Godawari Power & Ispat - Project Delays | Q1FY27 Company Update

1QFY27 performance with a beat due to better than expected pellet offtake and realization. However, margins were lower than expected due to high dependence on external sourcing of iron ore and high gas cost. We continue to remain positive on GPIL’s integrated pellet-led growth strategy supported by higher captive mining, improvement in pellet grade mix, reduction in outsourced iron ore and large diversification with non-commodity businesses (CRM and BESS). However, we have cut the pellet production estimate for FY27E due to delay in approvals for land to dump the overburden and a shutdown of the new pellet plant due to high gas and iron ore costs. Additionally, the CRM project is delayed by 9 months due to shift of plant to Maharashtra. The steel plant project has also been halted due to on-ground challenges and delays in approvals. Adjusting for all these changes has led to a 1%/5% cut in FY27E/FY28E EBITDA estimates. We have also lowered the capex outflow for both years to account for the halted steel plant, in turn leading to higher other income and a 3%/1% cut in earnings in FY27E/FY28E. Repeated delays in mining plans, CRM project and recurring changes in the steel plant project has led to cut in our target multiple. We value GPIL at 8x Jun’28e EV/EBITDA (9x earlier) to arrive at TP of Rs 350 (Rs 350 previously). The cut in earnings and target multiple is offset by the valuation roll forward, leading to no change in TP. We maintain BUY rating for the stock due to attractive valuation, post a sharp correction in share price.

Godawari Power & Ispat Ltd. Stock Price Chart

Strong pellet volumes and price hikes drive revenues:

GPIL reported 32% yoy growth in revenue at Rs 17.5bn in 1QFY27, largely driven by strong pellet offtake from the newly commissioned pellet plant along with improved realizations across the steel value chain. Pellet sales grew 36% yoy to 633kt, while realization grew 5% yoy to Rs 10,340/tonne.

Margins contract sharply due to high input cost:

EBITDA margins compressed by 543bps yoy to 19.1%, leading to EBITDA of Rs 3.3bn; +3% yoy. Margin compression was driven by increased dependence on external souring of iron ore and high gas cost. PAT grew by 3% yoy to Rs 2.2bn.

Project delays postpone thesis, leads to cut in earnings:

GPIL has received the EC for mining expansion to 6mntpa from 2.35mntpa in Feb’26, which along with the already started new pellet plant should result in strong pellet sales at optimum margins. GPIL has also approved capex on purchase of wagons to ensure security in logistics for the volume ramp up. This is expected to ramp up efficiently after the commissioning of the beneficiation plant in 3QFY27E. Across new businesses, land acquisition is complete for BESS, and is on track for commercial production from Apr’27. However, we have cut the pellet production estimate for FY27E due to delay in approvals for land to dump the overburden and a shutdown of the new pellet plant due to high gas and iron ore costs. Additionally, the CRM project is delayed by 9 months due to shift of plant to Maharashtra. The steel plant project has also been halted due to on-ground challenges and delays in approvals. Adjusting for all these changes has led to a 1%/5% cut in FY27E/FY28E EBITDA estimates. We have also lowered the capex outflow for both years to account for the halted steel plant, in turn leading to higher other income and a 3%/1% cut in earnings in FY27E/FY28E. Repeated delays in mining plans, CRM project and recurring changes in the steel plant project has led to cut in our target multiple.

Valuation and risks:

We value GPIL at 8x Jun’28e EV/EBITDA (9x earlier) to arrive at TP of Rs 350 (Rs 350 previously). The cut in earnings and target multiple is offset by the valuation roll forward, leading to no change in TP. We maintain BUY rating for the stock due to attractive valuation, post a sharp correction in share price. Risks: Commodity price risk, delay in start of BESS and CRM projects.

Company website: https://www.godawaripowerispat.com/

*CMP is as per report published date

Click to download the full Godawari Power & Ispat Ltd. Q1FY27 Company Update

Analyst:

• Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
• Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)

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FAQs on Godawari Power & Ispat Ltd. Q1FY27 Company Update

Here are quick answers to common investor queries about the Godawari Power & Ispat Ltd. swing trading opportunity, including entry strategy, targets and key risks.

How did Godawari Power perform in Q1FY27?

Godawari Power & Ispat reported 32% YoY revenue growth to ₹17.5 billion, supported by strong pellet volumes and improved realizations. EBITDA increased 3% YoY to ₹3.3 billion.

What drove GPIL's Q1FY27 revenue growth?

Revenue growth was primarily driven by higher pellet offtake from the newly commissioned plant and improved realizations across the steel value chain. Pellet sales increased 36% YoY to 633kt.

Why did GPIL margins decline?

EBITDA margin declined to 19.1% due to greater dependence on externally sourced iron ore and elevated gas costs.

What are the key project delays at GPIL?

The pellet production ramp-up has faced approval-related delays and higher input costs. The CRM project has been delayed by around nine months following its planned shift to Maharashtra, while the steel plant project has been halted amid execution and approval challenges.

What are GPIL's key long-term growth drivers?

Captive mining expansion, beneficiation, improved pellet-grade mix, reduced dependence on outsourced iron ore and diversification into BESS and CRM are key potential growth drivers.

What is the target price for Godawari Power?

The supplied research report maintains a BUY rating with a target price of ₹350 versus the reported CMP of ₹237. The target represents an analyst estimate and is not a guaranteed return.

What are the key risks for GPIL?

Key risks include commodity-price volatility and delays in commissioning the BESS and CRM projects, alongside continued execution and approval challenges.

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