Indian Metals & Ferro Alloys Limited (IMFA) Q3 FY26 Earnings Call Summary

Summary

Indian Metals & Ferro Alloys Limited - Q3 FY 2026 Earnings Call Summary Friday, February 6, 2026, 4:00 PM IST

Event Participants

Executives 5 Binoy Agarwalla (Head, Power Business Unit), Saunak Gupta (CFO), Sandeep Narade (Head, Mining Business Unit), Subhrakant Panda (Managing Director), Sureshbabu Chigurupalli (Head, Ferro Alloys Business Unit)

Analysts 11 Aashav Patel (Molecule Ventures PMS), Aditya Mutha (Individual Investor), Akshita (SBI Life Insurance), Amit Lodha (Sanmati Consultants), Anant Sarda (Chattisgarh Investment Limited), Harsh Vasa (SBI Securities), Joe Shah (7 Seas), Kaushal Kedia (Wallfort PMS), Madhur Chaturvedi (MAIQ Investment Advisors), Manan Vandur (Wallfort PMS), Parthiv Jhonsa (Anand Rathi Group)

Financials & KPIs

Geographic & Segment Commentary

• Ferrochrome (Exports): Currently accounts for >90% of revenue, heavily skewed towards long-term partners in South Korea (POSCO), Japan, and Taiwan. Strategic focus remains on maintaining niche premiums (e.g., low phosphorus/silicon grades) which fetch ~25% higher realizations.
• Ferrochrome (Domestic): Currently 10% of mix, but targeted to reach 40% by FY28 as new capacity at Kalinganagar comes online. The domestic market has recently shown higher realizations than global spot prices.
• Mining: Full backward integration remains the core competitive advantage; 100% of ore requirements for current and expanded capacities (up to 0.5 million tonnes ferrochrome) will be met by captive mines.

Company-Specific & Strategic Commentary

• KNR 2 (Strategic Acquisition): Definitive agreement to acquire Tata Steel’s 99 MVA Kalinganagar plant for ₹610 crores base consideration. Deal expected to close in Feb 2026, making IMFA India’s largest and the world’s 6th largest ferrochrome producer.
• KNR 1 (Greenfield Expansion): Project is on track with first furnace commissioning expected in June 2026. This facility is expected to reduce weighted average EBITDA costs by ₹1,500-₹2,000/tonne due to logistical efficiencies.
• Underground Mining Transition: ₹1,000 crore total outlay over 4-5 years to scale ore raising. Currently operating via MDO (Mine Developer and Operator) model with ₹780 crores already committed for infrastructure and development.
• Ethanol Diversification: 120 KLD plant at Therubali (₹150 crore capex) to commission in March 2026. The move aims to utilize existing infrastructure and land as smelting focus shifts toward Kalinganagar.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Supply Dynamics & South African Tariffs

• Question: What is the impact of South Africa’s proposed special tariffs for Glencore and Samancor? (Aashav Patel)
• Answer: The tariff of USD 0.87 only covers variable costs and requires government reimbursement, making its long-term sustainability questionable. Increased South African production would likely reduce their ore exports to China, potentially making it a zero-sum game for global supply (Subhrakant Panda).

Acquisition & Integration

• Question: When will the Tata Steel plant start contributing to the numbers? (Vinit Thakur)
• Answer: The deal should close in February. While any March production is a “bonus,” meaningful top-line and bottom-line contributions will begin in Q1 FY27 (Subhrakant Panda).
• Question: Are there any one-off integration costs? (Pragyam Laddha)
• Answer: No major one-offs expected; the acquisition is expected to be margin accretive due to logistical proximity to mines and ports (Subhrakant Panda).

Mining & Capex

• Question: What is the timeline for the underground mining capex? (Sanket Kapoor)
• Answer: We have a ₹1,000 crore roadmap. ₹780 crores are already ordered for development and equipment (shaft winders, etc.), with the majority of cash outlay occurring over the next 2 years (Saunak Gupta/Sandeep Narade).

Key Takeaway

IMFA delivered a robust Q3 FY26, characterized by high EBITDA margins (>23%) fueled by a ₹6,000/tonne recovery in ferrochrome realizations. The company is at a strategic inflection point, transitioning into India’s largest ferrochrome producer through the impending ₹610-crore acquisition of Tata Steel’s Kalinganagar plant and the June 2026 commissioning of its greenfield project. These initiatives are projected to nearly double production to ~500,000 tonnes by FY28. Management maintained a conservative financial stance, funding the acquisition through internal accruals and targeting record captive ore raising of 1 million tonnes in FY27 to protect margins. While global supply concerns persist regarding South African power subsidies, IMFA’s full integration and logistical optimization at Kalinganagar provide a resilient cost floor against market volatility. Forward outlook remains positive with Q4 margins expected to track Q3 levels.