Kiri Industries Q4 FY26 earnings call

Kiri Industries delivered a strong performance in Q4 FY26, with standalone revenue from operations increasing by 29% year-on-year to ₹241 crore. Consolidated revenue also grew by 22% year-on-year to ₹251 crore. For the full year FY26, standalone revenue rose 19% to ₹778 crore, and consolidated revenue increased 14% to ₹840 crore. Adjusted EBITDA for Q4 FY26 stood at ₹35 crore standalone and ₹33 crore consolidated, while full-year adjusted EBITDA was ₹79 crore standalone and ₹127 crore consolidated, post year-end closing adjustments.

During Q4 FY26, the company recognized non-cash closing period measurement adjustments aggregating to approximately ₹114 crore. These adjustments, along with other non-cash measurement transactions during FY26, impacted the reported EBITDA. Management clarified that operational performance significantly improved, and these adjustments were primarily year-end, non-cash items not related to core operations, which will not recur every quarter or year.

The integrated copper and fertilizer project is progressing steadily, with engineering, procurement, and infrastructure development activities underway. Key procurement milestones, including orders for critical machinery and utility packages, have been achieved. Construction activities, including oxygen facility and sulfuric acid plant, are gaining momentum, with civil construction for the entire site currently 25-30% complete. The project is expected to be fully operational by March 2029, with initial units starting operations from April 2027, targeting over ₹40,000 crores in revenue by FY27-28.

The total capital investment for the copper and fertilizer project is projected to be ₹13,000 crores by March 2029, with approximately ₹4,500-5,000 crores planned for FY27, another ₹5,000 crores for FY28, and ₹2,000-3,000 crores for FY29. The company anticipates receiving government incentives amounting to 30-35% of eligible CAPEX over 10 years, translating to ₹3,000-3,500 crores annually. The project will be funded through a mix of CAPEX debt (₹4,000-5,000 crores) and working capital debt (₹3,000-5,000 crores), leading to a total debt of ₹8,000-9,000 crores by FY27-28.

The company plans to incur significant debt for the copper project, with total debt reaching ₹8,000-9,000 crores by FY27-28. This debt will include a 3-year moratorium on principal repayment, with an estimated interest rate of 8.5-9%. Management assured that debt serviceability would be maintained from day one. For the DyStar judgment finance, a ₹1,100 crore loan incurred approximately ₹300 crore in interest over five quarters, which included foreign exchange effects due to the loan being in dollars.

The Dye and Dyes Intermediates business experienced a meaningful recovery in Q4 FY26, with Dyes Intermediates contributing 52% of revenue, Dyes 33%, and Basic Chemicals 15%. The company aims for standalone revenue of ₹1000 crore in FY27, representing a 20% growth, and targets an EBITDA margin of 10-15%. The outlook for Dyes Intermediates is constructive due to tightening supply from China, which is expected to improve realizations for Indian producers.

The successful conclusion of the DyStar matter was a significant event for the company. A tax provision of ₹160 crore was initially assessed, with ₹150 crore already paid. However, based on legal opinions, the company considers the award a judicial capital receipt, largely exempt from taxes. This interpretation suggests that a substantial portion of the award is non-taxable, impacting the final tax liability.

For the copper project, the company has visibility for over 1 million tons of copper concentrate against a requirement of 1.5 million tons, with efforts ongoing to secure the remaining. Rock phosphate tie-ups are 100% secure. Kiri Industries is also actively strengthening its management team, recruiting senior and junior level personnel across all business areas, including commercial heads and chief operational officers, to support both project execution and future operations.