Godawari Power And Ispat Q1 FY27 earnings call

Godawari Power & Ispat Limited reported a resilient Q1 FY27, with revenue showing both YoY and sequential growth, driven by healthy sales volume and improved realization across key product segments. The company's EBITDA and PAT remained broadly stable YoY, achieving margins of 19.1% and 12.7% respectively. However, profitability softened sequentially due to elevated input costs, primarily from increased market sourcing of iron ore and higher coal prices, exacerbated by the West Asia crisis. Q1 volumes contributed 16% to 29% of the full-year guidance, with value-added products like sponge iron, billet, and rolled production showing healthy YoY growth.

The proposed 1 million ton integrated steel project has been put in abeyance due to on-ground challenges and delays in water allocation approvals. Consequently, the 0.7 million ton CRM complex is being relocated to Maharashtra, near Sambhaji Nagar, with land allotment expected by end of August '26 and construction starting October 2026. This relocation is seen as beneficial due to local consumption demand and better state incentives, potentially improving CRM margins by 2-3% to 10-11%. The 20 gigawatt base project is on track for commissioning in Q1 FY28, with INR501 crores already incurred. The BESS project is also on track, with machine delivery starting December and first container rollout in Q1 FY28.

Iron ore mining volume at Ari Dongri declined in Q1 due to space constraints for overburden dumping and delays in obtaining tree-cutting permission for additional land. This necessitated higher market procurement of iron ore for pellet production, contributing to elevated input costs. Management expects Q2 to remain subdued for mining, with ramp-up anticipated from Q3 onwards, reaching full capacity by Q4 FY27 or early Q1 FY28. The company aims to achieve 100% captive iron ore usage by FY28 and reduce mining costs below INR2,700 from FY28, down from the current INR3,000-3,500 range.

The 4.7 million ton expanded pellet capacity operated at 77% utilization in Q1, with an expectation to ramp up to 80-85% in FY27. However, one pellet plant was shut down due to commercial unviability, as natural gas prices increased by 40-45% and pellet prices dropped below INR9,000/ton in July. This will lead to a slightly lower FY27 pellet production guidance than the initial 4.0 million tons, with Q2 production estimated around 500 kt. The company expects iron ore prices to hover between USD90-100 in the medium term, supported by Indian demand.

The company has incurred INR218 crores on the beneficiation plant till June '26, and INR501 crores on the 20 gigawatt base project. For the CRM complex, INR1,100 crores is planned, with INR80 crores already spent, to be funded by INR550 crores of debt and internal accruals. The BESS project has seen INR500 crores spent. Overall, the company envisages a total capex of approximately INR2,000 crores for the remaining FY27 and entire FY28. Management stated that current projects are funded entirely through internal accruals, without the need for additional debt, given sufficient free cash flows.

GPIL continues its ESG efforts, with the 6.9 megawatt WRHB plant commencing commercial production, bringing total WRHB capacity to 49 megawatt. A 5 TPD carbon capture utilization project is underway with IIT Mumbai, targeting completion by end of FY27. The company aims for a 4x increase in revenue and 3x growth in EBITDA and PAT by 2030. The captive solar power capacity is projected to reach 290 megawatt, with solar storage capacity at 45 megawatt upon completion of planned projects, including a 100 megawatt solar project targeted for commissioning by September '26.