IFGL Refractories Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

IFGL Refractories delivered a steady performance in Q2 FY26, driven by strong domestic growth and a rebound in US operations, leading to an 18% consolidated revenue increase. However, margins faced pressure from product mix, export decline, and new plant costs, while European operations continued to incur losses. The company is investing significantly in greenfield projects in India and expects Monocon UK to reach breakeven soon.

Highlights

  • Consolidated total income for Q2 FY26 grew by 18% year-on-year, reaching INR 490 crores.

  • Standalone total income for Q2 FY26 grew by 12% year-on-year to INR 288 crores.

  • Domestic business showed strong growth of 27% year-on-year in Q2 FY26, now contributing 78% of standalone revenue in H1 FY26.

  • U.S. operations revenue increased by 26% during the quarter due to tariff policy changes, price adjustments, and demand rebound.

  • Monocon UK is expected to achieve breakeven within this financial year or early next year, with performance improving under new management.

Concerns

  • Consolidated EBITDA margins were 8.2% in Q2 FY26, reflecting product mix, lower export off-take, higher employee costs, and initial plant operation expenses.

  • Standalone EBITDA margins stood at 13% in Q2 FY26, impacted by product mix, lower export off-take, higher employee costs, and initial plant operation expenses.

  • Europe subsidiary reported losses of almost INR 16 crores at EBIT level in H1 FY26, though losses are reduced from the corresponding quarter.

  • Export business declined by 20% year-on-year to INR 60 crores in Q2 FY26, primarily due to strategic shift to domestic market and moderate demand overseas.

Key financials

  1. Consolidated Total Income ₹490 Cr +18%YoY
  2. Consolidated EBITDA ₹40 Cr +10%YoY
  3. Consolidated EBITDA Margin 8.2%
  4. Consolidated PAT ₹12.7 Cr +5%YoY
  5. Standalone Total Income ₹288 Cr +12%YoY
  6. Standalone EBITDA ₹37.4 Cr +12%YoY
  7. Standalone EBITDA Margin 13%
  8. Standalone PAT ₹15 Cr +9%YoY

What they filed

Q1 FY27: revenue up 12.8%, net profit up 54.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue411 379 449 454 489 +19%469 +24%483 +8%512 +13%
EBITDA33 17 33 36 38 +15%23 +35%39 +18%37 +3%
Net profit12 -2 8 11 13 +8%-3 −50%14 +75%17 +55%
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

SegmentRevenue Growth Q2 FY26Revenue Growth H1 FY26
Domestic Business (Standalone)27%29%
Export Business (Standalone)-20%-21%
US Operations26%—

Capital allocation

high confidence
  • Capex Capex disclosed
    • Greenfield project at Khordha, Odisha ₹300 Cr
    • Second greenfield project in Gujarat (JV) ₹300 Cr
    Our greenfield projects at Khordha, Odisha has been initiated and is progressing well. The project with an estimated investment of INR 300 crores to INR 350 crores is expected to be completed by the end of financial year 2028 and it remains firmly on the schedule. Our second greenfield project in Gujarat being developed in joint venture, is currently under the regulatory approval stage. This project is targeted for completion by the beginning of FY 2029, subject to regulatory approval. With a total estimated outlay of around INR 300 crores.
  • Debt Gross ₹205.5 Cr
    With respect to liquidity position, we have debt of INR 205.5 crores with a strong balance sheet.
  • M&A Wholly-owned subsidiary in Australia Acquisition · Announced

    Expands footprint into new geographies and positions for future growth and new market tap.

    Monocon International Refractories Ltd incorporated a wholly-owned subsidiary in Australia, a milestone that expands our footprint into new geographies and position us for future growth and tap a new market.
  • Liquidity Cash ₹124 Cr
    Cash and cash equivalents stood at INR 124 crores on a consolidated basis as on September 25.

