GPIL — earnings call
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Prepared remarks
Moderator · Conference Operator
MR. AMIT LAHOTI – EMKAY GLOBAL Godawari Power & Ispat Limited August 06, 2025
Ladies and gentlemen, good day, and welcome to the Godawari Power & Ispat Limited Q1 FY '26 Conference Call hosted by Emkay Global Financial Services.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone.
Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Lahoti.
Thank you, and over to you, sir.
Amit Lahoti
Thanks, Nidhi.
Good afternoon, everyone.
Welcome to Q1 FY '26 Earnings Call of Godawari Power.
We have with us today Mr. Abhishek Agrawal, Mr. Dinesh Gandhi and Mr. Sanjay Bothra.
I thank the management for giving us the opportunity to host this call.
I shall now hand over to the management for opening remarks.
Over to you, Mr. Gandhi.
Dinesh Gandhi
Thank you very much, Amit.
Good day, ladies and gentlemen.
I welcome you all to the conference call to discuss Q1 FY '26 earnings result of Godawari Power & Ispat Limited.
Our financial results, press release and earnings presentation are available on our website as well as on the -- uploaded on Stock Exchanges.
I believe you had a chance to review the same.
I'll quickly take you through the results, after which we'll have question-and-answer session.
We have had a steady start to the year with a strong EBITDA and PAT margin of 24% and 15%, respectively.
Our operational performance, GPIL has already achieved on an average 20% to 25% of FY '26 volume guidance.
We are confident that the volume guidance given by us at the beginning of the year will be achieved on full year basis.
Production volume of pellet and value added products largely remained flat quarter-on-quarter.
Ferro alloys production and sales volume increased by about 15% and 13% Y-o-Y and Q-o-Q.
Realization of almost all products were flat except galvanized products.
And therefore, you can see the profitability and sales turnover more or less on the flat side.
Coming on the financial results.
On Q-o-Q basis, consolidated revenue, EBITDA and PAT remained largely stable despite fall in iron ore mining production due to delay in mining plan approval for Boria Tibu mines.
On Y-o-Y basis, performance was lower primarily due to decline in sales realization.
The EBITDA and PAT margin stood at 24% and 16%, respectively.
The performance of Jammu Pigments, the zinc recycling unit of GPIL, was stable during the quarter.
JPL achieved consolidated revenue from operations at INR230 crores and EBITDA of INR20 crores.
I would like to now give you a few strategic updates and operational development.
I'm pleased to announce that in line with our growth strategy and diversification strategy, the Board has approved total capex of INR1,600 crores for two new projects.
The first being a INR900 crore investment in setting up a 0.7 million ton cold rolling mill complex, which will enable the company to convert HRC into CRC and manufacture the other value-added products like color-coated steel, zinc-aluminum-magnesium steel, that is called ZIM, galvalume products.
Godawari Power & Ispat Limited August 06, 2025 These are all value-added, margin accretive product, which will get added to our portfolio.
The project cost includes the preoperative expenditure, margin for working capital.
The project will be funded through a debt of INR600 crores and equity of INR300 crores through the internal accrual.
The estimated time line for commissioning of this project is Q1 FY '28.
That is March 20 -- sorry, March '27, not Q1 FY '28, March '27.
Additionally, a 10-gigawatt battery energy storage system project is proposed at a cost of INR700 crores to manufacture battery pack and container manufacturing line.
The project will be set up in Maharashtra at Bidkin near Chhatrapati Sambhaji Nagar in a 100% subsidiary called Godawari New Energy Private Limited.
The company has applied to the Government of Maharashtra for allotment of land for the said project under the Package Scheme of Incentives policy 2019, which will entitle the company for various incentives like instant GST, capital investment subsidy, power subsidy at concessional rate and subject to compliance of certain terms and conditions.
The technology for manufacture of container and pack with lithium ion cell required for the project will be imported from China.
Company is in discussion with a few Chinese manufacturers for supply of technology and cell for the project.
Part of raw material required for manufacturer of container will be supplied from our CRM -- proposed CRM project, which will supply the raw material required for the container, that is steel required for the container.
The project will be funded by an equity investment of 40% from GPIL and balance will be raised by the debt in the SPV.
The expected time line for commissioning this project is also March '27.
Further to update you on ongoing capex plan, we expect to receive all necessary approval for Ari Dongri mining capacity expansion from 2.35 million to 6 million tons by Q3 FY '26 and it start operation in Q4. Pellet expansion of 2 million tons is going on schedule and we expect to commission the same in the month of October.
The operations at Boria Tibu mines have resumed after getting the approval for updated mining plan from Indian Bureau of Mines.
I would also like to mention that GPIL has received an approval from PGCIL to supply steel billets to the manufacturers of galvanized steel structure for transmission project.
This is a significant milestone that reflects the superior quality of our product comparable to those of India's leading steel producer.
Previously, dependence on the high-cost market source product that is steel billets and rolled product restricted our offering in this segment.
