Ashapura Minech.

Ashapura Minechem concluded FY26 as its best year ever, with consolidated revenue from operations growing 91% year-on-year to INR5,237 crores, up from INR2,739 crores in FY25. EBITDA for FY26 increased 51.46% to INR674 crores, compared to INR445 crores in the previous fiscal year. The strong performance continued into Q4 FY26, with revenue reaching INR1,969 crores, a 105% increase from INR960 crores in Q3, and EBITDA rising to INR211 crores from INR143 crores in Q3.

The Guinea business was a major contributor, generating approximately INR4,200 crores in revenue and INR561 crores in EBITDA for FY26. Bauxite export volumes for FY26 reached 8 million tons, a significant increase from 3.5 million tons in FY25. The company is expanding its Boffa port capacity from 5 million tons to approximately 10 million tons, which is almost complete. Additionally, plans are underway to expand the GSM port capacity by 50-60% by FY27-28, aiming for an overall port capacity increase from 15 million tons to 20 million tons by the end of the current year, and targeting 27 million tons in the medium term.

The Indian business, comprising Bentonite & Allied Minerals and White Performance Materials, contributed approximately INR998 crores in revenue and INR112 crores in EBITDA for FY26. The company is focusing on expanding its product basket and increasing value-added applications, with a planned capex of roughly INR150 crores for FY27 across all divisions to upgrade facilities and add new products. Ashapura secured seven new bentonite leases in Q4 FY26, reinforcing its commitment to sustainable backward integration.

Despite strong top-line growth, the company faced significant cost headwinds, including increases in fuel prices, transportation costs, and higher input costs in India. The Specialty Adsorbent Solutions business was particularly impacted by a sharp rise in sulfuric acid prices. In Guinea, geopolitical unrest led to increased fuel, OGB, freight costs, and higher taxes/duties, contributing to a Q4 FY26 EBITDA per metric ton of $5.9. Management anticipates these margin pressures to continue into Q1 FY27, expecting similar or slightly more difficult EBITDA margins compared to Q4.

The Guinea government plans to implement a bauxite quota system, which management believes will be an impediment for newer players but positive for Ashapura by reducing overall supply and potentially improving bauxite prices net of freight. Importantly, Ashapura's concessions are free from any local refining or value-addition requirements, unlike some larger Chinese players. The government has also decided not to issue new bauxite licenses for the next three to five years, which is expected to benefit existing, established mining players.

Ashapura is actively developing its iron ore business, which is currently in a commissioning phase. While speculative, management expects a meaningful contribution within the next one to two years, with initial margins potentially in the single digits. The company is also planning beneficiation plants for iron ore, aiming for a quality of 60% plus Fe content, and a bauxite washing plant with a capacity of 20,000 tons per day to improve marketable quality. These initiatives are being explored with potential vendors and partners to minimize balance sheet impact.

The company's capital allocation strategy focuses on not increasing debt, despite ramping up volumes that require working capital. While debt reduction might occur in the medium term, the immediate focus is on managing existing debt levels. For FY26, the board recommended a 100% dividend, reflecting confidence in the company's financial health and commitment to shareholder returns. Capex for new projects, particularly beneficiation plants, is being explored through build-operate-transfer models with partners to avoid significant balance sheet additions.