Guidance & targets

India Steel Demand

  • India Steel Demand Growth India Steel Demand · 2025 and 2026 · High confidence 9% a year
    Steel demand here is expected to grow by around 9% a year over 2025 and 2026, driven by strong infrastructure spending, manufacturing expansion, and broad-based industrial growth.

    — Arasu Shanmugam

Europe & UK Steel Demand

  • Europe & UK Steel Demand Growth Europe & UK Steel Demand · 2025 · High confidence 1.3%
    In Europe and the UK, after a prolonged period of slowdown, steel demand is set to see a gradual recovery, growing by about 1.3% in 2025 and 3.2% in 2026.

    — Arasu Shanmugam

  • Europe & UK Steel Demand Growth Europe & UK Steel Demand · 2026 · High confidence 3.2%

    — Arasu Shanmugam

United States Steel Demand

  • United States Steel Demand Growth United States Steel Demand · 2025 and 2026 · High confidence 1.8%
    United States, too, is expected to post steady growth with demand projected to rise by around 1.8% in both years, 2025 and 2026.

    — Arasu Shanmugam

China Steel Demand

  • China Steel Demand Contraction China Steel Demand · 2025 · High confidence 2%
    In China, steel demand is expected to contract moderately by about 2% in 2025 and 1% in 2026, reflecting a continued slowdown in the housing market.

    — Arasu Shanmugam

  • China Steel Demand Contraction China Steel Demand · 2026 · High confidence 1%

    — Arasu Shanmugam

Developing Countries Steel Demand

  • Developing Countries Steel Demand Growth Developing Countries Steel Demand · Annually · High confidence 3% to 5% annually
    Outside these major markets, developing countries, excluding China, including Vietnam, Egypt and Saudi Arabia, are expected to deliver robust growth of 3% to 5% annually, supported by sustained construction and industrial activities.

    — Arasu Shanmugam

Africa Steel Demand

  • Africa Steel Demand Growth Africa Steel Demand · Each year · High confidence 5.5% each year
    In Africa, steel demand is also gaining momentum, rising at roughly 5.5% each year, helped by improving macroeconomic stability, structural reforms and growth in Northern and Eastern regions.

    — Arasu Shanmugam

Central & South America Steel Demand

  • Central & South America Steel Demand Growth Central & South America Steel Demand · 2025 · High confidence 5.5%
    Similarly, Central and South America are projected to grow by around 5.5% in 2025, led by Argentina's recovery and continued strong demand in Brazil.

    — Arasu Shanmugam

Monocon UK Profitability

  • Monocon UK Breakeven Monocon UK Profitability · this financial year or early next year · Medium confidence Breakeven
    At Monocon, UK, performance is improving under the new management team with enhanced focus on the core refractory products. This transition is already showing encouraging results and we expect Monocon UK to achieve breakeven within this financial year or early next year.

    — Arasu Shanmugam

Technology Transfer

  • Sheffield Technology Transfer Completion Technology Transfer · December 2025 · High confidence Completed
    Additionally, the Sheffield technology transfer is progressing well and is expected to be completed by December this year, 2025, following which the imported product will undergo testing at a major cement plant in India for shotcreting application and more.

    — Arasu Shanmugam

Capex Project Completion

  • Khordha Greenfield Project Completion Capex Project Completion · end of financial year 2028 · High confidence Completed
    The project with an estimated investment of INR 300 crores to INR 350 crores is expected to be completed by the end of financial year 2028 and it remains firmly on the schedule.

    — Arasu Shanmugam

  • Gujarat Greenfield Project Completion Capex Project Completion · beginning of FY 2029 · High confidence Completed
    Our second greenfield project in Gujarat being developed in joint venture, is currently under the regulatory approval stage. This project is targeted for completion by the beginning of FY 2029, subject to regulatory approval.

    — Arasu Shanmugam

Domestic Revenue Growth

  • India made, India sold growth Domestic Revenue Growth · High confidence 20% to 22%
    So the growth is to the tune of 20% to 22%, okay, in India made, India sold, which was already, okay.

