IFGL Refractories Limited — Q4 FY25 earnings call

Call held 2 Jun 2025

Management summary

IFGL Refractories reported a mixed Q4 and FY25, with strong standalone performance driven by domestic market focus (11% FY25 revenue growth to INR 1,014 crores) and new product segments. Consolidated results were modest (1% FY25 revenue growth) due to international headwinds, particularly in Europe, impacting export performance. The company announced a 1:1 bonus issue and a dividend of INR 7 per share, while investing in new capacities and a joint venture for future growth.

Highlights

  • Standalone Total Income for FY25 reached INR 1,014 crores, marking an 11% year-on-year growth with strong EBITDA margins of 13.8%.

  • Domestic stand-alone business grew by 20% for the full year, now constituting over 70% of standalone revenue, a complete reversal from previous years.

  • Q4 FY25 standalone Total Income grew 26% YoY to INR 273 crores with EBITDA margins at 14.8%.

  • The Board recommended a dividend of INR 7 per equity share for FY25, representing a 70% payout, and approved a 1:1 bonus issue.

  • New product segments like non-ferrous refractories and magnesia carbon bricks contributed INR 8-10 crores in FY25, laying seeds for future growth.

Concerns

  • Consolidated Total Income grew modestly by 1% for the full year to INR 1,670 crores, reflecting a globally challenging environment.

  • Consolidated EBITDA margins for FY25 stood at 8.7%, and for Q4 FY25 at 8.2%.

  • International markets, particularly Europe, faced significant headwinds, with Germany operations most impacted by weak demand in the foundry segment.

  • Export business declined 6% for FY25, totaling INR 277 crores, although Q4 saw a 36% growth indicating early signs of recovery.

  • Working capital increased due to strategic stock build-up for new Vizag operations and early receipt of some stock, though management states it is temporary.

Key financials

  1. Standalone Total Income ₹1,014 Cr +11%YoY
  2. Standalone EBITDA ₹140 Cr
  3. Standalone EBITDA Margin 13.8%
  4. Standalone PAT ₹57.6 Cr
  5. Consolidated Total Income ₹1,670 Cr +1%YoY
  6. Consolidated EBITDA ₹146 Cr
  7. Consolidated EBITDA Margin 8.7%
  8. Consolidated PAT ₹43 Cr
  9. ROCE 6.3%
  10. ROE 3.9%

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

Share of Revenue (FY25)
₹1,007 Cr Total
  • Standalone Domestic Business ₹721 Cr 71.6%
  • Standalone Export Business ₹277 Cr 27.5%
  • New Non-Ferrous Segment ₹9 Cr 0.9%

Order book

low confidence
The company continues to secure orders from leading steel majors and mills in the ferrous segment. New product lines like non-ferrous refractories contributed INR 8-10 crores in FY25, with significant revenue potential identified for cast house refractories (INR 25-30 crores in 3 years) and the broader non-steel side (around INR 200 crores). The market potential for dead burn bricks is projected to double to 44,000 tonnes by the time the plant is commissioned.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹100 Cr New plan — new projects and regular capex
    • Regular capex for quality and productivity enhancement in existing plants ₹55 Cr
    • Greenfield project (Khurdha) ₹40 Cr
    • Joint Venture investment
    We have roughly calculated the cash outflow is expected to be something close to INR 55 crores, though we will take up a capex of close to INR 90 crores, which will spill into FY '27 also. This is all the regular capex, what I mentioned in existing plants... So Khurdha, we'll be spending around INR 40 crores to INR 50 crores this year, and the rest will be spent in the next year. ... And some additional fund will be diverted to the JV, which we have just started working on it. So roughly INR 100 crores to INR 150 crores will be the capex roughly for FY '26 in total?
  • Debt Gross ₹32.99 Cr · Net cash ₹136.36 Cr
    With respect to liquidity position, we had a debt of INR 32.99 crores with a strong balance sheet. Cash and cash equivalents stood at INR 169.35 crores on a consolidated basis as on March '25.
  • Dividend ₹7/share (final) Payout ratio 70%
    The Board of Directors has recommended a dividend of INR 7 per equity share, including a final dividend of INR 1 per equity share of face value INR 10, representing a 70% payout for FY 2024-25, reflecting our continued commitment to delivering value to our shareholders.
  • M&A Joint Venture Joint venture · Signed · Consideration ₹[object Object] (undisclosed)

    To enter and scale rapidly in high potential sectors such as cement, glass, nonferrous metal and coal gasification industry.

