Kirloskar Ferrous reported mixed results for Q3 FY26, with strong volume growth in casting, Ahmednagar tubes, and steel. However, the pig iron segment continued to face margin pressure due to a 9% YoY price decline, leading to a 7% reduction in overall value turnover. The company is actively expanding its green energy footprint with 70MW solar commissioned and another 95MW (solar + wind) under execution. Challenges persist in ramping up complex new products at the Solapur foundry, but management anticipates margin improvement in pig iron and increased deliveries in tubes in Q4.
vs Q4 FY26
| Metric | Value | YoY |
|---|---|---|
| Casting Production | 39000 tons | — |
| Overall Sales Quantity (YTD) | 385000 tons | +2.0% YoY |
| Pig Iron EBITDA Margin | 9.5% | — |
Segment Breakdown
| Metric | Latest | Trend |
|---|---|---|
| Casting Production(tons) | 39000 | |
| Pig Iron EBITDA Margin | 9.5% | |
| EBITDA(crores) | 214 |
| Category | Headline | |
|---|---|---|
Capex | Capex disclosed | |
M&A | Punjab Foundry (Oliver) merger · Other |
| Category | Target | Priority |
|---|---|---|
| Pig Iron | Margin Improvement→Improved margins | Medium |
| Pig Iron | Volume Growth→4-5% | Medium |
| Pig Iron | Annual Capacity→720,000 tons | High |
| Pig Iron | Hiriyur Hot Metal Capacity (Additional)→50,000-60,000 tons | Medium |
| Pig Iron | Sales Volume→~600,000 tons | Medium |
| Casting | Solapur New Foundry Production (Current)→1,200 tons/month | High |
| Casting | Solapur New Foundry Production (Target)→3,000 tons/month | High |
| Casting | Solapur Sales (Current Average)→4,200 tons/month | High |
| Casting | Solapur Sales (Next FY)→5,200 tons/month | High |
| Casting | Solapur Sales (Next-to-Next FY)→6,200 tons/month | High |
| Casting | Solapur Volume→60,000 tons | High |
| Casting | Koppal Volume→105,000-108,000 tons | High |
| Casting | Punjab Foundry Volume→24,000 tons | High |
| Casting | Total Casting Volume→~190,000-200,000 tons | High |
| Casting | Overall Growth (including Punjab)→15-16% | Medium |
| Casting | Overall Run Rate (including Oliver)→14,000-14,500 tons/month | High |
| Casting | Merged Entity Run Rate (with Punjab)→45,000 tons/quarter | High |
| Tubes | Volume Growth→15% | Medium |
| Tubes | Sales Volume→220,000 tons | High |
| Steel | Sales Growth→>15% | Medium |
| Steel | Sales Volume→120,000 tons | High |
| Steel | Koppal Steel Plant Commissioning→Commissioned | High |
| Green Power | Solar Power Plant Commissioning→70 MW | High |
| Green Power | Wind Power Plant Commissioning→25 MW | High |
| Green Power | Total Additional Green Power→130 MW | High |
| Overall Growth | CAGR (Value)→14-16% | Medium |
| # | Metric | |
|---|---|---|
| 01 | Pig Iron Margin Improvement | |
| 02 | Solapur New Foundry Ramp-up | |
| 03 | Green Power Commissioning | |
| 04 | Oliver/Punjab Foundry Merger | |
| 05 | ONGC Order Execution (Seamless Tube) |
| Severity | Risk |
|---|---|
medium | Continued pressure on pig iron margins Pig iron margins have been under continuous pressure, impacting profitability, though recent price increases offer some relief. Management |
medium | Coking coal price increases eroding pig iron margin benefits Recent pig iron price increases could be offset by rising coking coal costs, though the company has 3-4 months of coverage. Analyst |
medium | Slow ramp-up of complex new products at Solapur foundry Solapur's capacity utilization is not at satisfactory levels due to challenges with new, complex castings, impacting overall casting volume growth. Management |
low | Quality rejection issues in new foundries/products New product development and foundry commissioning can lead to initial quality issues, which the company is managing. Management |
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.