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Godawari Power And Ispat limited — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

Godawari Power reported a stable H1 FY26 performance with EBITDA and PAT margins of 22% and 14% respectively, despite soft realizations. Q2 FY26 saw a decline in revenue, EBITDA, and PAT YoY, with margins at 20% and 12%. The company is actively pursuing significant capacity expansions in iron ore mining, pellet production, cold rolling mill, and diversifying into renewable energy with a 10 GW BESS project and 250 MW solar power. An unfortunate incident at a pellet plant caused a 40-day shutdown, but management remains confident in meeting FY26 production targets with new capacity coming online.

Highlights

H1 FY26 EBITDA margin stood healthy at 22%, with PAT margin at 14%.
Q2 FY26 EBITDA margin was 20%, and PAT margin was 12%.
Ari Dongri iron ore mine capacity expansion from 2.35 MTPA to 6 MTPA, environmental approval expected by Dec '25.
2 million ton pellet capacity expansion commissioning targeted by end of Nov '25, aiming for 80-85% utilization from Q4 FY26.
0.7 million tons cold rolling mill complex project cost is INR900 crores.
10 gigawatt battery energy storage system (BESS) project in Maharashtra has a cost of INR700 crores, with land acquisition completed.
Additional 250-megawatt solar power capacity approved, expected to be commissioned by Q4 FY27.
Lost about 1.5 tons of pellet volume due to an incident and 40-day shutdown, but confident to achieve FY26 target of 3 million tons.

Key financials

2 periods

Q2 FY26

EBITDA Margin
20%
PAT Margin
12%

H1 FY26

EBITDA Margin
22%
PAT Margin
14%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,268	1,298	1,468	1,323	1,308 +3%	1,139 −12%	1,610 +10%	1,750 +32%
Expenses	1,021	1,076	1,150	999	1,048	922	1,171	1,417
EBITDA	247	221	318	324	260 +5%	218 −1%	439 +38%	334 +3%
Margin	19%	17%	22%	24%	20%	19%	27%	19%
Other income	24	20	32	26	23	27	18	38
Interest	14	13	15	15	11	13	19	20
Depreciation	39	37	40	44	41	45	48	50
Profit before tax	218	192	295	291	231 +6%	188 −2%	390 +32%	302 +4%
Tax rate	27%	24%	25%	26%	30%	24%	28%	26%
Net profit	159	145	222	216	162 +2%	143 −1%	280 +26%	222 +3%
EPS	2.38	2.16	3.31	3.23	2.41	2.14	4.17	3.29

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.

Guidance & targets

Capacity

Ari Dongri Mining Capacity Capacity · from January '27 · High confidence 6 million tons per annum

Our idea is to reach 4.5 million to 5 million tons next year and then full throttle 6 million tons from January '27.

— Management
Ari Dongri Mining Capacity (Interim) Capacity · FY27 · High confidence 4.5 million to 5 million tons

— Management
2 Million Ton Pellet Capacity Commissioning Capacity · end of November '25 · High confidence end of November '25

commissioning is targeted by the end of November '25, which is awaiting consent to operate from the State Pollution Control Board.

— Dinesh Gandhi
New Pellet Plant Capacity Utilization Capacity · From Q4 onwards · High confidence 80% to 85%

From Q4 onwards, we're expecting close to 80% to 85% of the capacity for the new pellet plant.

— Management
Additional 250MW Solar Power Commissioning Capacity · Q4 FY '27 · High confidence Q4 FY '27

The project is expected to be commissioned by Q4 FY '27, coinciding with the commissioning of the CRM project.

— Dinesh Gandhi
CRM & BESS Commercial Production Start Capacity · April '27 · High confidence April '27 (FY28)

we're looking at the commercial production of April '27, which is FY '28 for both, for BESS as well as for the CRM.

— Management
CRM & BESS PLF (First Year) Capacity · first year · Medium confidence 50% to 60%

We are assuming a 50% to 60% PLF on the first year.

— Management
CRM & BESS PLF (Second Year Onwards) Capacity · From the second year onwards · Medium confidence 80% plus

From the second year onwards, we will be at 80% plus in both the plants for sure.

