Ashapura Minechem Q1 FY27 earnings call

Ashapura Minechem reported a consolidated income from operations of INR 1,616 crores in Q1 FY27, marking a 19.2% year-on-year growth from INR 1,356 crores in Q1 FY26. Despite this revenue growth, reported EBITDA remained broadly stable at INR 188.9 crores, leading to a margin compression to 11.7% from 13.8% in the prior year. Profit before tax (PBT) also saw a marginal decline of 1.4% YoY, reaching INR 130.03 crores, while Earnings Per Share (EPS) increased by 4.95% to INR 12.07.

The Guinea bauxite business was a major contributor, accounting for INR 1,360 crores in turnover (84% of consolidated) and INR 163 crores in EBITDA. Bauxite volumes for Q1 FY27 stood at 2.34 million tons, a sequential decrease from 3.16 million tons in Q4 FY26, but an increase from 2.05 million tons in Q1 FY26. EBITDA per ton improved to USD 6.3 from USD 5.9 in the previous quarter. The business faced challenges from geopolitical uncertainty^🌐, high fuel prices, and abnormal ocean freight, which pushed up landed costs and impacted overall profitability.

Ashapura is significantly enhancing its port infrastructure in Guinea. The Boffa port is now fully operational with an increased capacity from 5 million tons to 8 million tons per annum. Additionally, a new jetty at the GSM port is under construction and is expected to be operational by Q4 FY27, boosting its capacity from 6 million tons to 10 million tons per annum. These developments will collectively raise the company's combined port capacity to approximately 23 million tons, providing robust support for future volume growth.

The India businesses, encompassing bentonite, allied minerals, and white performance minerals, continued to perform well across various verticals despite external headwinds^🌐 like elevated freight costs and raw material prices. The company is pursuing a strategy to increase its share of value-added products, deepen customer relationships, and expand into new applications. A capex of INR 200 crores is planned to support these initiatives and drive long-term growth and profitability in India operations.

A bauxite washing plant with a capacity of 20,000 tons per day has been established. While expected to be EBITDA neutral, this plant is crucial for enhancing resource flexibility and upgrading low-grade bauxite to high-grade, making it more marketable and allowing for premium pricing, especially in challenging market conditions. Management noted that expanding such a plant to 40,000-60,000 tons per day would take about one year and cost approximately USD 15 million under an operate and transfer model.

Management remains optimistic about the medium to long-term demand for bauxite, anticipating an additional 20-30 million tons of demand from new refineries in China. The company is confident in achieving its iron ore target of 15 million tons by FY28. For the next financial year, Ashapura expects around USD 1 billion (approximately INR 10,000 crores) in sales from bauxite alone, driven by infrastructure, partnerships, and customer relationships.

The government of Guinea is expected to implement a quota system for bauxite exports before the end of 2026, which Ashapura believes will positively impact global bauxite prices and potentially reduce freight costs. While current EBITDA per ton is expected to remain around USD 6-6.3 in the short term due to elevated freight, the company is optimistic about returning to USD 10 per ton in the medium to longer term as market conditions normalize.