Kirl. Ferrous

Kirloskar Ferrous reported a total sales value of ₹6,861 crores for FY26, a 3.5% increase from ₹6,628 crores in the previous year. Profit Before Tax (PBT) for FY26, after exceptional item^📎s, improved to ₹514 crores from ₹432 crores. Q4 pig iron production saw a 3% decline to 158,152 MT, while casting production increased by 13% to 36,596 MT. Overall sales realization for FY26 dropped by approximately 10%, primarily due to lower commodity prices, with pig iron realization down 6%.

The casting division demonstrated strong growth, with FY26 production (standalone KFIL) increasing 7% to 148,564 MT, and Oliver contributing an additional 17,500 MT. The company aims for 10-15% annual volumetric growth in castings, targeting 190,000 MT for FY27. New customer acquisitions, including a diesel engine manufacturer and direct export orders for earthmoving equipment, are driving this growth. Management expects casting realization to exceed ₹130 per kg in the next two years, up from the current ₹125 per kg, driven by intricate and value-added products.

Kirloskar Ferrous plans to expand its seamless tube capacity in Baramati to 400,000 MT per annum from the current 230,000 MT, by adding 150,000 MT, with completion expected within the coming year. This expansion involves an investment of ₹500 crores, part of the annual capex. In the steel segment, the company is converting MBF2 for alloy steel production and debottlenecking its rolling mill to process the entire 300,000 tons. Q4 steel sales increased 20% YoY to 24,812 MT.

The company is aggressively pursuing green energy, targeting the commissioning of 35 MW solar and 25 MW wind power projects by September 2026, adding to the existing 70 MW in Jalna. These initiatives are projected to yield power cost savings of ₹70 crores in FY26 and an estimated ₹115 crores in FY27. Management also mentioned preliminary work on battery storage systems to enhance green power utilization, despite new regulations in Maharashtra.

Kirloskar Ferrous is focused on backward integration, aiming for a 'mine to machine castings' and 'mine to seamless tubes' strategy. This includes making the Jambunath Gudda iron ore mines operational, followed by setting up beneficiation and pellet plants. The Hiriyur blast furnace is slated for an upgrade with an investment of ₹125-150 crores to increase its capacity to 300,000 MT per annum, with a payback period of less than two years.

The company plans an annual capital expenditure of ₹600-700 crores, allocated across pig iron, foundry, steel, and tube projects. This includes the ₹500 crore investment for seamless tube expansion and ₹125-150 crores for the Hiriyur blast furnace upgrade. Management noted that cash generation is robust, allowing for investment in growth opportunities and debt reduction, which has been substantial.

The merger of Oliver into Kirloskar Ferrous Industries is expected to close in the next couple of months, aiming to realize benefits for FY26-27. Oliver's FY26 revenue was approximately ₹118-119 crores, with a target of ₹240-250 crores for FY27. Management expects overall volume growth of 15% in FY27 and aims to achieve a 15% EBITDA margin, up from the current 12.5%, driven by improved commodity prices and value-added product mix.