Detailed Narrative
Q4 & FY25 Performance Overview
Kirloskar Ferrous reported an improved Q4 FY25 with EBITDA increasing by 9.94% YoY to INR 199 crores, compared to INR 181 crores in Q4 FY24. Production volumes saw significant growth, with pig iron up 14%, casting up 11%, tubes up 22%, and steel up 15% YoY. However, the full fiscal year FY25 saw a decline in EBITDA by 12.67% to INR 758 crores from INR 868 crores in FY24, primarily attributed to a drop in sales realization across key products.
Product-wise Performance & Outlook
In Q4 FY25, pig iron sales volume grew 13.25% YoY to 135,727 tons, while casting sales volume increased 15% to 32,200 tons. Tube sales value surged 27.5% YoY to INR 613 crores. Despite volume growth, sales realization for tubes declined 7% in FY25 and pig iron by 8% in Q4 FY25. The company aims to achieve 7 lakh tons of liquid metal production and 2 lakh tons of tube sales in FY26, alongside 40,000 tons of casting sales per quarter, with a focus on improving product mix and combating Chinese imports.
Cost Optimization Initiatives
The company successfully reduced its power and fuel cost from 8.6% in FY24 to 6.7% in FY25, an improvement of 1.9 percentage points. This was supported by the full commissioning of a 70 MW solar plant. Further cost savings are targeted for FY26, with solar power expected to contribute INR 80 crores and increased in-house iron ore consumption (250,000 tons) projected to save INR 40-45 crores. Efforts to reduce coke consumption through pulverized coal injection (5,000 tons replaced) and oxygen enrichment are ongoing.
Capacity Expansion & Project Updates
Kirloskar Ferrous has fully commissioned its 70 MW solar power plant and marginally increased Solapur's solar capacity to 12 MW. An additional 12.6 MW windmill and 30 MW solar capacity are ordered and expected to be operational in FY26. The Oliver foundry is now operational, having sold over 500 tons in its first month and targeting 1,500 tons/month. Debottlenecking efforts in Baramati and Ahmednagar are expected to boost tube production capacity to 2 lakh metric tons.
Strategic Outlook & Market Dynamics
The company is targeting an overall EBITDA margin of 15% and aims to restore the tube business EBITDA margin to 15%. Demand for castings from the tractor segment has improved, with current demand exceeding 15,000 tons per month. While pig iron prices remain dynamic, the company expects benefits from reduced coking coal prices with a 3-3.5 month lag. The FY26 capex is planned at INR 500-600 crores, focusing on steel plant, solar, wind power, and debottlenecking.