    A major milestone was the formation of joint venture in December. This JV will allow us to enter and scale rapidly in high potential sectors such as cement, glass, nonferrous metal and coal gasification industry. The estimated project cost is INR 300 crores. We have already acquired land in Bhachau, in Kutch District of Gujarat, which is a critical step towards long-term expansion strategy. The development work is currently underway in the newly acquired land.
  • Liquidity Cash ₹169.35 Cr The company has a strong balance sheet with cash and cash equivalents significantly exceeding its debt.
    With respect to liquidity position, we had a debt of INR 32.99 crores with a strong balance sheet. Cash and cash equivalents stood at INR 169.35 crores on a consolidated basis as on March '25.

Guidance & targets

Profitability

  • Standalone EBITDA Margin Profitability · future · High confidence around 14%
    See, I mean, as I was telling these 2 projects, like our conventional product mix whatever we have, as we said, it's going to be around 14% is the guidance stand-alone.

    — Arasu Shanmugam

  • New Projects EBITDA Margin (non-ferrous, cement, other) Profitability · future · High confidence not less than 20%
    But these projects, the one project what we are talking about for non-ferrous, cement and other market is expected to deliver not less than 20% on EBITDA margin.

    — Arasu Shanmugam

  • DBM Project EBITDA Margin Profitability · future · High confidence 29% to 30%
    But whereas on the DBM, it is even will go as high as 29% to 30%.

    — Arasu Shanmugam

Revenue

  • Standalone Growth (without new projects) Revenue · year-on-year · High confidence 20%
    Standalone operation, 20% growth year-on-year without these 2 projects are a complete possibility. And we have the plan for that.

    — Arasu Shanmugam

  • Cast House Refractory Revenue Revenue · in 3 years · Medium confidence INR 25 crores to INR 30 crores
    In 3 years down the line, I think, there will be a lot of new blast furnaces also where we will have opportunity from the beginning. So I mean, we are anywhere looking at somewhere like INR 25 crores to INR 30 crores revenues through this product line.

    — Arasu Shanmugam

  • Non-steel side Revenue Revenue · future · Medium confidence around INR 200 crores
    Non-steel side, as we are talking about once when the project is ready, there the ramp-up will take place, which can go up to as we have indicated earlier also, it's around INR 200 crores.

    — Arasu Shanmugam

Capacity

  • Khurdha Plant Capacity Utilization (Year 1) Capacity · Year 1 of operation · High confidence almost 35%
    You are absolutely right, like what Mr. Harssh Shah mentioned, now so in FY '28, we are going to start the Khurdha plant, where almost from the same time, the same year, even though mid of the year we start, but we will be almost 35% of the capacity utilization in the year 1, which is absolutely a tremendous one.

    — Arasu Shanmugam

  • Khurdha Plant Commissioning Capacity · Q4 FY28 · High confidence commissioned
    End of the quarter FY '28.

    — Amit Agarwal

  • JV with Marvel Commissioning Capacity · H2 FY28 · High confidence commissioned
    Yes. I mean that means what? It will start somewhere in the FY'28. So the H2 of September, October. So that's the time to start commissioning of the plant.

    — Arasu Shanmugam

What to watch in Q1 FY26

Khurdha Plant Capex and Progress

next quarter
Current INR 40-50 crores capex planned for FY26, commissioning targeted for Q4 FY28.
Target Continued capex spend and progress towards construction milestones.

Why it matters

This greenfield project is a key capacity expansion for future growth in high-potential sectors.

So Khurdha, we'll be spending around INR 40 crores to INR 50 crores this year, and the rest will be spent in the next year.

Risks & concerns

  • Volatile Overseas Environment

    medium

    Fluctuating steel prices, global inflationary pressures, and overall economic instability created significant headwinds across subsidiary markets.

