Kirloskar Ferrous Industries sees mixed results in Q1 FY25 post-ISMT merger

Kirloskar Ferrous Industries Limited (BSE: 500245), a leading name in castings and pig iron manufacturing and a significant player in steel and seamless tubes in India, has announced its unaudited financial results for the first quarter of the fiscal year ending March 31, 2025. This marks the company’s first quarter following the merger with Indian Seamless Metal Tubes Limited (ISMT), a move anticipated to reshape its market positioning.

Financial Performance Overview

For the first quarter of FY25, Kirloskar Ferrous Industries reported standalone revenue of INR 1,553.7 crore, reflecting a 4% increase compared to INR 1,498.0 crore in the same period last year. Despite the revenue growth, the company’s EBITDA decreased by 11%, reaching INR 186.9 crore from INR 210.3 crore in Q1 FY24. The EBITDA margin also fell from 14.0% to 12.0%.

The profit before tax (PBT) saw a significant decline of 25%, dropping to INR 104.3 crore from INR 139.2 crore year-over-year. Similarly, the profit after tax (PAT) fell by 21%, coming in at INR 75.6 crore compared to INR 96.2 crore in the previous year.

On a consolidated basis, Kirloskar Ferrous Industries reported a 3% increase in operating revenue, amounting to INR 1,553.7 crore compared to INR 1,502.5 crore in Q1 FY24. However, EBITDA also decreased by 10%, falling to INR 186.6 crore from INR 207.4 crore, with the margin decreasing from 13.8% to 12.0%. PBT and PAT both experienced declines of 28% and 25%, respectively.

Post-Merger Dynamics and Outlook

R.V. Gumaste, Managing Director of Kirloskar Ferrous Industries, commented on the quarterly results, noting the challenges faced due to lower demand for the company’s products and continued margin pressures. However, he expressed optimism about the future, highlighting an improvement in demand for castings and tubes following the first quarter. Gumaste also announced the successful commissioning of the first phase of their solar plant in Jalna, a move expected to bolster the company’s sustainable energy efforts.

The merger with ISMT, completed earlier this year, marks a strategic expansion of Kirloskar Ferrous Industries’ product range. ISMT, known for its seamless tubes and alloy steel, enhances KFIL’s capabilities in producing critical alloy steel and seamless tubes, which are essential for various industrial applications, including automotive piping and boiler tubes.

Founded in 1991, Kirloskar Ferrous Industries is renowned for its manufacturing of grey iron castings and pig iron, catering to sectors such as tractors, automobiles, and diesel engines. The company operates facilities in Koppal, Hiriyur, and Solapur, known for producing high-quality grey iron castings and various grades of pig iron.

The company is currently expanding its manufacturing capacities in pig iron and casting and has invested in 3D printing technology to accelerate product development. The addition of a coke oven manufacturing facility with waste-heat recovery power signifies further growth and efficiency enhancements.

Kirloskar Ferrous Industries’ first-quarter results for FY25 present a mixed picture, with revenue growth overshadowed by declines in profitability. The ongoing integration of ISMT and investments in new technologies position the company for future growth, though challenges in demand and margins will need to be addressed.