With integrated steel production now in place, GPIL can deliver comprehensive and cost-effective product portfolio, driving both volume and margin expansion.
Notably, GPIL is the only company in India producing galvanized steel structure end to end from iron ore.
GPIL has also received approval of MoEF during the quarter for setting up 2 million ton greenfield integrated steel project.
Coming on the market outlook, on the international front, global iron ore prices remained within a range of $95 to $105 per ton so far this year, currently, hovering at about $100.
Godawari Power & Ispat Limited August 06, 2025 The first half of the year was supported by weather-related production losses.
Second half will see increased supply and might put some pressure on the iron ore prices.
The recent geopolitical tension continues to weigh on the global demand and supply dynamics.
In response, China has been providing stimulus to boost household consumption, and for the first time, resorted to direct transfer of cash to promote population growth.
This augurs well for supporting demand.
On domestic front, iron ore prices NMDC have largely been remained range-bound between INR4,500 to INR5,500.
Rising domestic rising steel prices and stronger demand supported by implementation of safeguard duties continues to support prices.
Iron ore pellet prices have followed the same trend and has traded in a narrow band of INR8,500 to INR10,000 a ton during the quarter with current level at around INR9,500 to INR10,000 a ton.
India's steel output rose 9.2% Y-o-Y in January to December -- June '25, making it stand out in a weak global environment.
Amid sluggish demand steel landscape, India stands out as a rare bright spot, driven by robust growth in infrastructure and construction, and this growth momentum is expected to continue in coming quarters.
With this, I rest my opening remarks.
We can now open the floor for question and answers.
generation becomes zero. · So what is happening is the grid is getting very, very unstable for these states, and it's
So what is happening is the grid is getting very, very unstable for these states, and it's becoming a challenge at the national level as in terms of managing the grid.
So if you see all the tenders which are coming on in the market now by the SECI or even the state DISCOMs of these states, all tenders are now with so much megawatt capacity of solar, for example, 100 megawatt solar and 200 megawatt hours of battery storage.
It basically means for 2 hours, 200 megawatts of solar power can be generated from the battery stored, right?
And that the government or DISCOMs will use to inject in the grid during peak hour, which is from evening 6:00 to, say, 10:00, 11:00 as per their convenience and requirement.
So the way this entire field is coming up to India is in such a rapid pace because this is something which is a necessity now.
All DISCOMs needs to go ahead with all these qualifications to generate solar power.
In month of August only, 8 gigawatts of tender is going Godawari Power & Ispat Limited August 06, 2025 to be out by SECI and state DISCOMs.
So what is happening right now is the entire container, which basically is a 5-megawatt container is being imported into India from China at a 10%, 11% duty and the tenders, the people who have been winning the tenders, these people are importing and supplying and fulfilling the norms.
The idea is to generate the domestic capacity.
We want to enter into this.
First phase is we won't be getting into cells, which basically requires 70% of the capex of the entire industry.
We will import cells, which is at 5% duty, and we will do battery packs and then fit the battery packs in new containers with all automation and delivered to the consumer.
This is the whole idea.
To tap this market, we definitely feel, to give you a number, today, the market rate for import is about INR3.2 crores for a 5-megawatt container.
So if you consider a minimum, even a 5% EBITDA level for our operations, which is about INR20 lakhs, INR15 lakhs per megawatt, and when you apply with the capacity we are installing, 10 gigawatts, so the ROI is very handsome.
The ROI is hardly 18 to 24 months.
So we do feel new energy is the way to go ahead in India, and that is why we want to enter this project.
Steel will remain the core part of Godawari, and we will expand into steel as we have been discussing on the same platform earlier as well, till the whole idea to enter the belt.
You are very right, we did enter into that solar thing 10 years, 15 years back.
Unfortunately, that didn't pay a lot of dividends.
We do realize that.
But this is a very well thought, well explored decision we have taken, because I think it's time where Godawari does enter the next phase of growth.
It's been 3 years, I always have been very constant.
Finally, approvals are getting in place.
We found this opportunity, we know we'll be the first movers.
If you don't do it now, then probably if we think of doing it 5 years later, 4 years later, we might be late.
The whole idea is to keep the balance sheet healthy and diversify when there's opportunity given.
So that's the whole idea behind this.
No other rationale.
Vikash Singh
Noted, sir.
Sir, in solar thermal also, we were the first mover, but fine.
Sir, in terms of our steel plant capex, basically, we got the environmental clearance, I believe.
So if you could just give us some insight that if the composition or the total tonnage which we are looking has been changed with respect to the capex plan?
If you could give us some more insight how that is panning out?
Moderator · Conference Operator
The next question is from the line of Vivek Ramakrishnan from DSP Mutual Funds.
Vivek Ramakrishnan
I had three questions.
One, in terms of peak leverage, as you do your capex plans, you've been a debt-free company lately.
So what would be the peak leverage?
Two, when you set up the CRM complex, you'll be buying, I imagine, the hot-rolled coils from the market.
Isn't that a very low-margin business?
Or is it linked to your integrated steel plant plans?
And three, on the battery storage, which in prior questions also came, is the technology flat?
Or are you going to have any technological collaboration?
These are my three questions, sir.
Moderator · Conference Operator
The next question is from the line of Siddharth Gadekar from Equirus.
Siddharth Gadekar
Sir, first on the cold-rolling mill.
Sir, can you help us understand the configuration that we are looking at?
And what kind of CRC that we would be producing from this asset?
Moderator · Conference Operator
The next question is from the line of Manav Gogia from YES Securities Limited.
Manav Gogia
So one question I had, we are probably also nearing the greenfield steel plant coming up and along with the INR1,600 crores of capex that you have announced.
Can you give me the capex outline for the next couple of years?
And how do you see the debt part going up, especially if the steel plant kicks in, do we intend to take on more debt for the greenfield steel plant?
Moderator · Conference Operator
The next question is from the line of Sahil Sanghvi from Monarch Networth Capital.
Sahil Sanghvi
My first question is roughly any understanding as to how much of the current demand for this vessel imported?
Moderator · Conference Operator
The next question is from the line of Aditya Welekar from Axis Securities.
Aditya Welekar
Again, on the battery electric storage front.
So I just wanted to understand, we will be just in the EPC part of it, right?
We will not be...
Moderator · Conference Operator
The next question is from the line of Vinit Thakur from Plus91 AMC.
Vinit Thakur
I would like to know why is there a jump in the galvanized fabrication product on a year-on- year basis.
As we see last year, we did around 13,000 tons and this year, we're doing around 24,000 tons.
What would be the guidance regarding this?
Godawari Power & Ispat Limited August 06, 2025
Moderator · Conference Operator
The next question is from the line of Vedant Sarda from Nirmal Bang PMS.
Vedant Sarda
I want to know the CRM complex project, we are targeting a capacity of 0.7 million tons.
So what kind of margin we can expect from that?
Moderator · Conference Operator
The next question is from the line of Kunal Sukhwani from Indvest Group.
Kunal Sukhwani
My question was regarding the Boria Tibu mine.
Basically, what is the current HC grade, what we are getting from that mine?
And what is the beneficiation yield and what will be the cost of beneficiation?
Godawari Power & Ispat Limited August 06, 2025
Moderator · Conference Operator
The next question is from the line of Dibyansu Kumar from Carving Alpha Wealth Fund
Dibyansu Kumar
My question is related to the EPS, which has been dropped from -- dropped to INR3.5 from INR4.5 last year Q1. Could you explain what led to the drop in profit?
Was it due to lower prices, higher cost or something else?
And also what will be the estimate for the year?
Moderator · Conference Operator
The next question is from the line of Ashish Soni from Family Office.
Ashish Soni
Sir, regarding this BESS, the tech transfer, are you open for like -- is it like Japanese or Chinese because we have seen...
Moderator · Conference Operator
The next question is from the line of Aditya Agarwal from Fin Avenue
Aditya Agarwal
Sir, I just wanted to know about the pellet pricing that we are forecasting for next 12 to 18 months with the kind of pellet capacity that is coming on in the market, like Lloyd is also planning a major capex over there.
We are increasing our capacity.
So what pricing do we forecast because...
Moderator · Conference Operator
The next question is from the line of Bharat Pathak an Individual Investor.
Bharat Pathak
My question is like on the container side of things.
So you said there's going to be some kind of technology tie-up.
So this battery typically requires cooling, so is the tie-up on the side like you need to take care of the cooling aspects by designing the container or it's something else?
Moderator · Conference Operator
The next question is from the line of Manav Gogia from Yes Securities Limited.
Godawari Power & Ispat Limited August 06, 2025
Manav Gogia
So my first question is on the operational front.
Can you give me what was the landed cost of imported coal for the particular quarter, Q1?
Moderator · Conference Operator
Ladies and gentlemen, we'll take this as the last question for today.
I would now like to hand the conference over to the management for closing comments.
Dinesh Gandhi
Yes.
Thank you very much for joining us on this conference call and appreciate the same.
We are confident that we have adequately addressed all your queries.
Should you have any further questions or need additional information, please feel free to reach out to our Investor Relations team at Go India Advisors.
Once again, we sincerely thank you for all the active participation and the unwavering support of the investors.
Thank you very much.
With this, we end this call.
Moderator · Conference Operator
Thank you.
On behalf of Emkay Global Financial Services, that concludes this conference.
Thank you for joining us, and you may now disconnect your lines.
Questions and answers
Moderator · Conference Operator
The first question is from the line of Vikash Singh from ICICI Securities.
Vikash Singh
Sir, my first question pertains to your BESS business basically.
I was surprised, in the past, we have entered into solar thermal business as well and later on exited.
So what actually prompted this and what kind of the returns this business can generate us over a longer period of time?