KIRLFER - Kirl. Ferrous

📊 NSE: KIRLFER 🏢 Steel - Large 📅 Last Updated: 12/14/2025 8:55

💰 Financial Performance

Revenue Growth by Segment

ISMT (subsidiary) reported revenue of INR 2,585 Cr in FY2023, reflecting a 19% YoY growth. Standalone revenue for Q2 FY26 was INR 1,728.0 Cr, up 3.6% from INR 1,667.1 Cr in Q2 FY25.

Profitability Margins

Consolidated Operating Profit Margin (OPM) declined 18% from 14.15% in FY24 to 11.54% in FY25. Net Profit Margin (NPM) decreased 8% from 5.24% in FY24 to 4.83% in FY25.

EBITDA Margin

Standalone EBITDA margin for Q2 FY26 was 12.4% (INR 213.6 Cr), compared to 11.7% (INR 195.4 Cr) in Q2 FY25, representing a 70 basis point improvement despite commodity price corrections.

Capital Expenditure

Consolidated capex was INR 600-700 Cr in FY2024 and is planned at INR 700-800 Cr for FY2025 to fund an alloy steel plant, debottlenecking, and cost-saving projects.

Credit Rating & Borrowing

ISMT Limited is rated [ICRA]A+(Stable)/[ICRA]A1. Consolidated gearing remains comfortable at 0.37 times as of March 31, 2025.

⚙️ Operational Drivers

Raw Materials

Coking coal (imported) and Pig Iron. Material costs accounted for 55.5% of standalone revenue in Q2 FY26, down from 55.7% in Q2 FY25.

Import Sources

International markets for coking coal imports.

Capacity Expansion

Oliver Engineering is currently operating at a run rate of 1,850-1,900 MT per month, with plans to scale to over 2,000 MT per month shortly. Tube sales are currently at 13,000-14,000 metric tons per month.

Raw Material Costs

Material costs were 55.5% of revenue in Q2 FY26. The pig iron business is commoditized, making margins vulnerable to raw material price fluctuations.

Manufacturing Efficiency

Yield improvement, casting weight reduction, and waste elimination initiatives are implemented to optimize material usage and energy consumption.

📈 Strategic Growth

Expected Growth Rate

19%

Growth Strategy

Growth is driven by shifting the product mix toward high value-added castings and machining, scaling up Oliver Engineering production to 2,000+ MT/month, and backward integration in the tube segment to achieve 14-16% EBITDA margins.

Products & Services

Pig iron, ferrous castings (cylinder blocks, heads), seamless steel tubes (OCTG), and machined components.

Brand Portfolio

Kirloskar, ISMT, Oliver Engineering.

New Products/Services

High value-added castings, machined castings, and high-value OCTG (Oil Country Tubular Goods) tubes.

Strategic Alliances

Kirloskar Group companies including Kirloskar Oil Engines and Kirloskar Pneumatic.

🌍 External Factors

Industry Trends

The ferrous industry is seeing a shift toward value addition and machining to counter the low/negative margins of commoditized pig iron (where competitors are exiting or selling at a loss).

Competitive Landscape

Competition in pig iron is selling at negative margins; the company competes by moving to high value-added products.

Competitive Moat

Moat is built on the 'Kirloskar' brand, integrated operations with ISMT, and a specialized focus on high-precision castings for the auto and tractor industries.

Macro Economic Sensitivity

Highly sensitive to commodity price cycles and GDP growth, particularly affecting the CV and tractor end-user industries.

Consumer Behavior

Continued strong demand for castings from the tractor industry supports volume growth.

Geopolitical Risks

Chinese dumping in the steel tube market creates pricing pressure and competition for domestic volumes.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to SEBI (Prohibition of Insider Trading) Regulations and the Companies Act 2013. EHS (Environment, Health, and Safety) standards are monitored to achieve 'Zero' accidents.