Godawari Power

Godawari Power reported a steady Q3 and 9M FY26, with 9M EBITDA and PAT margins remaining strong at 22% and 14% respectively. Q3 FY26 saw EBITDA margin expand to 20% from 17% in Q3 FY25, despite softer realizations and moderated sales, EBITDA, and PAT quarter-on-quarter. Iron ore mining production increased by 46% Y-o-Y in Q3, while value-added steel products sales grew by 15% Y-o-Y. Pellet sales temporarily declined in Q3 due to an accident in September '25, impacting production and sales volumes.

The company is undergoing substantial capacity expansions across its core operations. Iron ore mining capacity at Ari Dongri is set to increase from 2.35 million tons to 6 million tons by FY28, with a run rate of 6 million tons expected by October/November '26. An additional 2 million ton iron ore pellet plant was commissioned in December '25, boosting total pellet manufacturing capacity to 4.7 million tons. The 0.7 million tons CRM complex is on track for commissioning by March '27, with construction beginning in April 2026.

GPIL is aggressively expanding its captive solar capacity over 3x, from 165 MW to 540 MW, with phased completion between March '26 and March '27. This is complemented by a decision to set up a 45 MWh battery energy storage system in one solar project. Furthermore, the company is venturing into BESS manufacturing with an initial 20 gigawatt capacity, targeting commissioning by Q4 FY27 with a capex of INR1,025 crores during 2026-27. This strategic pivot aims to enhance cost efficiency and achieve net-zero carbon emissions by 2050.

The company's capex for FY27 is projected to be around INR2,000 crores (+/- INR200 crores), primarily for CRM, battery storage, and additional solar capacity, excluding any potential steel plant investment. Total turnover is expected to reach INR12,000-15,000 crores by FY28, with a long-term target of approximately INR25,000 crores by 2030. Peak gross debt is estimated at INR1,500 crores by FY27, with management confident in meeting capital allocation requirements through strong cash reserves.

Domestic steel demand is strong, with Q4 and Q1 now considered the best quarters for steel, driving pellet, DRI, and finished product prices up by 10-20%. Management expects margins to slightly improve post-expansion due to enhanced quality and higher premiums, offsetting potential volume pressure from increased market supply. Significant cost savings are anticipated from captive power projects, with grid tariffs of INR11 (mining) and INR7 (plant) being replaced by power at INR3, reducing the average cost of generation below INR3.

A decision on a potential 1 million ton blast furnace steel plant, with an estimated capex of INR5,000 crores, is expected by the annual Board meeting in April/May. The company also plans to expand its Boria Tibbu mine by FY30 to secure raw material for its pellet plant, aiming for 4 million tons of beneficiation and 1.5 million tons of concentrate output. Disinvestment of a 37.85% stake in Ardent Steel for approximately INR91 crores is expected by March '26, streamlining the group structure.