Kirloskar Ferrous Industries Limited

Kirloskar Ferrous Industries Limited reported mixed performance for Q3 FY26. While pig iron production in Koppal increased by 21%, the Hiriyur plant was largely non-operational during the quarter. Casting production saw a 10% increase to 39,000 tons, and Ahmednagar tube sales grew 17% over the last nine months. However, overall sales quantity grew only 2% year-to-date, and pig iron prices declined 9% YoY, leading to a 7% reduction in value turnover.

The pig iron segment continued to face margin pressure, although management noted 'light at the end of the tunnel' with January price increases of approximately INR 4,000 per ton (10%) in North India. The company has secured coking coal for 3-4 months, providing a short-term buffer against rising coking coal prices. Management expects pig iron margins to improve in Q4 FY26 and anticipates a 4-5% volume growth in the last quarter, aiming for an annual capacity of 720,000 tons.

The casting division demonstrated a 10% increase in production for the quarter, with year-to-date sales growing 5% to 105,000 tons. However, the ramp-up of the new Solapur foundry has been slower than anticipated, currently at 1,200 tons per month against a target of 3,000 tons, primarily due to the complexity of new product development and associated quality issues. Management projects Solapur to reach 60,000 tons next year, contributing to an overall casting volume target of 190,000-200,000 tons for FY27, including the Punjab foundry.

The tube business saw a 17% increase in Ahmednagar sales over nine months, though Baramati production was down due to a planned shutdown for furnace upgrades. Overall tube sales realization dropped 11%. Steel sales grew 16% to 60,000 tons for the quarter. The company expects significant deliveries from a large ONGC order in Q4 FY26, which will also spill into the next quarter, boosting tube volumes. The steel plant at Koppal is targeted for commissioning within two years.

Kirloskar Ferrous is aggressively expanding its green energy footprint. A 70MW solar power plant is already commissioned, and another 70MW solar and 25MW wind power (total 95MW) projects are currently under execution. These projects are expected to be commissioned between April and September 2026, aiming to add effectively 130MW of green power to reach a total of 200MW solar equivalent capacity, contributing to cost reduction and sustainability.

The company is progressing with the merger of Punjab Foundry (Oliver) into KFIL, expected to be completed by the end of the current fiscal year. This merger is anticipated to add approximately 15,000 tons to casting sales this year. Management reiterated its commitment to ongoing projects and aims for a 15-20% volume CAGR, with value growth dependent on commodity price movements, while continuously striving for progress despite market forces.