Kirloskar Ferrous Industries - Pricing power yet to fully reflect in spreads | Company Update
09 May 2026
Companies Updates
Q4FY26 was a miss to our revenue & EBITDA estimates, due to lower than expected sales volumes and pricing across several products. This along with high operating expenses has led to miss on EBITDA estimates. We expect substantial part of price hikes in alloy steel, tubes and pig iron to add up in 1HFY27E which should elevate spreads in FY27E vs. FY26, despite the risk of high coking coal cost. Improved demand from tractor and CV along with offtake from newly started foundry at Oliver engg. and Solapur, is expected to considerably ramp up casting offtake sequentially. Going ahead, we expect significant EBITDA growth due to i) full year impact of price hikes; ii) Addition of (70+25) MW green captive power in FY27; iii) Ramp up of casting offtake along with start of 2-part foundry; iv) margin improvement in tubes on execution of ONGC order and v) higher production of pig iron post debottlenecking. On a longer term, projects like the steel plant in Koppal, debottlenecking and PCI/oxygen injection at Hiriyur and start of captive mines, are all factors that will structurally drive increase in profitability. We have downward revised our FY27E/ FY28E earnings by 11%/ 15% respectively to account for reduced spreads vs previous estimates, revised pricing and RM cost expectations. Remain positive on KFIL.
Sales volume and realizations - a mixed bag of surprises:
KFIL reported 4.6% yoy growth in consol. revenue at Rs 18.2bn, a miss to MNCL estimate. Despatches of pig iron (128kt; -6% yoy) and casting (38kt; +20% yoy) were lower than expected due to slow ramp up at Hiriyur blast furnace and Solapur foundry. Tubes (51.1kt; -1% yoy) and alloy steel (24.8kt; +20% yoy) were in-line with expectations. Realisation of pig iron, tubes and alloy steel missed our estimates and were lower than market pricing due to delayed price hikes and adverse product mix (for tubes); except castings where realization grew 3% yoy to Rs 1,31,790/tonne. For FY26, KFIL reported a 5% growth in revenue at Rs 68.9bn.
Partial impact of realization aids margins:
Partial price hikes in pig iron and castings uplifted the spreads for KFIL in Q4FY26, partly offset by adverse product mix of tubes and weak pricing of alloy steel. This resulted in 77 bps increase in margins at 12.4% and a 12% yoy jump in EBITDA at Rs 1.2bn. For FY26, spreads were largely compressed due to weak pricing across product lines. However, cost savings projects helped margins to improve by 70bps to 12.2%, resulting into 11% growth in EBITDA at Rs 8.4bn. Adj. PAT for FY26 grew 27% to Rs 3.7bn, supported by reduction in finance cost and high other income.
Looking forward to volume growth and improved spread:
After a year of weak pricing, the steel market has witnessed strong price hikes at the far end of FY26, which is expected to fully reflect in KFIL’s spreads, especially for alloy steel and tubes starting 1QFY27E. Despite the risk of high coking coal cost, we expect the spreads to be higher in FY27E vs FY26. Further, both tractor and CV demand has improved meaningfully. This along with offtake from newly started foundry at Oliver engg. and Solapur, is expected to considerably ramp up casting offtake sequentially. Going ahead, we expect significant growth in EBITDA due to factors like i) full year impact of price hikes; ii) Addition of (70+25) MW green captive power in FY27; iii) Ramp up of casting offtake along with start of 2-part foundry; iv) margin improvement in tubes on execution of ONGC order and v) higher production of pig iron post debottlenecking. On a longer term, projects like the steel plant in Koppal, debottlenecking and PCI/oxygen injection at Hiriyur and start of captive mines, are all factors that will structurally drive increase in profitability. We have downward revised our FY27E/ FY28E earnings by 11%/ 15% respectively to account for reduced spreads vs previous estimates, revised pricing and RM cost expectations. Remain positive on KFIL.
Valuation and risks:
We ascribe 8x multiple (unchanged) on Mar’28E consol. EBITDA to arrive at TP of Rs 525/share (previously Rs 570/sh). We maintain BUY rating on stock due to the sharp correction in share price. The downward revision in TP is largely due to cut in earnings. At CMP – Rs 451/share, the stock trades at 8.1x/ 7x FY27E/FY28E consol. EV/EBITDA. Key risks: weak commodity spreads and delay in cost saving projects.
Company website: https://www.kirloskarferrous.com/
| Rating | BUY |
|---|---|
| CMP | INR 451 |
| Target Price | INR 525 |
| Upside | 16% |
Click to download the full Kirloskar Ferrous Industries Ltd 4QFY26 Company Update
Analyst:
- Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
- Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)
Frequently Asked Questions (FAQ) on Kirloskar Ferrous Industries Ltd 4QFY26 Company Update
1. Why did Kirloskar Ferrous Industries miss Q4FY26 estimates?
The company reported lower-than-expected sales volumes and realizations across pig iron, castings, and alloy steel, along with elevated operating expenses.
2. What are the major growth drivers for FY27?
Growth is expected from full-year price hike benefits, green captive power additions, casting ramp-up, ONGC tube orders, and higher pig iron production.