    — Arasu Shanmugam

Market context

  • Global Steel Demand Global Steel Demand · 2025 · High confidence 1,749 million tons
    According to the World Steel Association's latest outlook, global steel demand in 2025 is expected to remain broadly stable at around 1,749 million tons.

    — Arasu Shanmugam

  • Global Steel Demand Growth Global Steel Demand · 2026 · High confidence 1.3%
    This is likely to be followed by a modest rebound of about 1.3% in 2026, taking overall demand to roughly 1,773 million tons.

    — Arasu Shanmugam

What to watch in Q3 FY26

Monocon UK breakeven

Within this financial year or early next year.
Current Performance improving, losses reduced.
Target Breakeven.

Why it matters

Achieving breakeven for Monocon UK would eliminate a drag on consolidated profitability.

At Monocon, UK, performance is improving under the new management team with enhanced focus on the core refractory products. This transition is already showing encouraging results and we expect Monocon UK to achieve breakeven within this financial year or early next year.

Risks & concerns

  • Trade tensions and geopolitical uncertainties

    medium

    Continue to weigh on sentiment, but the overall outlook remains cautiously optimistic, supported by steady economic activity, public infrastructure investment, and softer financial conditions.

    Management acknowledged

  • Higher production costs

    medium

    Along with trade friction and geopolitical tensions, higher production costs continue to pose a risk to the steel industry.

    Management acknowledged

  • Slowdown in China's housing market

    medium

    Reflecting a continued slowdown in the housing market, China's steel demand is expected to contract moderately by about 2% in 2025 and 1% in 2026.

    Management acknowledged

  • Macroeconomic position in Europe

    medium

    The achievement of breakeven for Monocon UK depends on the macroeconomic position out there in Europe.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Impact of alumina price on gross margins Direct
So, alumina prices per se to some extent, have become stable. But only it is affected by ocean freight price whenever we are importing. So, barring that variation, otherwise, overall, the prices are, I would say, at par. And there are no increasing trends which we are seeing now.

Addresses a key raw material cost component and its stability, which directly impacts profitability.

Asked by Mayank Bhandari

Europe subsidiary losses and breakeven timeline Partial
So, we do see betterment in their figures and performance, and we expect that by, maybe by this year-end, we may achieve a break-even. But all this depends on this macroeconomic position out there in Europe. But we are optimistic, henceforth.

Provides a timeline for profitability improvement in a loss-making international segment, though with macroeconomic caveats.

Asked by Mayank Bhandari

Pricing scenario in non-flow control areas and potential price increases Direct
So, I mean, there are no improvement in the pricing trend is expected, but whatever pricing we are getting now, that is expected to be hold. We will be holding on to that, and on the other side, the prices are also on a plateau, not increased more. So, that's why the margin and the price level will be maintained for some time, but I don't think we can expect any better Further price increase. Yes.

Clarifies the pricing environment, indicating stability rather than further increases, which sets expectations for revenue growth drivers.

Asked by Rajesh Majumdar

Demand-supply gap for dolomite refractory given new capacity additions Direct
I am telling you the demand-supply gap is going to be absolutely favorably to the producer of dolomite refractory, number one. Number two, the primary consumer of the dolomite in the country is now stainless steel. But if you track the projects which are announced and the capacity expansion in stainless steel alone, they themselves will have almost 15% to 20% growth on volume in terms of consumed dolomite refractory.

Provides a strong positive outlook on a key product segment, indicating significant growth potential and favorable market dynamics despite competition.

Asked by Lakshminarayanan

New products and client acquisitions in the India business Direct
See, new products, primarily what we have come into now, ladle refractories with magnesia carbon, where they were not there earlier. So in the last six months, we have come and we have come to the level of almost 500-600 ton a month, which was not there six months back. Okay. So that is one area which helped us in enhancing the share of spend with existing customers.

Highlights specific product innovations and their contribution to increasing market share and revenue from existing customers.

Asked by Lakshminarayanan

Margin guidance for H2 FY26 Evasive
So, I think we have given our margin guidance for the year and we stick to that.

