Kiri Industries Q1 FY27 earnings call

Kiri Industries reported a strong Q1 FY27, with consolidated revenue growing 55% year-on-year to INR 312 crores, driven primarily by improved price realizations. Standalone revenue also saw a 63% YoY increase, reaching INR 295 crore. Consolidated EBITDA, including share of profit from associates and joint ventures, stood at INR 37 crores, achieving an EBITDA margin of 7.84%. Profit after tax for the quarter was INR 270 crores, significantly boosted by INR 286 crores in other income, primarily from treasury management and interest on inter-corporate loans. The standalone material margin improved to 31.9% from 23.5% in Q1 FY26, reflecting favorable pricing.

The integrated copper and fertilizer project is progressing from the design stage into a structured construction phase, with capital deployment ongoing. The total estimated capital requirement for the project is approximately INR 12,000 crores, with INR 1,400 crore already deployed, funded entirely by equity to date. Key downstream copper facilities are planned for phased commissioning: the copper tube plant by Q1 FY28 (June 2027), followed by the copper rod plant in August-September 2027. The refinery (1.75 lakh tons) and scrap plant are targeted for operation by January 2028, with the full complex, including smelter and fertilizer plants, expected by Q1 2029. Previous FY28 revenue guidance of INR 20,000-25,000 crore for the copper project no longer holds due to dynamic timelines.

The Dyes and Dyes Intermediates industry saw an improved operating environment in Q1 FY27, with strengthening prices across reactive dyes, vinyl sulphone, H-acid, and basic chemicals due to tighter global supply and environmental compliance in China. Despite increased crude oil prices leading to higher input costs, improved average selling realizations and effective pass-through mechanisms helped sustain profitability and material margins. The company aims to increase its average capacity utilization from the current 60% to 70-75% during the current year, while maintaining pricing discipline. If market conditions persist, the dyes business could achieve INR 2,000 crore in annual revenue.

Kiri Industries is strategically deploying capital into its integrated copper and fertilizer project, with INR 1,400 crore already invested from internal equity. The company's finance costs have sharply reduced following the repayment of borrowings at Claronex Holdings, making the group substantially free of external debt. While financial closure for the remaining INR 12,000 crore copper project is still in progress, over 50% of debt commitments have been received, with full closure expected in the next few months^⏳. Management indicated that debt repayment for the copper project is projected to commence in 2029, aligning with the phased operationalization of the facilities. The option of further equity infusion for project funding remains valid.

Kiri Industries is a participant in the MCB Copper-Gold project, but its development has not yet commenced due to ongoing shareholder disagreements and litigation. Specifically, Celsius is objecting to Kiri's 70% off-take agreement, a matter currently subjudiced. Management stated that Kiri continues to act as a lender to the project and remains committed to its development, hoping for a resolution to the disputes that are currently hindering progress. The company also expressed continued interest in MMCI (related to the mine) should the overall situation resolve favorably.

Despite reporting strong Q1 FY27 results, Kiri Industries' Board has decided not to declare a dividend, opting instead to retain capital to fuel the company's significant growth trajectory, particularly the large-scale greenfield copper and fertilizer project. Management emphasized that this decision is in the best interest of the company and its shareholders for long-term value creation, by prudently deploying funds into new businesses. They acknowledged shareholder desire for returns but reiterated the focus on capital deployment for future growth, stating that the growth part has started and performance will continue to improve.