Indian Metals & Ferro Alloys Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Indian Metals & Ferro Alloys Limited reported a strong Q2 FY26, with PAT growing 8% sequentially and average realizations improving. The quarter was highlighted by the strategic acquisition of Tata Steel's Kalinganagar ferrochrome plant, significantly expanding IMFA's capacity and market position. Management expressed confidence in future profitability, driven by increasing prices, operational synergies from the acquisition, and a fully integrated business model, despite some one-time accounting impacts in Q2.

Highlights

  • PAT for Q2 FY26 improved by 8% QoQ to ₹98.77 crores, up from ₹91.48 crores in Q1 FY26.

  • Average realization price increased to ₹1,01,000 per ton in Q2 FY26, compared to ₹95,000 in Q1 FY26.

  • EBITDA margin stood at a healthy 19.3% in Q2 FY26, with expectations for improvement in Q3 FY26.

  • Ferrochrome production for Q2 FY26 was 65,671 metric tons, and sales were 69,765 metric tons.

  • Major acquisition of Tata Steel's Kalinganagar ferrochrome plant (150,000 tons capacity) for ₹610 crores, to be fully funded by internal accruals.

  • Post-acquisition, IMFA's total ferrochrome capacity will exceed 500,000 tons, making it India's largest and globally sixth-largest producer.

  • Targeting 400,000 tons total ferrochrome output by FY27, with 70,000-80,000 tons from the acquired unit.

  • Committed to 110 Megawatts of hybrid renewable energy, expected online next year, to power growth plans.

Key financials

  1. PAT ₹98.77 Cr +8%QoQ
  2. Average Realization ₹1,01,000/ton +6.3%QoQ
  3. EBITDA Margin 19.3%
  4. Ferrochrome Production 65,671 metric ton
  5. Chrome Ore Production 1,69,615 metric ton
  6. Ferrochrome Sales 69,765 metric ton
  7. Captive Power Generation 309.41 million units

What they filed

Q1 FY27: revenue up 49.5%, net profit up 109.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue692 643 567 642 719 +4%703 +9%763 +35%960 +50%
EBITDA171 128 71 125 138 −19%164 +28%159 +124%281 +125%
Net profit126 93 47 91 99 −21%131 +41%103 +119%191 +110%
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.

Guidance & targets

Capacity

  • Acquired Ferrochrome Production Capacity · FY27 · High confidence 70,000 to 80,000 tons
    Now, having said that, when we ramp up and operate the four furnaces, we will have to figure out how the situation plays out. But we are fairly confident about achieving, let's say, between 70,000 to 80,000 tons of output in FY '27 from this unit with an upside potential to that number.

    — Subhrakant Panda, Managing Director

Volume

  • Total Ferrochrome Production Volume · FY27 · High confidence 400,000 tons
    But broadly, Harsh, what I would say is 260, about 80 or so from acquisition and the rest from Greenfield, but this mix might change a little bit depending on how things pan out. But overall, we are reasonably confident about the 400,000 ton number.

    — Subhrakant Panda, Managing Director

Ore Raising

  • Chrome Ore Raising Ore Raising · FY26 · High confidence 8.5 lakh tons

    Previously 7 lakh tons (FY25) → 8.5 lakh tons

    And in FY '26, we are now with the acquisition having been signed off on. If all systems go and we are looking to touch about 8.5 lakh tons of ore raising in FY '26.

    — Subhrakant Panda, Managing Director

  • Chrome Ore Raising Ore Raising · Eventual target · Medium confidence 12 lakh tons
    And of course, our eventual target is to get to 12 lakh tons.

    — Subhrakant Panda, Managing Director

Sales Mix

  • Domestic vs Export Sales Sales Mix · in a couple of years · Medium confidence 40% domestic, 60% exports

    Previously 10% domestic, 90% exports (Q2 FY26) → 40% domestic, 60% exports

    So, in a couple of years' time with the entire capacity online, greenfield and acquisition, we are expecting to be about 60-40. So, 60% exports and 40% domestic.

    — Subhrakant Panda, Managing Director

Capex

  • Underground Mining CAPEX Capex · over 4 years · High confidence ₹1,000 crores
    And as far as the CAPEX for underground is concerned, broadly, it is about Rs. 1,000 crores, which is what we have briefed earlier as well.

    — Subhrakant Panda, Managing Director

Energy

  • Hybrid Renewable Energy Capacity Energy · next year · High confidence 110 Megawatts
    And of course you are aware that we are doing a pivot towards renewable energy with 110 Megawatts of hybrid renewable energy being signed up to come online next year which will power our growth plans.

    — Subhrakant Panda, Managing Director

Profitability

  • EBITDA Margin Profitability · Q3 FY26 · High confidence better than 19.3%

    From 19.3% (Q2 FY26) today

    But with the increasing average realization price, we expect Quarter 3 to be definitely better than 19.3%.

    — Saunak Gupta, Chief Financial Officer

Cost

  • RPO Obligation Impact Cost · From next quarter onwards · High confidence ₹2-3 crores

    Previously ₹14 crores (one-time in Q2 FY26) → ₹2-3 crores

    From next quarter onwards, it will be in the range of Rs. 2 crores to Rs. 3 crores.

    — Saunak Gupta, Chief Financial Officer

Risks & concerns

  • Global commodity price cycles and volatility

    medium

    Management noted that ferrochrome prices had been in turmoil due to geopolitical developments and tariff uncertainty, but are now recovering.

    Management acknowledged

  • Longevity of the upcycle in ferrochrome prices

    medium

    Management stated it's difficult to predict the longevity of the cycle due to complex market situations, but expressed confidence in IMFA's position.

    Analyst acknowledged

  • Dependency on imported chrome ore for non-integrated producers

    low

    Management highlighted that non-integrated producers face higher chrome ore costs, which is a disadvantage IMFA mitigates with captive mines.

    Management acknowledged

Areas of evasion (4)

  • Specific consumption metrics (ore, coke, power per ton)
  • Tata Steel's reasons for selling the plant
  • Quantification of long-term sustainable margins
  • Exact unused land on acquired parcel

Q&A highlights

0 direct, 2 evasive
Quantification of synergies from the Kalinganagar acquisition Partial
So, there will be some outbound logistical advantages as well, which could be probably about Rs. 1,000 to Rs. 1,500 a ton is our estimate.

Analysts sought specific financial benefits, but management provided only a range for one aspect (outbound logistics) and qualitative benefits for others.

Asked by Parthiv Jhonsa

Specific consumption metrics (ore, coke, power per ton) Evasive
So Priya, we will not get into the specifics because these are again commercially sensitive data, but broadly in line with the accepted parameters, so no outliers in that regard.

Management declined to provide granular unit economics, which are crucial for understanding operational efficiency and cost competitiveness in the metals sector.

Asked by Priya Agrawal

Sustainable margin outlook and long-term EBITDA projections Evasive
Look, I will leave you to make that conclusion because I wouldn't want to, you know, it has served us well not to project too far out. So, we remain quietly confident, but I wouldn't want to put numbers of probability to that.

Management consistently refused to provide specific long-term margin guidance or validate analyst's EBITDA projections, indicating caution despite a bullish outlook on fundamentals.

Asked by Aashav Patel

2 min read 6 chapters

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.

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