Management avoided providing specific H2 margin guidance, suggesting potential uncertainty or unwillingness to commit to a number beyond the current quarter's performance.

Asked by Nirav Bhanushali

Reasons for improved profitability/reduced losses at Monocon Direct
So, oflate if you would have seen, world over wherever this refractory congress has been happening, so our Monocon innovative products, refractory products have been very well accepted and it all has been converted into trial orders in many places... we have enhanced our focus on the refractory product which makes a package for the customer, which have really attracted.

Explains the strategic shift and product innovation driving the turnaround in Monocon's performance.

Asked by Sahil Sanghvi

Expectation for raw material pricing behavior in H2 Direct
No, no, no. I don't think so. I mean, our raw material is going to be, you know, almost at the stable level. I don't think we can expect anything, the raw material which is involved in our space. I'm not aware of the other thing, but here, I don't, we don't forecast. We don't foresee anything, a drastic reduction.

Provides clarity on raw material cost outlook, indicating stability rather than significant reductions, which impacts future margin expectations.

Asked by Sahil Sanghvi

3 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

IFGL Refractories reported a steady Q2 FY26 performance with consolidated total income growing 18% year-on-year to INR 490 crores. Standalone total income also increased by 12% year-on-year to INR 288 crores. Consolidated EBITDA stood at INR 40 crores with an 8.2% margin, while standalone EBITDA was INR 37.4 crores with a 13% margin. Profit after tax for the consolidated entity was INR 12.7 crores, growing 5% year-on-year, reflecting impacts from product mix, lower export off-take, higher employee costs, and initial plant operation expenses.

Robust Domestic Growth and Strategic Shift

The company's Indian operations demonstrated exceptional performance, with domestic revenue growing a robust 27% year-on-year in Q2 FY26 and 29% in H1 FY26, reaching INR 440 crores. This strategic focus on 'India-made India sold' has resulted in the domestic market contributing 78% of standalone revenue in H1 FY26, a significant increase from 69% in H1 FY25. This growth is supported by new customer additions and higher penetration across both steel and cement plants, along with new product introductions.

International Market Dynamics and Performance

While India remains a bright spot, other regions show mixed trends. U.S. operations delivered a strong performance with 26% revenue growth in Q2, driven by tariff policy changes, price adjustments, and demand rebound. European operations, particularly Sheffield, showed steady performance despite overall demand weakness, with Monocon UK expected to achieve breakeven by this financial year or early next year. The export business, however, declined by 20% year-on-year to INR 60 crores in Q2 FY26, reflecting a strategic shift towards the domestic market and moderate overseas demand.

Global Steel Industry Outlook

Management provided an outlook on the global steel industry, the key demand driver for refractories. Global steel demand is expected to remain stable at 1,749 million tons in 2025, with a modest 1.3% rebound to 1,773 million tons in 2026. India is projected to be the most dynamic growth market, with steel demand growing around 9% annually over 2025 and 2026. In contrast, China's steel demand is expected to contract moderately by 2% in 2025 and 1% in 2026, primarily due to a slowdown in the housing market.

Capex Initiatives and Capacity Expansion

IFGL Refractories is undertaking significant capital expenditure to expand its footprint. A greenfield project at Khordha, Odisha, with an estimated investment of INR 300-350 crores, is progressing well and is expected to be completed by the end of FY28. Additionally, a second greenfield project in Gujarat, a joint venture with an outlay of around INR 300 crores, is under regulatory approval and targeted for completion by early FY29. These projects aim to strengthen the company's position in both ferrous and non-ferrous refractories.

Product Innovation and Market Penetration

The company is focusing on product innovation, particularly in ladle refractories with magnesia carbon, which were not previously offered. This new product line has achieved volumes of almost 500-600 tons a month within six months, enhancing the share of spend with existing customers. The Sheffield technology transfer is also progressing, expected to be completed by December 2025, enabling new product testing for shotcreting applications in India. This focus on high-performance refractories and total solutions is expected to drive future growth.

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