IMFA - Indian Metals & Ferro Alloys Limited Share Price

Management at Indian Metals & Ferro Alloys Limited (IMFA) provided an optimistic outlook during the Q3 FY '26 earnings call. For the quarter ended December 31, 2025, they reported a robust performance, with ferrochrome production at 67,196 tonnes, power generation at 256.17 million units, and chrome ore raising at 265,468 tonnes. Sales of ferrochrome reached 64,802 tonnes, reflecting strong market demand.

Key forward-looking points include the strategic acquisition of Tata Steel's ferrochrome plant in Kalinganagar, with an expected completion within February 2026, enhancing IMFA's capacity to over 0.5 million tonnes. This acquisition is anticipated to yield immediate value accretion, with substantial contributions to revenue anticipated from the first quarter of FY '27.

Regarding pricing dynamics, management expressed confidence in maintaining robust EBITDAs, with margins reported at over 23% in Q3 FY '26, an increase attributed to higher ferrochrome prices. Current domestic prices range from INR 118,000 to INR 120,000 per tonne, with expectations of stability in Q4 FY '26.

The company aims for ore raising to maintain strong momentum, targeting approximately 850,000 tonnes in FY '26 and 1 million tonnes in FY '27. Furthermore, an ethanol project is anticipated to begin contributing to the top line starting April 2026, expected to enhance overall revenue growth.

The management sees potential for a structural gap between demand and supply in the global ferrochrome market due to reduced output from South Africa. They reaffirmed their commitment to operational excellence and maintaining competitive edges through their integrated business model, leveraging captive mines and strategic pricing arrangements to secure long-term contracts without over-relying on spot sales.

Q&A Section Summary from Indian Metals & Ferro Alloys Limited Earnings Call

Question 1:
Do you expect Q4 will allow us to see most of the benefit of increased realization? How is demand buoyancy at this point in time?

Answer:
Yes, we anticipate continued benefits from increased realizations; domestic prices are currently around INR118,000 to INR120,000 per tonne, while Chinese prices are about USD0.96 to USD0.97. Demand remains buoyant due to long-term contracts ensuring consistent offtake, as well as increased stainless steel production, despite some constraints in ferrochrome output from South Africa.

Question 2:
How significant do you see the structural shift in the ferrochrome industry due to rising cost curves?

Answer:
There are significant cost pressures on non-integrated producers, particularly due to rising chrome ore prices. Given our fully integrated model, we expect to maintain competitiveness. Demand may improve due to stimulus measures in China, further supporting ferrochrome prices. We foresee a structural gap between demand and supply in the coming years which could strengthen pricing.

Question 3:
Do you expect all smelters from Glencore and Samancor to come online as a result of tariff reductions, and how does this impact supply?

Answer:
Currently, it's uncertain if all smelters will be operational. The tariff reduction may only apply to selected facilities, and the sustainability of these benefits is questionable. If production resumes, it may not necessarily lead to increased ore exports to China, which is an important factor in the overall dynamics of the ferrochrome market.

Question 4:
What has contributed to the substantial jump in EBITDA per tonne from Q2 to Q3?

Answer:
The primary driver for the increase was a notable rise in ferrochrome prices, which improved realizations by about INR6,000 a tonne. We expect these price levels to persist into Q4, leading to similar EBITDA margins.

Question 5:
Can you elaborate on the capex plans for FY '26, '27, and '28?

Answer:
For FY '26, we have incurred around INR370 crores in capex, with another INR270-280 crores planned for the next quarter. The total capex for FY '27 is estimated at around INR600 crores while the following year would be approximately INR400-500 crores, focused primarily on expanding infrastructure and operations.

Question 6:
What is the expected EBITDA contribution from the Tata Steel Kalinganagar plant, and when will we see this reflected in the results?

Answer:
We anticipate meaningful contributions to our financial results from Q1 FY '27. While some output may commence in March, we are primarily focusing on significant results starting in the first quarter of FY '27.

Question 7:
How do you plan to shift the domestic versus international sales ratios over the next two years?

Answer:
Currently, over 90% of our sales are exports. We aim to shift this to approximately 60% exports and 40% domestic in two years, while still prioritizing our long-term contracts and ensuring we meet domestic demand effectively.

Question 8:
What is the company's stance on the rising costs of metallurgical coke?

Answer:
Coke prices have recently stabilized around USD250 per tonne, with slight increases expected, which will influence our EBITDA costs to some extent. However, we are confident in our integrated model's ability to manage these fluctuations effectively.

These summaries encapsulate key questions and the detailed responses provided by management during the earnings call.