Indian Metals & Ferro Alloys Limited — Q3 FY26 earnings call

Call held 6 Feb 2026

Management summary

Indian Metals & Ferro Alloys Limited delivered a robust Q3 FY26, marked by improved ferrochrome realizations leading to EBITDA margins above 23%. The company is aggressively expanding its capacity through the acquisition of Tata Steel's Kalinganagar plant and the commissioning of its greenfield unit, aiming for substantial production growth in FY27 and FY28. Strategic capex plans are in place, funded primarily by internal accruals, while maintaining a conservative debt profile. IMFA's integrated business model and logistical advantages are expected to drive cost efficiencies and enhance competitiveness.

Highlights

  • EBITDA margins for Q3 FY26 were reported at 'a little above 23%', a significant improvement from Q2 FY26's 18-19%.

  • Ferrochrome production in Q3 FY26 reached 67,196 tonnes, with sales broadly similar at 64,802 tonnes.

  • Chrome ore raising for the quarter was 265,468 tonnes, contributing to the company's integrated model.

  • The acquisition of Tata Steel's ferrochrome plant at Kalinganagar (KNR 2) for INR610 crores is expected to close in February 2026.

  • The greenfield Kalinganagar project (KNR 1) is on track, with the first furnace commissioning targeted for June 2026.

  • The ethanol project is expected to be commissioned in March 2026, with a capex of INR150 crores.

  • Ferrochrome production volume is targeted to reach ~400,000 tonnes in FY27 and 475,000-500,000 tonnes in FY28.

  • Total capex for the next two years (FY27-FY28) is projected at INR1,000 crores, with a conservative debt-equity target not exceeding 0.3.

Key financials

  1. EBITDA Margin 23%
  2. Ferrochrome Production 67,196 tonnes
  3. Ferrochrome Sales 64,802 tonnes
  4. Chrome Ore Raising 2,65,468 tonnes
  5. Power Generation 256.17 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 Expansion

  • KNR 1 First Furnace Commissioning Capacity Expansion · June 2026 · High confidence June 2026
    we expect to commission the first furnace in June 2026 and the second furnace shortly thereafter.

    — Subhrakant Panda, Managing Director

Acquisition Closure

  • KNR 2 Acquisition Closure Acquisition Closure · Q4 FY26 · High confidence February 2026
    we expect to close out the deal in the ongoing fourth quarter of FY '26, more specifically, I think, within the month of February itself.

    — Subhrakant Panda, Managing Director

Ethanol Project Commissioning

  • Ethanol Plant Commissioning Ethanol Project Commissioning · March 2026 · High confidence March 2026
    we expect to commission it in March 2026, that is next month.

    — Subhrakant Panda, Managing Director

Ore Raising Volume

  • Total Ore Raising Volume Ore Raising Volume · FY26 · Medium confidence ~850,000 tonnes
    As far as FY '26 is concerned, we are looking at 850,000 tonnes, broadly speaking.

    — Subhrakant Panda, Managing Director

  • Total Ore Raising Volume Ore Raising Volume · FY27 · High confidence 1 million tonnes
    we are targeting 1 million tonnes of ore raising, that is 10 lakh tonnes in FY '27.

    — Subhrakant Panda, Managing Director

Capex

  • Remaining Capex for KNR 1 Capex · FY27 · High confidence ~INR300 crores
    In KNR 1, we have almost spent out 60% this year. About 40% will be remaining, which will be around INR300-odd crores and will be spent in the next year.

    — Saunak Gupta, Chief Financial Officer

  • Remaining Capex for Ethanol Project Capex · FY27 · High confidence ~INR50 crores
    the residual value of the ethanol project, which mostly we'll be spending in this year, and about INR50 odd crores will remain for next year.

    — Saunak Gupta, Chief Financial Officer

  • Capital Outlay for Mines Capex · FY27 · High confidence ~INR200 crores
    For the mines, we have around INR200 crores of capital outlay or spend cash outflow next year.

    — Saunak Gupta, Chief Financial Officer

  • Overall Capex Capex · FY27 · High confidence ~INR600 crores
    Approximately next year, we are expecting somewhere around INR600 crores plus general capex that we'll be spending out.

    — Saunak Gupta, Chief Financial Officer

  • Overall Capex Capex · FY28 · Medium confidence ~INR400-500 crores
    In the following year, it is primarily the expansion of the underground projects will be the majority spent. This is the overall outlay that we have somewhat planned for next 2 years. And it is like INR600 crores next year and another INR400 crores to INR500 crores the year following.

