Godawari Power

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.

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.

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).

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.

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.

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.