— Management

Regulatory

Ari Dongri Environmental Approval Regulatory · end of December '25 · High confidence final stage, expected by end of December '25

The environmental approval is in the final stage now and expected by the end of December '25.

— Dinesh Gandhi

Capex

CRM Project Cost Capex · High confidence INR900 crores

The total cost of project for CRM project is INR900 crores, of which INR600 crores is financed through debt and the balance remainder funded by internal accrual.

— Dinesh Gandhi
BESS Project Cost Capex · High confidence INR700 crores

The cost of the project is INR700 crores, which is proposed to be funded by a debt of 60% and balance from internal accrual out of equity contribution from GPIL.

— Dinesh Gandhi

Volume

Pellet Production Target Volume · FY '26 · High confidence 3 million tons

the volume we had declared initially about 3 million tons, we are confident we can achieve that.

— Management
Pellet Production Target Volume · FY '27 · High confidence 4 million tons

Pellet for next year, 4 million will be the bare minimum. It might be on the higher side.

— Management
Boria Tibu Mine Annual Mining Volume Volume · High confidence about 5 lakh tons annually

And Boria Tibu mines will mine about 5 lakh tons annually, out of which I'll get about 3 lakh tons of concentrate.

— Management
Boria Tibu Mine Concentrate Volume Volume · High confidence about 3 lakh tons

— Management

Operations

New Pellet Plant Ramp-up Time Operations · High confidence 1 month or 4-6 weeks

No, probably a month or so, probably 4 to 6 weeks.

— Management

Other

BESS Cells Warranty Period Other · High confidence 8-10 years (8,000 cycles for 2-hour charging)

For cells, if you know the technicality, it's basically 8,000 cycles for 2-hour charging. Basically, roughly it's about 8 years, 10 years down the line, depending on the cell category.

— Management

Risks & concerns

Pellet Plant Incident and Production Loss
medium

An unfortunate incident on 26th September '25 led to 6 fatalities and 6 injuries, causing a 40-day shutdown of a pellet plant and a loss of 1.5 tons of volume, though management expects to cover this with new capacity.

Management acknowledged
Soft Realization Across Product Range
medium

H1 FY26 and Q2 FY26 saw soft realization across products, leading to lower EBITDA and PAT margins, though H2 is expected to see better realization as demand picks up.

Management acknowledged
Elevated Raw Material Prices due to Iron Ore Shortage
medium

Acute shortage of iron ore in the Eastern belt and increasing demand (8-9% annual growth) are keeping raw material prices elevated, impacting pellet pricing despite weak steel prices.

Management acknowledged
Competition in Battery Energy Storage System (BESS) Market
medium

Significant competition from large players like Adani, Ola, and JSW in the BESS market, but GPIL has a clear strategy to supply containers and leverage domestic manufacturing support.

Management acknowledged
Project Execution Delays (Regulatory)
low

Environmental approval for Ari Dongri mine expansion had a couple of months delay but is expected by Dec '25, and consent to operate for the new pellet plant is awaited by Nov '25.

Management managed

Areas of evasion (1)

Safeguard duty on HRC (management stated it's not their product)

Q&A highlights

3 direct

Solar Power Project Internal Rate of Return (IRR) and Strategic Justification Direct

This 250-megawatt solar, if you compare with the rate of INR7 and net cost to the steel plant at about INR5.50, the internal rate of return is about 24%. So it is a healthy investment. Number two, if you want to do solar under group captive, then the point is that the land on which this project is proposed cannot be done under group captive because it has been allotted to Godawari Power, and it cannot be subleased to any other company.

Management provided a clear financial justification (24% IRR) for their significant solar power investment, emphasizing cost savings and a strategic shift away from fossil fuels, addressing analyst's concern about 'no premium on green steel'.

Asked by Vikash Singh

Impact of Pellet Plant Incident on Production Volumes and FY26 Target Direct

We did lose about 1.5 tons of volume. Some of it was at the end of Q2 and the entire October. so it will affect -- but the good thing is out of 35 to 40 days shutdown, 20, 25 days were already planned at the end of Q3, early Q4 as an annual shutdown. So that we did the maintenance job this time only. Plus, with my new pellet plant coming in, I'm hoping to ramp up by Q4, the volume we had declared initially about 3 million tons, we are confident we can achieve that.

