Weak start masks structural margin recovery bet on price pass-through

Q1 revenue ₹1,771.5 Cr, +4.3% YoY only; needs 16%+ growth Q2-4 to hit 15% FY27 target

Casting sales +18% volume; overall OPM 10.5% (well below 15% target), suggesting margin compression despite volume growth

Price up confirmed; but net realization gain 'slight delta' after coal/dollar cost inflation; margin improvement unproven

Guidance targets imply 15–16% blended growth; feasible if all units hit targets but tubes remain at risk (subdued O&G, China dumping)

35 MW solar + 12 windmills on track Q2–Q3, but regulatory change (8-hour vs 17-hour green usage) will reduce benefit from ₹100 Cr to ₹80 Cr (payback 3→3.6 yrs)

Prior FY27 guidance 185–190k tons castings; now guiding 162k (Q1 sales) → 188k (~17–18% growth). Rajpura Phase 1 expansion accelerated; Solapur 2-part foundry (15k MT) by Oct. Implies 270k MT installed capacity by FY28.

Prior target 12.5%→15% FY27; Q1 at 12–13%, below range. Management now says 'Q2–Q3 recovery' once price hikes pass through; still targeting 15% but no longer imminent.

Expander mill for 350k MT capacity to take 2 years (from now); tubes to 3.5–4 lakh MT/year in 3–4 years (vs prior 2–3y estimate). O&G order backlog 23k MT but execution delayed to next 2 quarters.

Regulatory cap on green power usage (17→8 hours) reduces annual benefit from ₹100 Cr to ₹80 Cr; power trading window closed (₹10 Cr loss). Payback period extends 3→3.6 years. Battery storage being evaluated but timing unclear.

₹58 Cr YoY increase in other expenses; ₹28–29 Cr from rate hikes (LPG doubled in Solapur), ₹28–29 Cr from volume increases (higher casting production). Partial pass-through to castings; steel under discussion; tubes await market recovery.

₹58 Cr of ₹100 Cr in power/fuel. Split: ₹28–29 Cr from rate increase (LPG doubled), ₹28–29 Cr from volume (Rajpura casting ramp). Also ₹10 Cr loss from power trading ban, 8-hour cap on green power. Confident on pass-through to castings; steel under discussion; tubes await market pickup.

Yes, efficiency down. Instead of ₹100 Cr/year benefit, expect ₹80 Cr. Payback 3→3.6 years. Negative but continue; examining battery storage for longer-term.

Karnataka govt levied 8% fee in 2016. Won high court; govt appealed to Supreme Court. Case in hearing, judgment reserved. Sub judice.

On direction but aggregates 'far away'. Started machine shops in Koppal, Solapur, Rajpura; supplying fully machined 6-cyl heads ready for assembly. Looking at large exotic castings (earthmoving, beyond auto/tractor). Have 3D printing and proto facility close to serial prod (sold 50-cyl blocks via proto). Expanding machine shops.

Commissioning Oct 2026. 1,250 MT/month capacity. Confident capacities getting booked faster. Evaluating second 2-part foundry at another location.

Commodity prices reversed (pig iron up, steel announced increases). Pig iron exports support domestic prices. Castings demand very strong. Expect realization improvement Q2–Q3 as price hikes pass through. Steel and tube wait for market. Overall should improve but can't quantify timing.

Dollar FX and coal prices impacting cost. Still slight delta improvement on realization despite cost increase.

Pig iron: close to 7 lakh MT for year (Q1 produced ~1.65 lakh). Castings: gross sales 162k→188k MT (~17–20% growth). Steel: external sales 84k→100–110k (~20% growth). Tubes: 10% volumetric growth minimum. Overall 15%+ volumetric growth.

15k MT is total for Solapur 2-part (Phase 1+2 clubbed). With 6th foundry, realizable capacity 270k MT. In 3–4 years, reach 300k MT castings. Pig iron: 900k MT liquid (up to 1M if high efficiency), 500k MT saleable. Tubes: 350k MT after expander mill (2 years to build, 3–4 years to reach). Steel: 240k MT external by Koppal commissioning (2 years). ₹14k Cr aspiration—3–4 year horizon implied.

One customer wants full capacity. Started building more large foundries. Within 1 year, 500–600 MT/month (from 1,250 total). 1–1.5 years to fully utilize.

Almost ready. All govt clearances in place. Preliminary work done, project report, timeline, tech partners ready. Need to clear land (within premises). Next 2–3 months move to next stage; commission within 2 years.

Order should complete in next 2 quarters.

Carry 3-month stock. Jun–Aug highest cost period (higher than Apr–Jun). After Aug, coal prices slightly down; can blend. Peak will mitigate somewhat.

Plan this month 58k MT pig iron sales (including internal). Blend of steel grade and foundry grade. Foundry ~20–25k MT, not more.

This year ₹600–700 Cr; should pick up when large capex programs trigger (Hiriyur, expander mill, steel plant ~20–22 months each, ₹130–140 Cr, ₹20–22 Cr/month). Next year higher. Over 4 years, ₹3,000–3,500 Cr total.

