Godawari Power And Ispat limited — Q1 FY26 earnings call

Call held 6 Aug 2025

Management summary

Godawari Power reported a steady Q1 FY26 with strong margins despite lower year-on-year performance due to sales realization decline. The company announced significant capex of INR 1,600 crores for diversification into Cold Rolling Mill and Battery Energy Storage Systems, targeting commissioning by March 2027. Key capacity expansions in mining and pellets are also on track, reinforcing the company's growth strategy.

Highlights

  • Achieved EBITDA margin of 24% and PAT margin of 16% for Q1 FY26.

  • Consolidated revenue, EBITDA, and PAT remained largely stable quarter-on-quarter.

  • Year-on-year performance was lower primarily due to a decline in sales realization.

  • Ferro alloys production and sales volume increased by approximately 15% and 13% respectively, both Y-o-Y and Q-o-Q.

  • Board approved INR 1,600 crores capex: INR 900 crores for a 0.7 MT Cold Rolling Mill complex and INR 700 crores for a 10 GW Battery Energy Storage System project, both targeting March '27 commissioning.

  • Expected approval for Ari Dongri mining capacity expansion from 2.35 MT to 6 MT by Q3 FY26, with operations starting Q4 FY26.

  • Pellet expansion of 2 million tons is on schedule for commissioning in October.

  • Jammu Pigments (zinc recycling unit) reported INR 230 crores revenue and INR 20 crores EBITDA.

Key financials

  1. EBITDA Margin 24%
  2. PAT Margin 16%
  3. EPS ₹3.5 -22.2%YoY

What they filed

Q1 FY27: revenue up 32.3%, net profit up 2.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,268 1,298 1,468 1,323 1,308 +3%1,139 −12%1,610 +10%1,750 +32%
EBITDA247 221 318 324 260 +5%218 −1%439 +38%334 +3%
Net profit159 145 222 216 162 +2%143 −1%280 +26%222 +3%
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.

Segment breakdown

  • Jammu Pigments Limited (JPL)
    ₹230 Cr Revenue from Operations₹20 Cr EBITDA

Guidance & targets

Volume

  • FY26 Volume Guidance Achievement Volume · FY26 · High confidence full year basis
    We are confident that the volume guidance given by us at the beginning of the year will be achieved on full year basis.

    — Dinesh Gandhi

  • Galvanized Fabrication Products Quarterly Volume Volume · quarter-on-quarter · High confidence 30,000 tons
    from this quarter and next quarter onwards, you can see thus volumes crossing 30,000 tons every quarter-on-quarter

    — Management

Capex

  • Cold Rolling Mill (CRM) Investment Capex · High confidence INR 900 crores
    The first being a INR900 crore investment in setting up a 0.7 million ton cold rolling mill complex

    — Dinesh Gandhi

  • Battery Energy Storage System (BESS) Investment Capex · High confidence INR 700 crores
    a 10-gigawatt battery energy storage system project is proposed at a cost of INR700 crores

    — Dinesh Gandhi

Capacity

  • Cold Rolling Mill (CRM) Capacity Capacity · High confidence 0.7 million ton
    setting up a 0.7 million ton cold rolling mill complex

    — Dinesh Gandhi

  • Battery Energy Storage System (BESS) Capacity Capacity · High confidence 10 gigawatt
    a 10-gigawatt battery energy storage system project

    — Dinesh Gandhi

  • BESS Long-Term Target Capacity Capacity · Medium confidence 40 gigawatt
    if everything goes well, we want to take it to 40 gigawatt.

    — Management

Project Timeline

  • Cold Rolling Mill (CRM) Commissioning Project Timeline · March 2027 · High confidence March '27

    Previously Q1 FY28 → March '27

    The estimated time line for commissioning of this project is Q1 FY '28. That is March 20 sorry, March '27, not Q1 FY '28, March '27.

    — Dinesh Gandhi

  • Battery Energy Storage System (BESS) Commissioning Project Timeline · March 2027 · High confidence March '27
    The expected time line for commissioning this project is also March '27.

    — Dinesh Gandhi

Mining Capacity

  • Ari Dongri Capacity Expansion Approval Mining Capacity · Q3 FY26 · High confidence from 2.35 million to 6 million tons
    we expect to receive all necessary approval for Ari Dongri mining capacity expansion from 2.35 million to 6 million tons by Q3 FY '26

    — Dinesh Gandhi

  • Boria Tibu Capacity Expansion Mining Capacity · 3 years from now · High confidence from 0.7 million to 3 million tons
    from 0.7 million, we'll be taking it to 3 million tons

    — Management

Mining Operations

  • Ari Dongri Start Operation Mining Operations · Q4 FY26 · High confidence —
    and it start operation in Q4.

