five clients that we cater to and have been catering for many years. So, we feel that the share will keep revolving in those four, five clients. Sometimes somebody would be larger, somebody would be lesser. Over the years, it has reduced. The concentration of one customer has come down from 70% to around 40%, and I think eventually it will go down further as we grow.

Provides insight into the company's customer base, indicating a natural concentration in the industry but also a trend towards diversification over time.

Asked by Vivek Jhala

Deployment of IPO proceeds for working capital Direct
In this whole year, we expect it to kind of get utilized, mostly in terms of scrap buying from various new sources that we are trying to develop in various parts of the world. So, it will mostly cater to that. Also, certain export origins we are trying to develop, which would require higher credit, and higher debt that would increase the debtors a little bit.

Details the strategic use of IPO funds to expand raw material sourcing and support export growth, which could impact future working capital needs.

Asked by Vivek Jhala

Impact of new capacity on ROCE Direct
You'll see the impact on the balance sheet this year only, as the whole the money has come in, and it will eventually get deployed. In the cash flow and the liability side, both, you'll see the impact in a positive way this year. In terms of second question, historically, the capital was low, that's why the number always seemed high. Right now, once the new equity has come in, the return ratios will reduce. We believe we would be able to maintain 20-plus range in the coming years.

Explains the near-term dilution of ROCE due to new equity infusion but provides a long-term target for maintaining healthy returns.

Asked by Vivek Jhala

EBITDA margin outlook for FY27 given geopolitical issues Direct
Basically, seeing the whole geopolitical scenario, which is not almost seeming to get over anytime soon, it would be better to for us to kind of say that 10% or 10% range would still be better for us to guide.

Sets a realistic expectation for full-year EBITDA margins, acknowledging the persistent impact of external factors.

Asked by Nishita

Reasons for dip in gross profit and EBITDA per ton Direct
The main reason for this dip is that the raw material that we domestically procured and all the petroleum products that were used in our bomb items, the cost of all that increased and this impact came.

Identifies specific cost pressures (domestic raw material and petroleum products) as the cause for margin compression, providing clarity on operational challenges.

Asked by Ankur Gulati

3 min read 7 chapters

Detailed narrative

Q1 FY27 Financial Performance Overview

Ardee Industries reported a robust 35.2% YoY revenue growth in Q1 FY27, reaching ₹338.8 crores, up from ₹250.6 crores in Q1 FY26. Sales volume also saw a significant increase to 17,645 metric tons from 15,529 metric tons in the prior year. Despite this top-line performance, EBITDA remained flat at ₹33.8 crores, resulting in a margin of 10%. Profit after tax (PAT) grew 6% YoY to ₹19.9 crores, with a PAT margin of 5.9%.

Capacity Expansion and Utilization

The company successfully expanded its installed capacity by 50.9% from 1,04,025 MTPA to 1,56,950 MTPA, effective May 29, 2026. This brownfield expansion, achieved through debottlenecking in the existing unit, cost approximately ₹15 crores. While the optimum utilization level is targeted at 70-75%, management expects utilization to be lower in FY27 due to market conditions, with a ramp-up to optimum levels anticipated in FY28.

Market Dynamics and Export Strategy

Ardee Industries continues to focus on a diversified revenue mix, with 61.3% from domestic and 38.7% from export markets in Q1 FY27. The company exports to eight countries, and its recent empanelment with the London Metal Exchange (LME) for its 99.97 brand, alongside its listing on MCX in India, strengthens its global credibility and market presence. Management aims to expand its international relationships and presence in global markets, leveraging its proximity to ports for the Southern and Southeast Asian markets.

Raw Material Sourcing and Supply Chain Challenges

The company faced challenges in Q1 FY27 due to ongoing geopolitical disruptions, which impacted raw material imports and led to increased freight costs and supply chain delays. This resulted in a strategic decision to be conservative with volumes and contributed to a dip in gross profit and EBITDA per ton. Domestic raw material sourcing also presents challenges related to availability, price, and GST issues due to the unorganized sector. The company is actively exploring new sourcing geographies and developing domestic market sources to mitigate these risks.

Working Capital Management and IPO Proceeds

The working capital cycle, currently around 95 days (down from 110 days), is expected to remain in the 90-100 day range. Approximately ₹220 crores of IPO proceeds have been earmarked for incremental working capital requirements. These funds will primarily be utilized for buying scrap from new sources and managing higher credit requirements for new export origins, which will increase debtors. The company also holds around ₹150 crores in FDRs from IPO funds.

Profitability and Margin Outlook

EBITDA margin for Q1 FY27 stood at 10%, a decline from 12.6% in FY26. Management attributes this to increased raw material costs (both domestic and petroleum products) and geopolitical issues. For the full year FY27, the company conservatively guides for an EBITDA margin in the 10% range. They anticipate that if market conditions improve, particularly the geopolitical scenario, margins could improve back to previous levels.

Strategic Growth Initiatives

Ardee Industries is evaluating various opportunities for future growth, including potential entry into lithium-ion battery recycling, though nothing concrete is planned yet. The company's long-term strategy involves investing in sustainable recycling infrastructure and technology to improve recovery rates and scale operations. They aim to build Ardee into a leading global player in the circular economy, maintaining discipline on quality, customer relationships, operational efficiency, and financial performance.

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