KIRLFER Q3 FY26 earnings call.
A source-linked concall view: reported numbers, management language, guidance, commitments and risks that should carry forward.
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Revenue
₹1,618 Cr
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Pending
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Kirloskar Ferrous Industries reported a mixed Q3 FY26 with pig iron production up 21% at Koppal but overall volumes flat due to extended Hirur plant shutdown. Castings grew 10% YoY to 39,000 tons driven by tractor, CV, and earthmoving demand, while tubes achieved 17% volume growth. However, pig iron prices declined 9% YoY, compressing margins significantly. Management indicated Rs 4,000/ton price increase in North India from January should support Q4 margin recovery, though coking coal cost inflation remains a watch item. The Solapur expansion continues to face ramp-up challenges with new complex castings (cylinder heads/blocks) taking longer than anticipated—currently at 1,200 tons/month versus 3,000 target. Punjab foundry merger expected by year-end adding 15,000 tons annually. Management targets 15-16% casting volume growth for full year and reiterated project execution timelines for green power and steel expansion. Key risks include inability to accelerate Solapur ramp-up and sustained commodity price volatility impacting pig iron margins.
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Guidance to track
- Rs 4,000/ton price increase in North India (~10%) from January should reflect in Q4 results. Management has coal inventory covered for 3-4 months at earlier prices.
- Including Punjab foundry, management targets ~1.90 lakh tons for FY26. Solapur expected to reach 52,000 tons this year and 62,000 next year.
- Additional 70 MW solar and 25 MW wind (12 machines of 2.1 MW each) expected to commission between April-September 2026, reaching ~200 MW solar equivalent total.
- Full year pig iron external sales expected to be 5.8-6 lakh tons. Hirur plant now operational with upgraded capability to produce 46-47,000 tons/month.
Risks flagged
- New foundry producing only 1,200 tons/month versus 3,000-ton target due to complex auto castings (cylinder heads/blocks). Full ramp-up to 5-year trajectory instead of 2-3 years. Management attributed volume miss to this bottleneck.
- While Rs 4,000/ton price increase announced, coking coal prices also rising due to Australian flooding. Management has coal coverage only for 3-4 months—cost pressures could erode pig iron spread gains.
- Q3 castings at 35,255 tons vs Q2's 36,650 tons—a 4% sequential decline despite strong industry demand. Analyst pressed management on whether market share loss is occurring.
- Baramati realization down 16%, overall tube prices down 11%. While volume grew 17%, value growth limited to 5%. Export margins remain better but subject to duty headwinds.
Key quotes
- We have to resolve some issues in Solapur and move to higher volumes next year. The new product development and ramp up of newly developed castings is taking longer because we are dealing with complex cylinder heads and cylinder blocks for auto applications.
- I can say that bottom is over. We have some improvement in pig iron prices and we have covered with the cooking coal required up to for the next 4 months from January.
- Unlike pig iron, casting pricing is long-term fixation with some linkage to raw material. We cannot increase prices like pig iron—any change requires long-term negotiation. Operating leverage from volume growth is more important for casting margins.
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