Indian Metals

IMFA reported a resilient Q3 FY25 performance despite challenging market conditions, with profits seeing some pressure due to market dynamics. The company acknowledged that performance came in 'below expectations' but emphasized a focus on long-term value creation and operational excellence. Management anticipates some further contraction in the next quarter but expects a recovery from March onwards, reinforcing their commitment to stakeholders.

For Q3 FY25, ferrochrome production stood at 65,865 tons, with sales reaching 65,490 tons. The average selling price for ferrochrome during the quarter was Rs. 96,943 per ton, reflecting a steep fall due to market conditions. Approximately 60% of sales are under long-term contracts, with the remaining on a spot basis, and 90% of total sales are exports.

The EBITDA cost for the quarter was Rs. 77,827 per ton, and management expects it to remain at similar levels for Q4 FY25. Key input costs included chrome ore at Rs. 9,085 per ton (landed at Choudwar), coke at Rs. 14,628 per ton, and power at Rs. 5.27 per unit. Other expenses increased to Rs. 106 crores from Rs. 88 crores last year, primarily due to higher repairs, maintenance, and freight costs.

IMFA is on track with its expansion plans, including Kalinganagar Phase-1, which is expected to be operational by April-June FY27, with the second furnace by September, adding 40,000-45,000 tons in FY26. The company aims to double its ferrochrome capacity to 0.5 million tons in 3-4 years. Diversification includes a 120 KL ethanol plant with a Rs. 150 crore investment, projected to generate Rs. 300 crores in revenue with a 10% EBITDA margin, becoming operational by December 2025 or January 2026.

The company has received CTE and CTO to double its mining output to 1.2 million metric tons from Sukinda and Mahagiri mines. Mahagiri is targeted to produce 6 lakh tons by FY27, up from 3 lakh tons, while Sukinda will contribute 3 lakh tons from opencast mining by FY27. The conversion of opencast to underground mining at Sukinda is a time-consuming process, taking about 5 years to start ore production.

Ferrochrome prices experienced a steep fall in the last quarter, mainly due to Chinese steel oversupply. Management expects prices to remain similar for January and February 2025 but anticipates an 'uptick' from March onwards, citing the unsustainability of current low operating levels for non-integrated producers and stabilization in Chinese prices. The benchmark for long-term contracts is based on Tsingshan prices, with quarterly negotiations for customers like POSCO.

IMFA maintains a debt-free status with approximately Rs. 890 crores invested in various funds, bonds, and FDs, which contributed to PAT. Cash generation for the nine months ended December 2024 was around Rs. 370 crores. Capital expenditure for the Kalinganagar project is projected at Rs. 150 crores by the end of FY25 and Rs. 450-500 crores for FY26. The company also secured a 25-year renewable power agreement with Jindal Group, commencing June 2026, at a tariff of Rs. 3.84 paisa per unit.