    Management acknowledged

  • Weak Demand in European Foundry Segment

    medium

    Germany operations were among the most impacted with weak demand in the foundry segment, contributing to subdued performance.

    Management acknowledged

  • Working Capital Deterioration

    low

    Increase in working capital due to strategic stock build-up for new Vizag operations and early receipt of some stock, though deemed temporary.

    Management acknowledged

  • Raw Material Price Volatility

    low

    Some power cost increases for fused magnesia are expected, but the company hopes to pass on the major portion to customers.

    Management acknowledged

  • Overcapacity in Indian Refractories Market

    low

    Analyst cited an international parent's commentary on overcapacity in India, but management emphasized their strategy of focusing on specific, high-value product lines rather than overall market share.

    Analyst downplayed

Q&A highlights

6 direct
Driver for Standalone Growth Direct
See, it is basically if you look at our Vishakhapatnam work, we have ramped up. I mean the magnesia carbon brick business, which was not there earlier, now we started that. And also, we have acquired new customers where TTM. I mean earlier, it used to be 9, 10 sites, now it has become 17. So it is basically growth in our iron and steel sector...

Management clarified that standalone growth was driven by a mix of new product lines (magnesia carbon bricks, non-ferrous alumina products), ramp-up of existing facilities, and new customer acquisitions, indicating diversified growth drivers.

Asked by Sahil Sanghvi

Working Capital Increase Direct
No, it's because of the some stock we have built up strategically and we have new operation added, Vizag operation. So there are some stock and some amount of stock, we say, we have received a bit early than expected. So this has added to the increase in the working capital, but I think this is a temporary one, and we'll work on it to reduce it further.

Analyst questioned the sharp increase in working capital. Management explained it as a temporary effect of strategic stock build-up for new operations and early receipts, reassuring that it's not a structural issue.

Asked by Mayank

Hofmann Foundry Business Outlook Partial
Yes, it is negative. I mean, as I said in the speech there, we feel that we'll get some new products that we'll be working on that could bring us some nice areas. However, with the change in government and especially in Germany, we believe that especially in the infrastructure investment and also in the military investment announced by the German government that this could be positive for us because obviously, foundries are involved in these areas. So hopefully, we will start to see some turnaround.

Analyst raised concerns about a competitor's negative outlook on the foundry business. Management acknowledged the negativity but expressed hope for a turnaround driven by new products and German government investments in infrastructure and military.

Asked by Mayank

Chinese Competition in New Segments Direct
You see, there are 2 projects what you mentioned. So I would say we are going to be in a market where a number of players are going to be maximum 3, and we become 1 among 3. So we will have a better negotiating abilities in this market. And we are also very, very bullish about the profitability of this product.

Analyst inquired about countering Chinese competition in new segments. Management stated their strategy is to be one of a few dominant players, which will provide better negotiating power and ensure profitability in these less crowded markets.

Asked by Mayank

EBITDA Margin Sustainability Direct
See, I mean, as I was telling these 2 projects, like our conventional product mix whatever we have, as we said, it's going to be around 14% is the guidance stand-alone. But these projects, the one project what we are talking about for non-ferrous, cement and other market is expected to deliver not less than 20% on EBITDA margin. But whereas on the DBM, it is even will go as high as 29% to 30%.

Analyst questioned the sustainability of EBITDA margins. Management provided clear guidance for standalone margins (14%) and highlighted that new high-margin projects (20-30%) would help maintain overall profitability despite some lower-margin commodity products.

Asked by Bharat Sheth

International Subsidiary Turnaround Partial
Yes. I mean, really, we believe that we will see a significant shift in the American market. As I said now with the President Trump coming in, he in his last term as President, created an excellent market condition in steel. And both of our businesses in the United States and Canada are obviously heavily invested in the steel industry. We believe a similar situation will occur. Already, we see an improvement. ... Encouragingly, we are beginning to see initial signs of recovery in the region, and we believe this, coupled with our internal efforts, will enable a gradual turnaround in performance over the next few quarters.

Analyst asked about the recovery timeline for international subsidiaries. Management expressed optimism for the US market due to policy changes and noted early signs of recovery, with a gradual turnaround expected for Monocon in Europe over the next few quarters.

