Detailed Narrative
Strategic Acquisition of Kalinganagar Ferrochrome Plant
IMFA announced the acquisition of Tata Steel's ferrochrome plant at Kalinganagar for a base purchase consideration of ₹610 crores, with an additional ~₹50 crores for net working capital. This acquisition adds 150,000 tons of ferrochrome capacity (99 MVA, including 33 MVA under construction requiring ₹50 crores CAPEX), bringing IMFA's total capacity beyond 500,000 tons. The deal is expected to close within three months, ideally by the calendar year-end, and will be entirely funded through internal accruals.
Enhanced Market Position and Operational Synergies
The acquisition positions IMFA as India's largest and the world's sixth-largest ferrochrome producer. Management highlighted significant operational synergies, as the acquired unit is close to IMFA's greenfield project site and chrome ore mines, improving logistics efficiency. Outbound logistics advantages from Kalinganagar are estimated to save ₹1,000 to ₹1,500 per ton. The company expects to produce 70,000 to 80,000 tons from the acquired unit in FY27, contributing to a total target output of 400,000 tons.
Strong Financial Performance and Improving Realizations
IMFA reported a PAT of ₹98.77 crores in Q2 FY26, an 8% increase from ₹91.48 crores in Q1 FY26. The average realization price per ton rose to ₹1,01,000 in Q2 FY26 from ₹95,000 in Q1 FY26. EBITDA margin stood at 19.3%. While Q2 FY26 EBITDA was ₹138 crores, lower than Q2 FY25's ₹170 crores, this was attributed to one-time📎 impacts of ₹14 crores from renewable power obligations and ₹14 crores from mark-to-market forex accounting.
Positive Outlook on Prices and Profitability
Management expressed confidence in a 'definite improvement' in EBITDA margins for Q3 FY26, expecting it to be 'definitely better than 19.3%,' driven by higher benchmark prices and the absence of Q2's one-time📎 impacts. Domestic ferrochrome prices are currently ranging between ₹1,15,000 to ₹1,18,000 per ton, with international prices (ex-China) at $1.02 to $1.04 per ton. The spot EBITDA spread is approximately ₹40,000 per ton, historically the highest.
Captive Ore and Renewable Energy Strategy
IMFA plans to meet all its chrome ore requirements for existing, greenfield, and acquired capacities from its captive mines. Chrome ore raising is targeted to reach 8.5 lakh tons in FY26, up from 7 lakh tons in FY25, with an eventual target of 12 lakh tons. The company is also pivoting towards renewable energy, with 110 Megawatts of hybrid renewable energy expected to come online next year, providing long-term fixed procurement prices and reducing carbon footprint.
Long-Term Capex and Domestic Market Focus
A CAPEX of approximately ₹1,000 crores is planned over the next four years for transitioning the Sukinda mine from open cast (3 lakh tons per annum) to fully underground (6 lakh tons per annum). The company aims to shift its sales mix from 90% exports and 10% domestic in Q2 FY26 to 60% exports and 40% domestic 'in a couple of years,' leveraging its strategic location in Kalinganagar, an emerging stainless-steel hub.