3. How will captive power projects benefit KFIL?
The addition of 70+25 MW green captive power capacity is expected to reduce energy costs and improve operational efficiencies over the long term.
4. What supports the long-term outlook for Kirloskar Ferrous?
Projects such as the Koppal steel plant, debottlenecking initiatives, PCI injection systems, and captive mining operations are expected to structurally improve profitability.
5. What are the key risks for KFIL?
Major risks include weak commodity spreads, elevated coking coal prices, delays in cost-saving projects, and slower-than-expected volume ramp-up.
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We reiterate BUY on Goldiam International / revise target price to Rs. 515 (vs. Rs. 470 earlier) as we roll forward our valuation to Q3FY28E and upgrade estimates by ~5%, driven by stronger-than-expected execution. The company delivered its best-ever...
Ratnamani Metals and Tubes Ltd.: Core pipes weak; subsidiaries anchor margins - Company Update
We upgrade Ratnamani Metals to BUY (from Accumulate earlier); though revise our target price lower to Rs 2,460 given miss to our estimates and consequently the cut in our earnings. Q3FY26 saw core pipes business witness a sharp decline due to delayed...
Carysil Ltd: Crafting the future of modern kitchens - Company Update
We retain our BUY rating on Carysil Ltd with a revised target price of Rs 1,190 (earlier Rs 1,140), factoring in a rollover to Q3FY28E and a ~4% trim to FY27E–FY28E earnings. Strong traction in quartz and stainless-steel sinks, upcoming capacity ex...
Wonderla Holidays: Chennai Takes The Baton As Mature Parks Plateau - Company Update
We upgrade Wonderla Holidays to BUY from HOLD, as we revise earnings estimates upward by ~5% and roll forward our valuation to Q3FY28E. The company continued to deliver ARPU-led growth at mature parks during the quarter, while footfall growth remaine...
Rashi Peripherals Ltd: Stellar quarter - Company Update
We retain "BUY" rating and raise our target price to Rs. 610 (vs Rs 505 earlier). Rashi reported topline growth of 42.6% YoY in a seasonally weak quarter, on the back of strong sales volume & prices across PES segment (56% of revenue) and LIT (44...
Triveni Turbine: Worst likely behind, recovery pending - Company update
We upgrade our rating on Triveni Turbine to BUY, supported by improving execution visibility and a gradual recovery in order inflows. While new applications such as CO₂-based energy storage, MVR, and turbine servicing are likely to be incrementally...
The Anup Engineering: Through the Trough, Recovery in the offing - Company Update
We upgrade our rating on The Anup Engineering to BUY (previously HOLD) and revise our target price to Rs 2,515. The company is not yet out of the woods, with the market awaiting clear signs of a recovery in order inflows. That said, we believe the wo...
Saksoft Ltd: Temporary headwinds, normalization in sight - Company Update
We maintain our "BUY" rating with a revised target price of Rs 285 (vs 325). Saksoft delivered weak results – a) topline growth saw a de-growth of 3% despite the favourable currency mix, b) Top 2 clients have cut spends in Q3, the pain co...
Mayur Uniquoters: Riding export momentum - Company Update
We maintain our BUY rating on Mayur Uniquoters with a revised target price of Rs. 825 (earlier Rs. 770), as we roll forward our valuation to Q3 FY28E and upgrade our FY27E/FY28E earnings estimates by ~4%. The company delivered a robust operating perf...
Scoda Tubes Ltd.: Slight miss; structural thesis intact - Company Update
We retain BUY rating on Scoda Tubes but upward revise target price of Rs 250 (previously Rs 240). Increase in target price is mainly due to valuation rollover. Q3FY26 was a strong performance on offtake, marginally offset by pricing weakness and dela...
TD Power Systems: Global demand fuelling growth visibility - Company Update
We upgrade TD Power to BUY / revise our target price upwards to Rs 875 (vs. Rs 840 earlier). Q3-FY26 results were a tad lower than our expectations and reflect timing issues rather than demand or competitive weakness. Going ahead, the Tumkur facility...
SJS Enterprises Ltd - Premiumisation and Export-led Outperformance - Company Update
We revise our target price on SJS Enterprises upwards to Rs2,190 to account for an increase in revenue/ margin estimates, and valuation roll-forward to Dec’27E. SJS delivered another quarter of strong industry outperformance, with record profitabil...
Sundram Fasteners Ltd.: Exports spoil the show - Company Update
We lower target price to Rs 1035 (previously Rs 1085) and maintain Accumulate rating for Sundram Fasteners Ltd. (SFL). We downward revise our multiple to account for extended weakness on exports including delay in EV order to North America, in turn l...
ASK Automotive Ltd. - Firing on all cylinders - Company Update
We upgrade ASK Automotive to BUY rating on attractive valuation and increase our TP to Rs590 (Rs525 previously). The increase in TP is largely driven by valuation rollover. ASK delivered a strong Q3, materially ahead of our expectations, led by broad...
