Detailed Narrative
Strong Financial Performance Driven by Core Businesses
Refex Industries reported a robust Q1 FY27, with revenue from continuing operations growing 76% year-on-year to ₹619 crores. This strong top-line growth translated into significant profitability improvements, with EBITDA from continuing operations increasing 165% to ₹105 crores, achieving a 17% margin. Profit after tax (PAT) also saw a substantial rise of 123% to ₹73.6 crores, resulting in an 11.9% PAT margin for the quarter.
Ash and Coal Handling Business Maintains Momentum
The ash and coal handling business continued its strong operational performance, remaining the largest contributor to the company's revenue and profitability. The average daily volume run rate for Q1 FY27 was between 65,000 to 70,000 tons. Despite intermittent diesel supply constraints and logistics disruptions due to geopolitical developments, the company managed to cover most of its operations. Management aims to achieve a run rate of 90,000 tons/day by Q4 FY27, with current penetration at 30-35% of thermal power plants in India, indicating significant future potential.
Wind Energy Business Transitions to Active Delivery Phase
The wind energy business successfully transitioned from development to an active delivery phase, executing ₹295 crores this quarter. A key milestone was the successful erection of India's first 5.3 MW wind turbine in Koppal, Karnataka. While Q1 margins were 'very small' due to material in transit and pending billing, management expects better margins in Q3 and Q4, targeting ₹1,700-1,800 crores in execution for FY27 and a 5-6% net margin by year-end. The company operates on a product supplier model, avoiding EPC risks like land acquisition.
Mobility Business Demerger Progresses as Planned
The demerger of the mobility business is progressing as per schedule, with NCLT approval received to convene shareholder and creditor meetings. This restructuring is expected to unlock long-term value by allowing the mobility business to operate as an independent entity with its own strategic focus and capital allocation framework. The demerger is anticipated to be completed by the end of Q3 FY27, at which point it will cease to be a discontinued operation for Refex Industries.
Strategic Focus on Localization and Market Expansion
Refex is committed to strengthening its manufacturing ecosystem and supply chain capabilities, particularly in the wind energy segment. The company plans to achieve 85% localization of wind turbine components within 12 months, which is expected to lead to margin improvements towards 18-20% EBITDA within two years. Additionally, the company sees positive impacts from increased railway usage for coal and ash handling, opening new avenues and geographies like Northeast India, further enhancing its integrated ash management solutions.