Kiri Industries Limited

Kiri Industries reported a mixed Q1 FY26. Standalone revenue grew 8% YoY to Rs. 181 crores, with EBITDA increasing to Rs. 17.3 crores from Rs. 13.6 crores in Q1 FY25. Standalone PAT turned positive at Rs. 7.2 crores, a significant improvement from a Rs. 1.7 crores loss in the prior year, primarily driven by dividends from Lonsen Kiri. On a consolidated basis, revenue increased 10% YoY to Rs. 202 crores, and EBITDA rose to Rs. 18.6 crores from Rs. 14.3 crores. However, consolidated net loss before accounting for associates and joint ventures significantly widened to Rs. 51.4 crores from Rs. 1.1 crores in Q1 FY25, partially offset by a Rs. 61.54 crores share of profit from associates and JV.

The company provided a critical update on the DyStar divestment, confirming the execution of a share-purchase agreement with Zhejiang Longsheng Group Company Limited on May 29, 2025. Kiri's 37.57% stake in DyStar will be sold for a total consideration of $696 million. The deal is contingent on regulatory approvals, with a long-stop date of October 2nd, 2025, extendable to November 3rd, 2025. Management expressed high confidence in the deal's completion, noting that if the primary bidder fails to secure approvals, the sale would proceed to a second bidder by December 31st, 2025, whose funds are already confirmed.

Kiri Industries is actively progressing its ambitious copper project, with an equity infusion of $130 million (approximately Rs. 1,100 crores) from Singapore borrowings. The total project budget is Rs. 8,000 crores, with Rs. 3,000 crores allocated as equity and Rs. 5,000 crores expected from debt, for which in-principle approvals are largely secured. The plant, strategically located at Pipavav Port in Gujarat, is expected to commence partial operations by FY27, targeting Rs. 12,000 crores in revenue from 25% capacity utilization. Full capacity installation is anticipated by 2028, projecting Rs. 40,000-45,000 crores in revenue by 2029-2030 based on current copper prices.

The dyes and dyes intermediate industry continues to face headwinds, particularly in reactive dyes, vinyl sulfone, and H-Acid, due to raw material volatility and US tariffs causing export realignment. This has led Kiri Industries to revise its FY26 revenue guidance downwards. Standalone revenue is now projected to be Rs. 800-900 crores, a significant reduction from the earlier Rs. 1,500 crores. Consolidated revenue guidance has also been lowered to Rs. 1,200-1,300 crores. The company's dyes capacity utilization stood at a challenging 48% in Q1 FY26, contributing to the pressure on margins.

Management highlighted several strategic initiatives, including exploring opportunities in Odisha for potential projects in 3-5 years and signing an MoU with the Philippines government to invest in a copper mine and secure off-take agreements for copper ore. These global engagements are aimed at securing feedstock for the upcoming copper plant and exploring future growth avenues. The company also addressed the termination of a prior CEO for the copper unit, citing integrity issues, mismanagement, and misconduct as reasons for the Board's unanimous decision.

Kiri Industries plans to allocate half of the post-tax DyStar sale proceeds (estimated Rs. 5,500-5,600 crores) as equity into the copper project, amounting to approximately Rs. 3,000 crores. The remaining funds will be held, with the Board deciding on their deployment for future investments and shareholder rewards. Clarity on the allocation of these remaining funds and a decision on rewarding shareholders is expected in the October to December quarter (Q4 FY26), coinciding with the receipt of the DyStar sale proceeds.