This question directly addressed a critical operational disruption, and management quantified the volume loss while explaining how they plan to mitigate the impact and still meet their annual production target by leveraging preponed maintenance and new capacity.

Asked by Manav

Competition and Market Strategy for the BESS Project Direct

Firstly, whether it's Adani, Ola, or JSW, there will be stiff competition in this, and we are very well prepared for that. We don't want to be a capacity design such that we want to be probably one of the top 5 in India in terms of volumes... We want to be supplying containers and directly competing with other guys in India as well as imports from China. And banking on government policies, the way it has supported the solar industry till now, those policies will also start coming in place as and when the volumes in India start going up of supply.

Management acknowledged significant competition in the nascent BESS market but clarified their strategic positioning, emphasizing their role as a supplier of containers and banking on government support for domestic manufacturing rather than aiming for top market share in volumes.

Asked by Sahil Sanghvi

3 min read 6 chapters

Detailed narrative

Q2 & H1 FY26 Performance Overview

Godawari Power reported a consistent H1 FY26 with strong operational progress, achieving an EBITDA margin of 22% and a PAT margin of 14%. Q2 FY26, however, saw a year-on-year decline in revenue, EBITDA, and PAT, with margins at 20% and 12%, primarily due to softer realizations and seasonal factors. Despite these pressures, the company's overall financial performance remains healthy and stable, with management expecting improved realizations in H2 FY26 as demand picks up post-monsoons and festivals.

Strategic Capacity Expansions in Core Business

The company is aggressively pursuing multiple capacity expansions in its core iron and steel business. The Ari Dongri iron ore mine is set to expand from 2.35 million tons to 6 million tons per annum, with environmental approval expected by December '25 and full 6 MTPA run rate by January '27. A 2 million ton pellet capacity expansion is targeted for commissioning by end of November '25, aiming for 80-85% utilization from Q4 FY26. Additionally, a 0.7 million tons cold rolling mill complex is progressing well with a project cost of INR900 crores.

Diversification into Green Energy and BESS

GPIL is making a significant pivot towards green energy and storage solutions. The Board approved an additional 250-megawatt solar power capacity, expected to be commissioned by Q4 FY27, which will feed both the CRM complex and existing operations, replacing thermal power. Furthermore, its wholly-owned subsidiary, Godawari New Energy Private Limited, is setting up a 10 gigawatt battery energy storage system (BESS) project in Maharashtra, with a project cost of INR700 crores and land acquisition already completed. Both CRM and BESS projects are targeting commercial production by April '27 (FY28).

Operational Resilience and Market Outlook

An unfortunate incident at a pellet plant on September 26, 2025, led to a 40-day shutdown and a loss of approximately 1.5 tons of pellet volume. However, management preponed annual maintenance during this period and expressed confidence in achieving the FY26 pellet production target of 3 million tons, supported by the new pellet plant ramping up to 80-85% utilization by Q4. The domestic steel demand remains strong, with the World Steel Association forecasting 9% growth in FY25 and FY26, while iron ore and pellet prices are expected to remain stable around INR9,750 a ton.

Cost Management and Competitive Edge

Management highlighted the strategic advantage of captive iron ore and solar power in managing costs. The 250-megawatt solar project is projected to yield a 24% Internal Rate of Return, significantly reducing operating costs compared to grid power (INR7.70-INR8 per unit). The company also noted its unique position as the only integrated end-to-end solution provider for galvanized steel structures in India, from iron ore to finished product, enhancing its competitive edge and benefiting from PGCIL approval for steel billets.

BESS Project Strategy and Competition

In the nascent BESS segment, GPIL acknowledges stiff competition from players like Adani, Ola, and JSW. However, the company's strategy is not to be a top-volume developer but to supply containers and leverage government policies supporting domestic manufacturing, aiming to bridge the 90% import dependency in India. They are in advanced negotiations with top-tier cell suppliers like CATL, EV, and Lithium for long-term supply, ensuring quality and an 8-10 year warranty for cells, with demarcation and infrastructure work starting next month.

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

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