IFGLEXPOR - IFGL Refractories Limited Share Price

The management of IFGL Refractories Limited provided a positive outlook for the company, emphasizing strong revenue growth and ongoing strategic initiatives. For Q3 FY'26, consolidated revenue increased by 23% year-on-year, while standalone revenue rose by 16%. Standalone EBITDA was reported at INR 18 crores, with an EBITDA margin of 6.5%, while consolidated EBITDA was INR 25 crores.

Management highlighted significant trends in the global steel industry, predicting that India would continue to drive steel demand growth with an expected increase of approximately 9% in both 2025 and 2026. In contrast, demand in the US is projected to rise by around 1.8%, and Europe's recovery is forecasted between 1% to 3%. Importantly, the company's India-made and sold business demonstrated a remarkable growth of 25% year-on-year, achieving revenues of INR 648 crores for the nine-month period.

Management also noted improvements in American operations, reporting a 37% year-on-year revenue growth attributed to recent tariff adjustments and demand recovery. In Europe, revenue grew by 39%, although profitability remains under pressure.

Looking forward, management plans to enhance cost efficiencies and improve margins while addressing the operational challenges in the UK subsidiary, Monocon, to boost overall profitability. They expect gradual improvements in margins in subsequent quarters.

Regarding future capex, the company plans an investment of approximately INR 325 crores for the Khurda project and INR 300 crores for a joint venture facility in Gujarat, targeted for completion in FY'28. Notably, Mr. James Leacock McIntosh will step down as Managing Director effective March 1, 2026, with Mr. Mihir Prakash Bajoria appointed as his successor.

1. Question: "Under this Total Refractory Management model, can you give us some idea in what would be the revenue visibility and margin profile compared to the traditional product sales?"
   Answer: We expect the TRM model to contribute around 35% to 40% of our total monthly revenue, with better profitability than direct material sales. This efficiency stems from our application impact at plant sites, positioning us among top competitors in the market.

2. Question: "How much of the 37% year-on-year revenue growth in the US was volume-led versus price-driven? Is this momentum sustainable into FY27?"
   Answer: The US market has rebounded, leading to robust growth though 37% won't be sustainable. We anticipate solid growth in FY27, albeit at a lower rate, which suggests continued profitability improvement.

3. Question: "What incremental revenue or margin benefits do you expect post-technology transfer from Sheffield Refractory?"
   Answer: Iron-making is a key focus for us. We anticipate significant advantages from newly localized products, which will improve our market position by offering competitive alternatives.

4. Question: "What asset turns and margin profiles should we expect from new capacities in Odisha and Gujarat?"
   Answer: We assure double-digit margins for these projects. The unique product nature and limited competition in these markets will yield strong returns post-completion.

5. Question: "Despite revenue growth, why were EBITDA margins below expectations?"
   Answer: Our margins were affected by higher employee costs, operational overheads, and an unfavorable product mix. While we aim for 12% EBITDA margins, we expect gradual improvement as cost rationalization begins.

6. Question: "What will the stabilization level of employee costs as a percentage of revenue be?"
   Answer: We expect employee costs to stabilize around 10% of revenue going forward. This is inclusive of current projects and aims to reduce volatility observed this quarter.

7. Question: "What is your guidance on Capex spending this year and next?"
   Answer: Our Capex includes INR325 crore for the Khurda project and around INR300 crore for our JV with Marvel, split over two years. We expect to spend 60-70% this year on Khurda, with Marvel starting next year.

8. Question: "What percentage of your total portfolio does flow control refractories contribute?"
   Answer: Flow control refractories account for approximately 50%-55% of our total portfolio, reflecting our strong market position in this segment.