Auto and tractor markets strong but not high-yielding. Oil & gas turmoil but still hopeful (high fuel prices, Middle East reconstruction). New applications (high-pressure storage, transport systems) evolving. Export affected, volumes less. If scenario normalizes, expect orders to flow; should increase high-value O&G tubings Q2–Q3, including premium couplings.

Volatility unrelated to that. Some applications change but not the driver.

70 MW solar: ₹70–80 Cr annual benefit (realizable once commissioned). 35 MW solar: ₹30 Cr benefit (slightly less). Windmill equivalent 55 MW: ₹70–80 Cr combined. Seasonal effects (wind Jun–Sep 70% benefit; solar low Jun–Sep). Still safe investment; realizable. Need to commission and get regular ops. Will have more clarity in coming months on strategy/planning given regulatory changes.

Trading window closed. Many options if we have battery storage till then.

Increase capacity for processing O&G tubes at higher level (3–4 month project windows). Building capacity for premium couplings (high value, in-house). Increase portfolio: now up to 10 inches (60% market); going to 18 inches (next 40% market) in 2 years. Services wider market and create capacities.

Within 12 months except expander mill. Going up to 18 inch takes 2 years from now.

Decided to go ahead. Ready to go; 2 years to implement. Jejuri: power/fuel cost important; want 35 MW solar and 12 windmills in place. Improved yield and reduced manufacturing cost. Rolling capacity enhancement: expand to 25k MT/month (3 lakh tons/year external alloy steel) in 18 months. Will establish 0.25M tons external steel sales and 3.5–4 lakh tubes/year.

Castings: 162k→188k MT (demand very strong, Rajpura booked, Solapur ramp Q2–Q3). Steel: 84k→100–110k MT (full Jejuri run, rolling expansion). Tubes: 10% min (O&G order 23k MT to execute next 2Q; China dumping risk remains).

Q1 produced 165.1k MT; tracking for 700k MT full year. Export channel at 30k MT/month supports domestic pricing. Hiriyur upgrade to 360k MT/year capacity targeting high volume; internal steel consumption will grow with Koppal capex.

Aspiration shared at AGM. Requires 270k MT casting capacity realization this FY + 2 more years; expander mill (2 years to build, 3–4 years to 350k MT tubes); Koppal steel plant (2 years). Capex ₹3–3.5k Cr over 4 years. Execution risk on large projects.

Recovery hinges on price pass-through (castings confirmed, steel under discussion, tubes await market). ₹58 Cr power/fuel headwind (rate + volume) to be offset by price hikes. Commodity price stabilization assumed (coal, pig iron).

Castings margin not separately disclosed Q1. Strong demand + capacity constraints should support pricing. Steel and tube margins dependent on market dynamics (O&G recovery, China competition).

Q1 NPM 4.6% (vs ~5.5% historical). Management confident but vague on timing and quantum. No quarterly guidance on PAT.

Solar (35 MW) and windmills (12 × 2.1 MW) to commission Q2–Q3. Solapur 2-part foundry (15k MT) by Oct. Rajpura Phase 1 expansion ongoing. Hiriyur pig iron and Koppal projects starting next 2–3 months.

Covers: Hiriyur upgrade (₹130–140 Cr, 9 months), Koppal steel plant (20–22 months), expander mill Baramati (20–22 months), rolling capacity Jejuri (18 months). Battery storage budget still undefined (regulatory evolving).

Tube sales –14% YoY; O&G activity 'subdued', export volumes affected by China dumping. 23k MT ONGC/Oil India order in execution but completion only next 2 quarters. If O&G does not recover, tubes stuck at 10% growth or lower.

Power/fuel costs up ₹58 Cr YoY (₹28–29 Cr rate, ₹28–29 Cr volume). LPG doubled in Solapur. Green power usage capped 8 hours (vs 17 prior); power trading banned (₹10 Cr annual loss). Reduces green capex ROI from ₹100 Cr to ₹80 Cr benefit; payback extends 3→3.6 years.

Q1 EBITDA 12–13% vs 15% target. OPM 10.5% (below 12.5% prior). Recovery dependent on Q2–Q3 price pass-through, which is not yet crystallized. If commodity stabilization or price negotiations stall, margins risk staying depressed.

₹3–3.5k Cr capex over 4 years across Koppal steel plant, Baramati expander mill, Hiriyur pig iron upgrade, Jejuri rolling capacity. All 20–22 month programs. Geopolitical volatility (war, tariffs) cited as headwind. Execution delays could push revenue/profit timelines.

Karnataka forest development fee 8% levied in 2016. Won high court; govt appealed to Supreme Court. Case in hearing, judgment reserved. Contingent liability ₹350 Cr. If ruled against, material hit to P&L; timing of judgment unknown.

Management claims casting realization 'held' YoY despite commodity cycle; but Q1 OPM 10.5% down from historical (~12.5%), suggesting margin compression. Casting margin not separately disclosed; full picture unclear. If realization does not materialize as claimed, margin recovery will miss.