Kirloskar Ferrous Ind. - Casting and tubes outperform, spreads spoil the show | Company Update
We lower our target price to Rs 620 (previously Rs690) and retain BUY rating for Kirloskar Ferrous Industries Ltd. (KFIL). The decrease in TP is mainly to account for weak commodity spreads and realization across end products . KFIL’s 2QFY26 perfor...
IFGL Refractories Ltd. - Domestic focus continues to payoff; overseas improving gradually | Company Update
We decrease target price to Rs 280 (previously Rs 300) but maintain BUY rating. The change in TP is mainly due to cut of earnings estimates. IFGL delivered another quarter of strong standalone growth as its domestic-focused strategy continues to gain...
Borosil Ltd. - Glassware ignites growth; levers to power margins | Company Update
We reiterate our BUY on Borosil Ltd and revise our target price upwards to Rs. 460 (vs. Rs. 420 earlier), driven by strong demand momentum and emerging structural growth and margin levers. The company continues to deliver robust growth in its glasswa...
Venus Pipes & Tubes Ltd. - Export and welded drives confidence | Company Update
We increase Target Price to Rs 2040 (previously Rs1,950) and retain BUY for Venus Pipes & Tubes (VENUS) due to attractive valuations. Increase in TP is primarily due to valuation roll forward. Revenue in 2QFY26 was strong, supported by a sharp re...
ESAB India - Encouraging quarter; growth in focus | Company Update
We retain Buy on ESAB India with TP revised upwards to Rs 6,850 (vs Rs 6,554 earlier) on valuation rollover. The company delivered a strong quarter, with overall growth hinting at signs of recovery supported by margin gains. ESAB continues to o...
The Anup Engineering - All eyes on cash conversion | Company Update
We maintain our HOLD rating on Anup Engineering but increase TP to Rs 2,475 (vs Rs 2,375 earlier) considering steady operational performance and an unchanged growth outlook coupled with valuation rollover. The impact from higher taxes was anticipated...
Rashi Peripherals Ltd – Turns cashflow positive
We retain "BUY" rating with a Target Price of Rs. 505 (vs Rs 525 earlier). Rashi Peripherals ltd reported decent topline growth, on the back of strong sales from the PES segment (PCs, Desktops). Our dealer checks suggest demand is improving for AI-en...
Wonderla Holidays - Chennai on Track; Expansion Visibility Low | MNCL Research Update
We reiterate our HOLD rating on Wonderla Holidays Ltd while revising our target multiple downwards to 18x (from ~20x) and rolling forward our valuation to Q2FY28E. In a seasonally weak quarter, the company delivered a better-than-expected topline, pr...
R Systems International - Strong growth tempered by higher SG&A & RSU costs | MNCL Research Update
We maintain our "BUY" and retain our target price to Rs 620. R Systems delivered higher than expected topline growth (7.9% vs our estimate of 3.5% in INR terms). EBITDA was in line with our estimates / margins dipped 70bps QoQ on the back of higher R...
SJS Enterprises Ltd - Designed to outperform | MNCL Research Update
We revise our target price on SJS Enterprises upwards to Rs1,930 to account for an increase in revenue/ margin estimates, valuation roll-forward to Sept’27E and target multiple expansion. SJS delivered another quarter of strong industry outperforma...
Channel checks - Opalware and Glassware - Borosil Sets the Benchmark in Opalware Retail
We conducted channel checks across key markets in Western and Northern India to gauge demand trends (qualitative aspects) in the Opalware and Glassware categories. We also analysed balance sheet / profitability trends (quantitative parts) across key ...
Goldiam International - LGD Momentum builds; ORIGEM scaling | Company Update
We reiterate our BUY rating on Goldiam International with a target price of Rs. Rs.470. Despite near-term uncertainty around U.S. tariff implications, the company has delivered an exemplary performance driven by robust topline growth and increasing w...
ASK Automotive Ltd – Meets Expectations; ALPS & Aftermarket to Drive Growth | MNCL Research Company Update
We retain ACCUMULATE on ASK Automotive while lowering our target price to Rs 525. The lowering of TP follows downward revision in our revenue and margin estimates, partially offset by valuation rollover. ASK delivered a strong Q2, broadly in line wit...
Sundram Fasteners Ltd. - Steady Domestic Momentum Offsets Export Weakness; upgrade to Accumulate - Company Update
We increase target price to Rs 1085 (previously Rs1030) and upgrade our rating to Accumulate for Sundram Fasteners Ltd. (SFL) due to steep correction in share price. Increase in TP is mainly due to valuation roll forward. SFL’s performance in 2QFY2...
JNK India Ltd – End of Overhang, Execution to Drive Growth | Q2FY26
Our interaction with JNK India led to the following conclusions: JNK India’s legacy low-margin orders (NRL, IOCL) delayed by site and client issues are expected to conclude largely by Q2FY26, with minor spillover into Q3FY26. From Q3FY26, high-marg...
Ratnamani Metals and Tubes Ltd. - Subsidiaries outperform | Company Update
We increase target price to Rs 2710 (previously 2690) and upgrade to Accumulate rating. Increase in target price is due to valuation roll forward. In 2QFY26, the core pipes business saw modest growth as strong offtake was offset by weak realizations....
