IFGL Refractori.

IFGL Refractories demonstrated strong performance in the Indian market during Q3 FY25, with the domestic business reporting over 25% year-on-year growth for the quarter and an 18% growth for the first nine months of the fiscal year. Standalone domestic revenue for 9M FY25 surpassed INR 500 crores, contributing 71% to the total standalone revenue. This growth is supported by India's resilient economy and a projected 8% expansion in steel demand over 2024-2025, fueled by significant infrastructure investments.

In contrast to the domestic market, IFGL's global subsidiaries in the U.S.A., Germany, and the U.K. encountered a challenging environment. Factors such as subdued demand, major steel plant shutdowns, economic and geopolitical uncertainties, and elevated raw material costs impacted their performance. This led to a consolidated total income growth of only 3% YoY to INR 382 crores in Q3 FY25 and a 3% decline for 9M FY25 to INR 1,218 crores. Consolidated EBITDA margin compressed to 5.1% in Q3 FY25, resulting in a net loss of INR 2 crores for the quarter.

A significant strategic move was the incorporation of IFGL Marvel Refractories Limited in December, a joint venture aimed at diversifying the company's product portfolio beyond its traditional steel industry focus. This JV will produce fired basic bricks, highly consumable in the rapidly expanding Indian cement sector, which is projected to reach 900 million tonnes by 2029. The JV also targets entry into non-ferrous sectors like glassmaking and gasification, with a plant capacity of 25,000 tons/year, expected to ramp up to 90% utilization within two years of commissioning, though revenue contribution is anticipated from H2 FY27.

The company's gross margins were significantly affected by a sharp increase in raw material costs, particularly alumina, whose index price almost doubled from USD 320-330 to USD 650-660. This, coupled with pricing pressures from customers and increased logistics costs, resulted in a 6-9% reduction in contract prices. Management is actively engaging with customers for price adjustments and expects raw material costs to soften in 3-4 months, aiming for a revival in margins from Q1 FY26.

IFGL is investing in capacity expansion and operational efficiency to support future growth. Key initiatives include the inauguration of an alumina production line at its Gujarat toll manufacturing facility, which has already supplied 7,000 metric tons to cement manufacturers. The Continuous Casting Flux plant in Visakhapatnam is now fully automated, and a new magnesia carbon production line has been launched as part of Phase 3 expansion. The Vizag plant is expected to contribute INR 48-50 crores in revenue from H2 FY26.

The company incurred approximately INR 160-170 crores in capital expenditure during FY24-25, primarily directed towards new plants and the joint venture. Despite these investments, IFGL maintains a healthy liquidity position, reporting a net debt of INR 11.64 crores and consolidated cash and cash equivalents of INR 180 crores as of December 2025. The annualized ROCE and ROE stood at 6.5% and 4.2% respectively, reflecting prudent financial management.