    — Dinesh Gandhi

Pellet Capacity

  • Pellet Expansion Commissioning Pellet Capacity · October · High confidence 2 million tons
    Pellet expansion of 2 million tons is going on schedule and we expect to commission the same in the month of October.

    — Dinesh Gandhi

Steel Plant Capacity

  • New Steel Plant Capacity Steel Plant Capacity · Medium confidence 1 million steel plant
    we will be going with the 1 million steel plant at the moment.

    — Management

Debt

  • Debt/Equity Ratio (Current Capex) Debt · High confidence below 0.5
    the leverage will be very minimum, hardly -- below 0.5 at the moment with the current capex amount.

    — Management

  • Debt for Current Capex Debt · High confidence INR 700-800 crores
    with the current capex amount, we will be taking a small debt of, say, INR800 crores, INR700 crores.

    — Management

Free Cash Flow

  • Minimum Free Cash Flow Free Cash Flow · FY27, FY28 · Medium confidence INR 3,000 crores
    for FY '27, FY '28, we should do about a free cash of minimum INR3,000 crores basis the mining approval.

    — Management

Capex Deployment

  • Steel Capex Deployment Schedule Capex Deployment · FY27, FY28, FY29 · High confidence 20% in FY27, 60% in FY28, 20% in FY29
    probably you can say 20% in FY '27 and probably say 60% in FY '28 and then probably last 20% in FY '29

    — Management

Profitability

  • BESS Return on Investment (ROI) Profitability · High confidence 40-50%
    So we're looking at ROI more than 40%, 50% at investment of INR700 crores

    — Management

  • BESS EBITDA Margin Profitability · High confidence 5%
    consider a minimum, even a 5% EBITDA level for our operations

    — Management

  • BESS EBITDA (at 10 GW capacity) Profitability · High confidence INR 350-400 crores
    the numbers are as good as INR350 crores, INR400 crores at 10 gigawatt capacity.

    — Management

  • CRM Margin per ton Profitability · longer-term basis · High confidence INR 4-5 per ton
    INR4 to INR5 a ton is what we're looking at in the longer-term basis for 0.7 million capacity.

    — Management

Pricing

  • Pellet Price Band Pricing · longer term · High confidence INR 8,500-10,000 per ton
    The price band remains intact, which is about, say, INR8,500 to INR10,000 in longer term.

    — Management

Cost

  • Imported Coal Landed Cost Cost · Q2 FY26, Q3 FY26 · High confidence INR 11,000-11,500
    I would say INR11,500 for the Q2 as well as Q3 is a very practical number, INR11,000, INR11,500.

    — Management

Risks & concerns

  • Delay in mining plan approval for Boria Tibu mines

    medium

    Management acknowledged past delays but stated IBM approval for revised mining plan is expected this week, with public hearing in September and EC post-Diwali (early November).

    Analyst acknowledged

  • Technology obsolescence/evolution in Battery Energy Storage System (BESS)

    medium

    Management stated they are open to collaborations for technology and supply, recognizing it as a technology-driven industry that will keep evolving, and they plan to move with everyone.

    Analyst acknowledged

  • Decline in sales realization impacting profitability

    medium

    The drop in Q1 FY26 profitability (EPS from INR 4.5 to INR 3.5 YoY) was primarily attributed to a decline in sales realization, though prices are expected to move up in the busy season.

    Management acknowledged

  • Low-margin nature of Cold Rolling Mill (CRM) business

    low

    Management clarified that the strategy is to add value to HR coils by converting them into color-coated steel, ZAM, and other value-added products, targeting INR 4-5 per ton margin.

    Analyst downplayed

  • Oversupply of pellets impacting prices

    low

    Management believes oversupply is not a challenge as their capacity is backed by own iron ore mines, and there is currently a shortage of pellets in the Raipur market due to increased DRI capacity.

    Analyst downplayed

Areas of evasion (1)

  • Absolute consolidated revenue and PAT figures for Q1 FY26

Q&A highlights

3 direct
Rationale and returns for the new BESS business given past exits from solar thermal. Direct
So the idea to diversify into this BESS project is, so just to give you a history, I don't know how much you know about the BESS project, so the idea is all the solar generating states in India, especially states like Maharashtra, Gujarat, Rajasthan, where the solar capacity is quite high, during the daytime, there is peak generation. And by the evening 5:00, the generation becomes zero.

This question directly addresses the company's diversification strategy and its ability to learn from past ventures, providing insight into the market necessity and expected high ROI of the BESS project.

Asked by Vikash Singh

Peak leverage post capex, profitability of the Cold Rolling Mill (CRM) business, and BESS technology strategy. Direct
See, for the current capex which we've announced, it's a 40-60 ratio, and with the current balance sheet and cash reserve, the leverage will be very minimum, hardly -- below 0.5 at the moment with the current capex amount.