Asked by Bharat Sheth

JV and Greenfield Project Timelines Direct
Khurdha project will be exactly on the same line what we mentioned, like end of '27 or I mean, Q4 of FY '28? ... End of the quarter FY '28. ... Yes. I mean that means what? It will start somewhere in the FY'28. So the H2 of September, October. So that's the time to start commissioning of the plant.

Analyst sought clarification on commissioning timelines for the Marvel JV and Khurdha greenfield plant, which were confirmed as H2 FY28 for the JV and Q4 FY28 for Khurdha, providing clarity on future capacity additions.

Asked by Harssh Shah

Overcapacity in Indian Refractories Direct
Yes. I think that sorry Arasu, you probably want to answer this more fully. But for me, it's quite funny because when I started this Managing Director of IFGL 4 years ago, there was already have overcapacity in refractories in India. And it was at that time, we said, look, our strategy is to focus on certain product lines and not necessarily to be the biggest, but the focus on being the best and to focus on segments that we believe that we can market and do well.

Analyst raised concerns about overcapacity in the Indian refractories market. Management acknowledged the historical context but reiterated their strategy of focusing on specific, high-value product lines and being the best in those segments, which has driven their domestic growth.

Asked by Aryan Sharma

2 min read 6 chapters

Detailed narrative

Overall Performance & Strategic Shift

IFGL Refractories reported a mixed performance for FY25. On a consolidated basis, Total Income grew modestly by 1% to INR 1,670 crores, with EBITDA margins at 8.7%. However, standalone performance was strong, with Total Income growing 11% YoY to INR 1,014 crores and EBITDA margins at 13.8%. The company has strategically shifted its focus towards the Indian domestic market, which now accounts for over 70% of standalone revenue, a significant change from its historically export-oriented business.

Domestic Market Dominance

The domestic standalone business demonstrated robust growth, increasing 20% for the full year to INR 721 crores and 27% in Q4 FY25. This segment now contributes 72% to the standalone revenue, up from 67% in FY24. Key drivers for this growth include the ramp-up of magnesia carbon brick production at Vishakhapatnam, entry into new non-ferrous product lines like alumina monolithic and bricks, and the acquisition of new customers, expanding the total number of sites served from 9-10 to 17.

International Operations & Headwinds

International markets, particularly Europe, faced significant headwinds in FY25, leading to a 6% decline in export business to INR 277 crores. Germany's operations were most impacted by weak demand in the foundry segment. However, the US operations are showing early signs of recovery, and the UK's Sheffield Refractories demonstrated resilience. The company is undertaking internal transformations in its Monocon operations, with a focus on new product development and market penetration, expecting a gradual turnaround in performance over the next few quarters.

New Product Segments & Joint Venture

IFGL Refractories is actively diversifying its product portfolio and market reach. The company entered the non-ferrous refractory segment, contributing INR 8-10 crores in FY25, and is exploring opportunities in cement, glass, coke, and other non-ferrous applications. A major milestone was the formation of a joint venture in December with an estimated project cost of INR 300 crores, aimed at rapidly scaling in high-potential sectors. Land has been acquired in Bhachau, Gujarat, for this expansion.

Capital Expenditure & Capacity Expansion

The company has significant capex plans for FY26, with an estimated cash outflow of INR 100-150 crores. This includes INR 55 crores for regular capex to enhance quality and productivity in existing plants, and INR 40-50 crores for the greenfield Khurdha project in Odisha, which is expected to be commissioned by Q4 FY28. The joint venture project is also underway, with commissioning targeted for H2 FY28. These investments are aimed at strengthening manufacturing footprint and expanding into new segments.

Shareholder Returns & Capital Structure

The Board recommended a dividend of INR 7 per equity share for FY25, representing a 70% payout, demonstrating a commitment to shareholder value. Additionally, a 1:1 bonus issue was approved, subject to regulatory approvals. The company maintains a strong balance sheet with consolidated debt at INR 32.99 crores and cash and cash equivalents at INR 169.35 crores as of March 2025, indicating a net cash position.

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