Indian Metals & Ferro Alloys Limited — Q4 FY25 earnings call

Call held 23 May 2025

Management summary

Indian Metals & Ferro Alloys Limited (IMFA) reported resilient performance in Q4 FY25 despite a challenging macroeconomic environment, marked by subdued global ferrochrome demand and weak pricing. The company focused on cost optimization and operational efficiency, achieving an EBITDA cost of INR 76,980 per metric ton. Strategic initiatives include the commencement of the Kalinganagar ferrochrome expansion, securing 110 MW of hybrid renewable energy, and the amalgamation of Utkal Coal Limited. Management expressed confidence in a more stable FY26 with early signs of pricing recovery.

Highlights

  • EBITDA cost per metric ton for Q4 FY25 was INR 76,980.

  • Met coke component in ferrochrome cost was INR 15,150 per metric ton in Q4 FY25.

  • Chrome ore raising crossed 7 lakh metric tons for the first time in FY25.

  • Kalinganagar Greenfield ferrochrome expansion project (96,000 metric tons per annum) has commenced, with major equipment orders placed.

  • Signed power purchase agreements for 110 MW hybrid renewable power (70 MW with JSW, 40 MW with Ampin), to be commissioned by June '26.

  • Approved scheme of amalgamation of Utkal Coal Limited with IMFA, effective March 28, 2025.

  • PAT for FY25 stood at INR 378 crores.

  • Free cash flow generated (before dividend payout) was INR 430 crores for FY25.

Key financials

  1. EBITDA Cost per Ton ₹76,980 -1.1%QoQ
  2. Met Coke Cost per Ton ₹15,150
  3. Chrome Ore Cost per Ton ₹7,500
  4. Power Variable Cost ₹4.09
  5. Ferrochrome Net Realization ₹87,021 -10.2%QoQ
  6. PAT ₹378 Cr
  7. Free Cash Flow ₹430 Cr
  8. Net Cash Balance ₹535 Cr

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

  • Greenfield Ferrochrome Expansion Capacity · Ongoing · High confidence 96,000 metric tons per annum
    Our work has commenced on the 96,000 metric ton per annum Greenfield ferrochrome expansion project in Kalinganagar.

    — Saunak Gupta

  • Mines Capacity Raising Capacity · by FY31 end · High confidence 1.2 million tons
    The major amount will come and then it will taper down by FY '31 end by the time we reach the capacity of 1.2 million tons of raising.

    — Saunak Gupta

Capex

  • Kalinganagar Project Capex Capex · by September/October '26 · High confidence INR 840-900 crores

    Previously INR 650-700 crores → INR 840-900 crores

    So on the capex part, as we have mentioned earlier, that almost INR840 crores of our investment is in Kalinganagar project... And if you add up the capitalizable expenses that will be spent at the time of trial run, it will go up to somewhere around INR900 crores.

    — Saunak Gupta

  • 120 KLD Ethanol Project Capex Capex · Ongoing · High confidence INR 150 crores
    Besides that, we are also under project completion of 120 KLD ethanol project, which is about INR150 crores, which is on course.

    — Saunak Gupta

  • Underground Mines Capex Capex · 5-6 years · Medium confidence INR 1,000 crores
    And on the underground mines, which is overall in a 5-year tenure, it's about INR1,000 crores, we'll be spending, but a part of it will also come in FY '26.

    — Saunak Gupta

  • Total Capex Outlay Capex · FY26 · High confidence INR 800-900 crores
    So overall, we expect in FY '26 around, INR800 crores to INR900 crores will be the outlay for all these three projects.

    — Saunak Gupta

Production Volume

  • Kalinganagar Project Production Production Volume · FY27 (first year of operation) · High confidence 50,000 to 60,000 tons
    See, in the first year, we are expected to start the production from the month of -- mid of the '26-'27. That is around July, we are going to produce. In June, we are going to commission. So it will ramp-up will happen. So in the financial year, it will be around 50,000 to 60,000 production will be there.

    — Sureshbabu C

  • Ferrochrome Production Production Volume · Next half year · High confidence 130,000 tons
    The production is similar to what we have -- for the next half year, it will be around 130,000, two quarters.

    — Sureshbabu C

  • Ferrochrome Production Production Volume · FY27 · High confidence 3.1-3.2 lakh tons
    So production next year can be 3.1 lakh to 3.2 lakh tons of ferrochrome. And in FY '28, we can do 3.6 lakh completely? Yes. You are right.

    — Akhilesh B, Sureshbabu C

  • Ferrochrome Production Production Volume · FY28 · High confidence 3.6 lakh tons

    — Akhilesh B, Sureshbabu C

Energy

  • Hybrid Renewable Power Capacity Energy · Commissioned June '26 · High confidence 110 MW (70 MW JSW, 40 MW Ampin)
    So we'll go for this Kalinganagar project with the help of renewable energy, hybrid energy that we have tied with JSW with 70 megawatt and with Ampin with 40 megawatt. So this will be help through the new facility and both are going to be commissioned in June '26.

    — Bijayananda Mohapatra

  • Renewable Energy Contract Duration Energy · High confidence 25 years
    And both the agreement will be for 25 years, and they will be supplying power by June '26.

    — Binoy Agarwalla

  • JSW Renewable Energy Tariff Energy · High confidence INR 3.84 per unit
    One unit price of JSW is tariff at injection point is INR3.84 and with Ampin is INR3.75.

    — Binoy Agarwalla

  • Ampin Renewable Energy Tariff Energy · High confidence INR 3.75 per unit

    — Binoy Agarwalla

Market Outlook

  • Ferrochrome Price Realization Market Outlook · Q1 FY26 · Medium confidence INR 92,000-93,000 per metric ton
    Now for Q1, we are expecting some INR92,000 to INR93,000 per metric ton realization -- average realization. Can you confirm my understanding?

    — Saunak Gupta

Risks & concerns

  • Macroeconomic Uncertainty & Geopolitical Situation

    medium

    Q4 FY25 experienced uncertainty on trade policy-related developments, along with geopolitical situation impacting several segments of commodity markets.

    Management acknowledged

  • Subdued Global Ferrochrome Demand & Weak Pricing

    medium

    Global ferrochrome market traversed through a phase of subdued global demand and weak pricing trend in Q4 FY25.

    Management acknowledged

  • Capex Overrun/Increase for Kalinganagar Project

    medium

    The Kalinganagar project capex increased from an initial estimate of INR 500-700 crores to INR 840-900 crores, attributed to best-in-class equipment and cost escalation over 2.5-3 years.

    Analyst acknowledged

  • Energy Cost Volatility in South Africa

    low

    Electricity costs have gone up in South Africa, impacting ferrochrome production there, which could affect global supply dynamics.

    Management acknowledged

Areas of evasion (1)

  • exact Q1 FY26 ferrochrome price realization (due to SEBI guidelines)

Q&A highlights

1 direct
Increase in Kalinganagar Capex Partial
No. Actually, as far as what we have mentioned is that, the cost was last year also, it was somewhere around INR700-plus crores what we have estimated. Now the cost has increased as we are to put up the best-in-class in all the equipments over there... As well as there is an escalation of the various costs, which has happened because this INR700 crores we had mentioned somewhere around 2.5 to 3 years back.

Analysts questioned the significant increase in capex guidance for the Kalinganagar project from INR 500-700 crores to INR 900 crores, indicating potential cost overruns or scope changes.

Asked by Aashav Patel

Impact of Anti-Dumping Duty (ADD) on Met Coke Direct
Yes. See, for antidumping, what the ferroalloy is using, that is excluded. So we have actually required the ultra-low phos of 0.030, okay? So whatever the appeal went to the DGTR, this ultra-low phos is excluded from the antidumping norms.

This clarifies that IMFA's specific grade of met coke (ultra-low phos) is excluded from ADD, mitigating a potential cost risk for the company.

Asked by Aashav Patel

Ferrochrome Price Realization Lag and Q1 FY26 Outlook Partial
So on this price realization part, I would say that lag period is about 1.5 to 2 months for us to get the benefit out of it. But on the future outlook, I will just request Venkatesh just to give an overall viewpoint on the ferrochrome market price... So Mr. Shah, we are seeing some upside. But as you know, there are certain lag period for getting this value in our books.

Analysts sought clarity on the lag in price realization and the expected ferrochrome prices for Q1 FY26, which is crucial for near-term profitability. Management confirmed a 1.5-2 month lag and an expected upside in Q1 realization but avoided specific numbers due to SEBI guidelines and market uncertainty.

Asked by Pranav Jain, Joe Shah

3 min read 6 chapters

Detailed narrative

Q4 FY25 Performance and Cost Optimization

IMFA demonstrated resilience in Q4 FY25 amidst a challenging global ferrochrome market. The company's EBITDA cost per metric ton was INR 76,980, reflecting a slight reduction from Q3 FY25's INR 77,800. Key cost components included met coke at INR 15,150 per metric ton and chrome ore at INR 7,500 per ton. Power variable cost for the quarter was INR 4.09. The net ferrochrome realization for Q4 FY25 was INR 87,021, a decrease from INR 96,943 in the December quarter and INR 101,771 in Q4 FY24, indicating pricing pressure.

Kalinganagar Ferrochrome Expansion Project

The 96,000 metric ton per annum Greenfield ferrochrome expansion project in Kalinganagar has commenced, with orders placed for civil, structural works, major furnace equipment, and power transformers. The first furnace is scheduled for commissioning in June 2026, followed by the second in September 2026. The total capital expenditure for this project is now estimated at INR 840 crores at base level, potentially reaching INR 900 crores including capitalizable trial run expenses, an increase from earlier estimates of INR 650-700 crores due to equipment quality and cost escalation over 2.5-3 years.

Renewable Energy Initiatives

IMFA has significantly advanced its renewable energy strategy by signing power purchase agreements for 110 MW of hybrid renewable power. This includes 70 MW with JSW Green Energy Group and 40 MW with Ampin Energy Utility One Private Limited. Both agreements are for 25 years, with commissioning expected by June 2026. The tariffs are competitive, with JSW at INR 3.84 per unit and Ampin at INR 3.75 per unit, aiming to enhance energy security and reduce the company's carbon footprint.

Mining Operations and Inventory Management

The company's chrome ore raising reached a record 7 lakh metric tons in FY25. IMFA is strategically building up chrome ore inventory in anticipation of the Kalinganagar project, currently holding over 4 months of inventory at plant sites and 2.5 months at mines. The plan is to increase ore production to 8.25 lakh tons and eventually reach 1.2 million tons by FY31. The Sukinda underground mines expansion is on track, with major contracts awarded for decline, ventilation shafts, and main shaft works.

Financial Performance and Outlook

For the full fiscal year FY25, IMFA reported a PAT of INR 378 crores and generated INR 430 crores in free cash flow before dividend payout. The company maintained a healthy net cash balance of approximately INR 535 crores (after INR 372 crores in working capital borrowings). Management anticipates a more stable FY26 with early signs of pricing recovery, particularly from April onwards. They expect Q1 FY26 ferrochrome realization to improve to INR 92,000-93,000 per metric ton, despite a 1.5-2 month lag in price realization.

Amalgamation and Ethanol Project

The scheme of amalgamation of Utkal Coal Limited with IMFA was approved by the Regional Director, Eastern Region, with an appointed date of March 28, 2025. Financial entries for this merger have been passed in Q4 FY25. Additionally, the 120 KLD ethanol project is progressing, with necessary statutory clearances received and all major equipment orders placed. The boundary wall for the project has been completed, and the total project cost is estimated at INR 150 crores.

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