    — Saunak Gupta, Chief Financial Officer

  • Total Capex Capex · Next 2 years (FY27-FY28) · High confidence INR1,000 crores
    So, INR1,000 crores will be spent for the next 2 years.

    — Saunak Gupta, Chief Financial Officer

  • Capex Spend Capex · Q4 FY26 · High confidence ~INR270-280 crores
    In next 3 months, we have a plan of approximately INR270 crores to INR280 crores of spend.

    — Saunak Gupta, Chief Financial Officer

Debt

  • Peak Debt-Equity Ratio Debt · High confidence 0.3
    from a debt equity point of view, we are not looking at, I mean, our outer limit is 0.5, but we are not expecting to go beyond 0.3 at most.

    — Subhrakant Panda, Managing Director

Ferrochrome Production Volume

  • Ferrochrome Production Volume Ferrochrome Production Volume · FY26 · High confidence ~265,000 tonnes
    we expect in terms of production for the ongoing FY '26 we expect to close at about 265,000 tonnes and sales broadly similar numbers.

    — Subhrakant Panda, Managing Director

  • Ferrochrome Production Volume Ferrochrome Production Volume · FY27 · High confidence ~400,000 tonnes
    we have indicated that we expect production volume in FY '27 to be approximately 400,000 tonnes

    — Subhrakant Panda, Managing Director

  • Ferrochrome Production Volume Ferrochrome Production Volume · FY28 · High confidence 475,000-500,000 tonnes
    we expect the volume in FY '28 to be between 475,000 to 500,000 tonnes.

    — Subhrakant Panda, Managing Director

Sales Mix

  • Export to Domestic Sales Ratio Sales Mix · In 2 years · High confidence 60-40 (exports-domestic)
    we expect to move from 90-10, that is 90% exports and 10% domestic market at present with enhanced capacity over the next few years for it to be somewhere around 60-40.

    — Subhrakant Panda, Managing Director

Cost Reduction

  • Weighted Average EBITDA Cost Reduction Cost Reduction · Steady-state operation (KNR 1 & 2) · High confidence INR1,500-2,000 a tonne
    when you're in a steady-state operation, we expect our weighted average EBITDA cost for the expanded output to reduce by about INR1,500 to INR2,000 a tonne on account of logistics costs and all of that.

    — Subhrakant Panda, Managing Director

Ferrochrome Price Outlook

  • Fair Price Range for Ferrochrome Ferrochrome Price Outlook · Medium confidence INR105,000-110,000 range
    I would broadly think that a fair price for ferrochrome is in that INR105,000 to INR110,000 range, and taking into account cost pressures and all of that.

    — Subhrakant Panda, Managing Director

Risks & concerns

  • Sustainability of special electricity tariffs for South African ferrochrome producers.

    medium

    Management highlights that the special tariff for Glencore and Samancor covers only variable and some legacy costs, not full overheads, and the government is expected to bear the difference, raising questions about its long-term practicability and sustainability.

    Management acknowledged

  • Volatility in ferrochrome realizations and input costs (metallurgical coke, thermal coal).

    medium

    While IMFA is sheltered on chrome ore costs due to captive mines, it remains exposed to volatility in other key input costs and market prices, which can impact sustainable margins.

    Management acknowledged

  • Initial stabilization period and power consumption for new furnaces.

    low

    The commissioning of new furnaces (KNR 1 and KNR 2) will involve an initial heating-up period and power consumption without immediate production, leading to some start-up costs.

    Management acknowledged

Areas of evasion (2)

  • breakeven utilization level of the incremental capacity
  • specific details on critical minerals strategy

Q&A highlights

3 direct
Sustainability and impact of special electricity tariffs for Glencore and Samancor in South Africa. Direct
I think the concerns which have been expressed about how sustainable this is, is on account of the fact that it is for 2 companies, and certainly, it will lead to demands from others is the expectations, whether it is manganese steel, aluminium, etc. And the second that, obviously, covering only variable costs may not be sustainable, and that is where NERSA has very clearly said that the government has to reimburse and the burden shouldn't go on to the common to the average consumer.

This question addresses a major external factor impacting global ferrochrome supply and pricing, and management provides a nuanced view on its sustainability and broader implications, suggesting it's not a simple positive for SA producers.

Asked by Parthiv Jhonsa

Analyst suggestion for share subdivision to improve liquidity and shareholder access. Direct
Thank you, Amitji, for your suggestion. We will certainly take that under consideration. I know this topic has come up about having adequate floating stock to provide liquidity, but there are pros and cons to everything, but this is certainly, we will certainly take your suggestion on board and always have the interest of shareholders paramount when we look at taking any actions.

This is a direct suggestion from an investor regarding capital structure and shareholder value, indicating a potential area of concern for retail investors regarding stock liquidity and accessibility.

Asked by Amit Lodha

Status and timeline for the incomplete 33 MVA furnace at the acquired Tata project (KNR 2). Direct
The unit has 4 16.5 MVA furnaces, which are capable of producing 100,000 tonnes, which are good to go. And there is a 33 MVA furnace, which is partially complete, which can produce another 50,000 tonnes. Our estimate is approximately a year's time and roughly INR50 crores of capex to make that operational.

This question clarifies the operational status and future potential of a significant part of the recently acquired capacity, providing crucial details on additional capex and timeline for full utilization.

Asked by Anant Sarda

3 min read 6 chapters

Detailed narrative

Robust Q3 FY26 Performance Driven by Realizations

Indian Metals reported a strong Q3 FY26, with EBITDA margins exceeding 23%, a significant improvement from the 18-19% in Q2 FY26. This performance was primarily attributed to a roughly INR6,000 per tonne increase in ferrochrome realizations. Ferrochrome production for the quarter stood at 67,196 tonnes, with sales at 64,802 tonnes, while chrome ore raising was 265,468 tonnes. Management expects similar EBITDA margins in Q4 FY26, with domestic ferrochrome prices currently ranging from INR118,000 to INR120,000 a tonne.

Aggressive Capacity Expansion and Acquisition Strategy

The company is actively pursuing significant growth through both organic and inorganic routes. The acquisition of Tata Steel's ferrochrome plant at Kalinganagar (KNR 2) for a base consideration of INR610 crores is expected to close in February 2026, adding 99 MVA of furnace capacity. Concurrently, the greenfield Kalinganagar project (KNR 1) is on track, with the first furnace expected to be commissioned in June 2026. These expansions are projected to increase ferrochrome production from the current ~260,000 tonnes to ~400,000 tonnes in FY27 and 475,000-500,000 tonnes in FY28.

Strategic Capex and Financial Prudence

IMFA has outlined a substantial capex plan, with approximately INR600 crores for FY27 and INR400-500 crores for FY28, totaling INR1,000 crores over the next two years. This includes ~INR300 crores remaining for KNR 1, ~INR50 crores for the ethanol project, and ~INR200 crores for mines in FY27. The acquisition of KNR 2, costing around INR700 crores including GST, will be entirely funded by internal accruals. The company maintains a conservative stance on debt, with current long-term debt drawdown at only ~INR80 crores against a sanctioned limit of INR470 crores, and a target debt-equity ratio not exceeding 0.3.

Integrated Model and Cost Advantages

Management emphasized the resilience and competitiveness derived from its fully integrated business model, which includes captive chrome ore mines and power generation. This integration helps mitigate cost pressures, particularly from rising chrome ore prices. The Kalinganagar facilities are strategically located, offering logistical advantages expected to reduce weighted average EBITDA costs by INR1,500-2,000 a tonne in steady-state operations. The company aims to increase its ore raising to 1 million tonnes in FY27, fully catering to its expanded capacity from captive mines.

Diversification into Ethanol and Critical Minerals

IMFA is commissioning a 120 KLD ethanol plant in March 2026 with a capex of INR150 crores. This is viewed as a small diversification, leveraging existing infrastructure at Therubali, and further expansions will depend on its value accretion. Additionally, the company is evaluating opportunities in the critical minerals space, acknowledging the global scramble for these resources and IMFA's competence in mining and processing. However, specific plans for critical minerals are still in early stages.

Evolving Sales Mix and Market Outlook

The company plans to shift its export-heavy sales mix (currently >90% exports) to a 60-40 split (exports-domestic) over the next two years, aiming to meet domestic demand as the largest producer in India. While acknowledging market volatility, management expressed confidence in near-term market dynamics and expects ferrochrome prices to remain supportive, with a long-term fair price range estimated at INR105,000-110,000 per tonne. IMFA also highlighted its focus on long-term contracts and niche ferrochrome products with premiums.

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