Detailed Narrative
Q4 FY26 Performance Overview
Indian Metals & Ferro Alloys reported a strong Q4 FY26, with production reaching approximately 68,500 tons, including an initial contribution of about 2,200 tons from the newly acquired KNR 2 facility. Realizations saw a substantial increase to ₹109,000 per ton, up from ₹87,000 per ton in the corresponding quarter of the previous year. This led to a significant jump in Profit After Tax (PAT) from ₹47 crores in Q4 FY25 to ₹103 crores in Q4 FY26, representing a 119.14% year-on-year growth.
Capacity Expansion and Project Updates
The company is progressing with its greenfield KNR 1 project, with pre-commissioning activities starting May 30, 2026, and furnaces expected to switch on around July 10-15. The KNR 2 acquisition, closed on February 27, 2026, has already started contributing to production. The partially built 33 MVA furnace at KNR 2, capable of adding 50,000 tons, is targeted for commissioning by June 2027, pending environmental clearances. The ethanol project is also on track for commissioning in Q2 FY27, with output expected by the end of August.
Renewable Energy Initiatives
IMFA is significantly expanding its hybrid renewable energy portfolio to reduce its carbon footprint and secure stable power prices. An agreement for 70 megawatts with JSW Energy is expected to come online by July 2026. Additionally, a new agreement for 65 megawatts with Enfinity Global will be operational by June 2027, bringing the total hybrid renewable capacity to 135 megawatts. By FY28, the company aims for 35-40% of its total energy consumption to be sourced from renewables, benefiting from steady rates over long-term⏳ contracts.
Cost Management and Forex Impact
While costs marginally increased due to higher royalty on chrome, elevated ore prices, and thermal coal, the company maintained a tight focus on cost control. The West Asia crisis resulted in higher freight and domestic logistics costs. The company's hedging policy, covering about 25% of its total forex exposure, led to a notional mark-to-market loss of ₹28 crores in Q4 FY26 due to rupee depreciation (USD to INR moving from 89.9 to 94.65), though the actual realized loss was only ₹3 crores. Management expects a weighted average reduction in EBITDA cost by ₹3,000-4,000 per ton once KNR 1 and 2 are fully operational, with full benefits expected from Q4 FY27 onwards.
Mining and Sales Strategy
IMFA is expanding its mining capacity, targeting 10 lakh tons in FY27, up from 8 lakh tons in FY26, with a long-term goal of 12 lakh tons. Strategically, the company plans to shift its export-to-domestic sales mix from 90-10 to 60-40 'sometime next year' to capitalize on India's growing stainless steel demand. For Q1 FY27, sales are projected to reach approximately 80,000 tons, a significant increase from the normal 65,000-67,000 tons per quarter, driven by additional output from KNR 2.
Capital Expenditure and Funding
The company has already spent approximately ₹600 crores on capex by April 2026. An additional ₹450 crores is planned for FY27, primarily for Kalinganagar, ethanol projects, and underground mines. For FY28, about ₹700 crores is earmarked for the balance portion of the mines. Funding will primarily come from internal accruals, supplemented by an unutilized sanctioned term loan of ₹170 crores from the ₹470 crores loan taken. Cash in books stands at ₹400-450 crores, down from ₹900-950 crores due to funding acquisitions.
Critical Minerals Exploration
IMFA is exploring opportunities in critical minerals and rare earth elements, viewing it as adjacent to its skill set in prospecting, mining, and value addition. The company is looking to participate in upcoming critical mineral blocks in Odisha and other parts of the country. While details are limited, this initiative represents a strategic diversification beyond its core ferro alloys business, leveraging its expertise in mineral processing.