This question probes the financial implications of the new capex, the margin profile of the CRM business, and the technological approach for BESS, all critical for assessing future profitability and balance sheet health.

Asked by Vivek Ramakrishnan

Current import demand for BESS vessels and expected margins from domestic manufacturing. Direct
So now close to more than 99% is being imported into India with a certain duty. Duty on cells is 50% of that. So if you consider everything put 0, whatever you manufacture and the way you sell it, saving 5% on duty itself will give you a margin of INR15 lakh, INR20 lakh per megawatt.

This highlights the significant market opportunity for domestic BESS manufacturing due to high import dependence and the clear margin advantage from duty savings, validating the project's profitability.

Asked by Sahil Sanghvi

3 min read 7 chapters

Detailed narrative

Q1 FY26 Performance Overview

Godawari Power reported a steady start to FY26 with an EBITDA margin of 24% and PAT margin of 16%. While consolidated revenue, EBITDA, and PAT remained largely stable quarter-on-quarter, the year-on-year performance was lower primarily due to a decline in sales realization. Ferro alloys production and sales volumes demonstrated robust growth, increasing by approximately 15% and 13% respectively, both year-on-year and quarter-on-quarter. The company's zinc recycling unit, Jammu Pigments Limited (JPL), contributed INR 230 crores in revenue and INR 20 crores in EBITDA during the quarter.

Strategic Capex Initiatives: Cold Rolling Mill & BESS

The Board has approved a total capex of INR 1,600 crores for two new strategic projects. This includes a INR 900 crore investment in a 0.7 million ton Cold Rolling Mill (CRM) complex, which will enable the conversion of HRC into CRC and other value-added steel products. Additionally, INR 700 crores will be invested in a 10-gigawatt Battery Energy Storage System (BESS) project. Both projects are targeted for commissioning by March 2027, with funding for the CRM project through INR 600 crores debt and INR 300 crores equity, and the BESS project through 40% GPIL equity and balance debt in an SPV.

Mining and Pellet Capacity Expansion

The company anticipates receiving necessary approvals for the Ari Dongri mining capacity expansion, increasing from 2.35 million tons to 6 million tons, by Q3 FY26, with operations expected to commence in Q4 FY26. Furthermore, a 2 million ton pellet expansion is progressing on schedule and is expected to be commissioned in October. Management also indicated plans to expand Boria Tibu mining capacity from 0.7 million tons to 3 million tons, with beneficiation facilities at the mine site, aligning with the new steel plant commissioning in approximately three years.

Galvanized Products and Steel Plant Outlook

GPIL has received approval from PGCIL to supply steel billets for galvanized steel structures, a significant milestone reflecting product quality. This is expected to drive volumes of galvanized fabrication products to cross 30,000 tons quarter-on-quarter. The company plans to proceed with a 1 million ton integrated steel plant, but this investment is contingent upon receiving the mining EC, which is expected post-Diwali (early November). The steel capex deployment is projected as 20% in FY27, 60% in FY28, and 20% in FY29.

BESS Business Rationale and Profitability

The BESS project is a strategic diversification into new energy, driven by the necessity for grid stability in solar-rich states and government tenders. Management expects a handsome ROI of 40-50% within 18-24 months, based on a minimum 5% EBITDA margin, translating to INR 350-400 crores EBITDA at 10 gigawatt capacity. The strategy involves importing cells (5% duty) and manufacturing battery packs and containers domestically, leveraging high import dependence (over 99%) and potential future government policies to protect domestic manufacturing.

Cold Rolling Mill (CRM) Strategy and Product Mix

The CRM complex aims to produce value-added steel products, including color-coated steel, zinc-aluminum-magnesium (ZAM) steel, and galvalume products, targeting a margin of INR 4-5 per ton for its 0.7 million ton capacity. The company plans to cater to diverse segments with thicknesses ranging from 0.15mm to 3.5mm. The CRM complex will also indirectly support the BESS project by producing steel for container manufacturing. Sourcing of HR coils will be from major domestic players like JSW, Tata, and JSPL, as well as imports.

Financial Outlook and Debt Management

For the current capex, the company expects to maintain a very low leverage, with a debt-to-equity ratio below 0.5, taking on a small debt of INR 700-800 crores. Looking ahead to FY27 and FY28, with mining approvals and pellet plant commissioning, GPIL anticipates generating a minimum free cash flow of INR 3,000 crores. Management expressed confidence in pellet prices remaining in a range of INR 8,500-10,000 per ton in the longer term, supported by own iron ore mines and market shortages.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls