Kirloskar Ferrous Industries faces challenges in FY 2024 despite steady revenue

Kirloskar Ferrous Industries Limited (BSE: 500245), a leader in the castings and pig iron industry in India, reported its financial outcomes for the fourth quarter and the fiscal year ending March 31, 2024. While the company maintained stable revenue, it faced significant challenges impacting profitability, particularly due to subdued demand from the tractor industry and pressures on pig iron margins.

Kirloskar Ferrous Industries Financial Performance Analysis

For the fourth quarter of FY 2024, Kirloskar Ferrous Industries Limited recorded a standalone operating revenue of INR 994.4 crore, virtually unchanged from INR 991.0 crore in the same quarter the previous year. However, the company experienced a sharp decline in profitability:

– EBITDA for Q4 dropped to INR 96.9 crore, down 39% from INR 158.0 crore in FY23, with the EBITDA margin shrinking from 16% to 10% year-over-year.

– Profit Before Tax (PBT) saw a significant decrease, falling by 60% to INR 43.8 crore.

– Profit After Tax (PAT) also declined by 58%, amounting to INR 34.1 crore for the quarter.

The consolidated figures tell a similar story of challenge amid resilience. The operating revenue for Q4 FY24 was INR 1,535.9 crore, a slight decrease of 2% from INR 1,565.6 crore year-over-year. Other key consolidated financial metrics include:

– Consolidated EBITDA stood at INR 165.1 crore, a 25% decrease from the previous year.

– PBT (before exceptional items) plummeted by 61% to INR 62.6 crore.

– Consolidated PAT was significantly impacted, showing an 81% decrease to INR 17.7 crore.

Kirloskar Ferrous Industries navigated market challenges in FY 2024, maintaining stable revenue but facing profit declines.

Corporate Developments and Future Outlook

Despite the financial setbacks, Kirloskar Ferrous Industries Limited is optimistic about the future. Mr. R. V. Gumaste, Managing Director, noted signs of revival in both pig iron prices and tractor casting demand. The company continues to progress with its projects, many of which are nearing completion and are expected to start yielding returns soon.

In terms of production capabilities, Kirloskar has expanded its manufacturing capacities in both pig iron and casting sectors. Noteworthy is the addition of a coke oven manufacturing facility equipped with a waste-heat recovery power plant, enhancing sustainability and operational efficiency. The company’s facilities in Koppal, Hiriyur, and Solapur are equipped to produce a diverse range of products, including grey iron castings up to 300 kg and various grades of pig iron.

The financial year 2024 posed considerable challenges for Kirloskar Ferrous Industries, reflecting broader industry trends of fluctuating demand and margin pressures. However, the company’s strategic project advancements and capacity expansions signal a strong foundation for recovery and growth. As market conditions improve, Kirloskar’s diverse product capabilities and innovative manufacturing techniques, such as 3D printing for rapid product development, are likely to play a crucial role in its rebound and future success.