Kirl. Ferrous

Kirloskar Ferrous reported a total sales (revenue) of INR 1,736 crores in Q2 FY26, up from INR 1,683 crores last year. EBITDA for the quarter increased to INR 214 crores from INR 195 crores YoY, while H1 PBT grew 16.8% to INR 256 crores from INR 219 crores. The company saw strong volume growth in tubes (24% YoY to 49,588 tons) and steel (4% YoY to 19,616 tons), but pig iron sales volume was only up 2% YoY to 131,508 metric tons.

The pig iron segment faced significant headwinds, with prices dropping 11% YoY from INR 41,670/metric ton to INR 37,098/metric ton, leading to the segment not covering its costs. Management noted a 'phenomenally high' margin pressure, with contribution dropping from INR 10,000 to INR 3,000. In response, the company is pursuing efficiency improvements like PCI (up to 125 kg/ton hot metal) and oxygen enrichment, and plans a strategic shift to reduce external pig iron sales to 4 lakh tons, diverting 3.5 lakh tons to steelmaking within two years.

The casting segment reported sales of INR 456 crores, a slight drop of 0.3% YoY, with realization showing a small growth to INR 124.466/kg. The company is focusing on high value-added castings and machining. The newly acquired Oliver foundry has commenced production, contributing approximately 5,000 tons in the first half, and is expected to reach 15,000-16,000 tons/month post-integration. KFIL aims for a total casting volume of 170,000 tons this year and 200,000 tons next year, supported by a planned INR 100 crore investment to expand Oliver's capacity to 48,000 metric tons/annum.

The tube segment demonstrated robust volume growth, with sales increasing 24% YoY to 49,588 tons in Q2 FY26 and 33% YoY to 98,049 tons in H1 FY26. However, realization for tubes declined 7% YoY from INR 112,440 to INR 104,690/metric ton, reflecting broader commodity price pressure. Despite this, management is confident in maintaining margins and aims to achieve 200,000 tons in sales this year, with a further 10% increase next year before adding a bigger seamless tube manufacturing facility, targeting 3 lakh metric tons capacity in the coming year.

Kirloskar Ferrous is actively investing in renewable energy to reduce power costs. The company expects to commission approximately 20 megawatts of wind capacity by the end of FY26, with an investment of around INR 200 crores. An additional 25-30 megawatts of solar capacity is planned for realization next year. These initiatives are projected to yield INR 70-80 crores in power cost savings for FY26. However, solar project timelines have been impacted by changes in Maharashtra government policy, grid connectivity, and land acquisition, leading to a strategic shift to prioritize wind energy.