Gallantt Ispat Ltd (GALLANTT) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good evening and welcome to the Gallantt Ispat Limited Q2 FY '27 Earnings Conference Call. 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Vanessa Fernandes from the Investor Relations Team of Adfactors PR. Thank you and over to you, Ms. Vanessa.
Vanessa Fernandes (Adfactors PR): Thank you, Sumanali. Good evening everyone. On behalf of Gallantt Ispat Limited, I would like to welcome you all to the earnings conference call for quarter two and H1 FY '27. Today on the call, we have with us from the management, Mr. Deen Dayal Jalan, Vice Chairman, Mr. Mayank Agarwal, Chief Executive Officer, and Mr. Amit Jalan, Chief Financial Officer of Gallantt Ispat Limited. We will begin the call with brief opening remarks from the management, followed by a Q&A session. All participant lines will be in listen-only mode during the management's remarks and the floor will be opened for questions thereafter. Please note that certain statements made during this call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or projections to differ materially from those statements. Gallantt Ispat holds no responsibility for any actions taken based on such statements and undertakes no obligation to publicly update these forward-looking statements. I now hand over the call to Mr. Deen Dayal Jalan, sir, for his opening remarks. Over to you, sir.
Deen Dayal Jalan (Gallantt Ispat Limited): Thank you, Vanessa. Good afternoon, ladies and gentlemen, and a warm welcome to Gallantt Ispat's Earnings Conference Call for the second quarter and first half of FY '27. Let me begin with wider environment because it's shaped this quarter in important ways. The global steel industry continues to operate in an uncertain setting. Geopolitical tensions, including the conflict in the Middle East, have kept energy, freight, and coal cost elevated. And trade flows have shifted as surplus from overseas looks to new buyers. India has not been fully insulated from this. But the domestic fundamentals remain strong, and our two home states, Uttar Pradesh and Gujarat, remain among the fastest-growing markets in the country. We see this as a long cycle, and we are building Gallantt to participate in it fully. Mayank will take you through the market trends in more detail. For Gallantt, Q2 was a quarter in which we chose to invest in our future capacity. We took a planned shutdown at our Gorakhpur plant to integrate the expanded capacity, and an unplanned extension of a power plant shutdown added to the impact. Mayank will take you through both in detail. Revenue for the quarter was 1,146 crore, 13% higher than a year ago, and in line with the previous quarter, as former realizations helped offset the effect of the shutdowns on our volumes. Our margin, however, were affected by the shutdowns and by higher input cost. It was all one-time effect. They do not reflect any change in the underlying strength of our business, and as the new capacity comes on stream in Q3, we expect our performance to recover. Our strategy continues to rest on three anchors: integration, scale, and capital discipline. Each of these moved forward this quarter. On integration, Gallantt was awarded a coal block in Singrauli in August 2026, as disclosed to the exchanges. Together with our iron ore blocks in Uttar Pradesh and Rajasthan, this means Gallantt now holds both of the key raw materials for steelmaking. Over time, this will give us security of supply and a structurally lower cost base. This is the most durable advantage a steel company can build. On scale, our expansion
Deen Dayal Jalan (Gallantt Ispat Limited): from 1 to 1.23 million tonnes is now being integrated at Gorakhpur, and Mayank will take you through the through the progress. On capital discipline, we continue to carry no term loans for our projects, and our 3,000 crore program remains funded through internal accruals. I would also like to address our medium-term growth plan. In our previous calls we said that we'd share it with you this quarter. Since then coal block award has changed the scale of what is possible for Gallantt. With both iron ore and coal now in our portfolio, we are evaluating a larger greenfield opportunity built around our raw material base, rather than only extending our existing sites. A project of this nature depends on land acquisition and incentives from the state government, and we are working on that. We would rather come to you with a plan that is concrete and fully worked fully worked out than one that's still taking shape. We therefore intend to present our growth plan in quarter 4 '27. What will not change is our focus on steel, our commitment to integrate, and our discipline on returns and on balance sheet. Gallantt has been built over 2 decades by staying focused and investing ahead of the opportunity. The steps we are taking this year in capacity, in raw material security, and in renewable energy are meant to position us for the next phase of India's growth. I am confident in the direction we have set. With that, I hand over to Mayank to take you through our operating performance. Over to you, Mayank.
Mayank Agarwal (Gallantt Ispat Limited): Thank you, sir, and good afternoon, everyone. Let me begin with a brief word on the market and then, as on our previous calls, take you through the quarter across our four pillars: that is volume growth, cost efficiency and integration depth, margin expansions and capital discipline. Domestic demand held up well through the first half. Finished steel consumption in India grew 7.5% to about 85 million tons, ahead of growth in domestic production, even as the country remained a net importer of finished steel. As the monsoon receded sorry, as the monsoon receded, prices across the value chain firmed up from August and TMT prices in September were about 21% higher than a year ago. On the cost side, coal and freight stayed elevated and prices of metallics such as sponge iron and pig iron rose sharply in the second half of the quarter. Demand is being driven by infrastructure, housing and urbanization, and we expect activity in our market to pick up further as the construction season gets underway. The first pillar of operations: volume growth. This quarter, our volumes were shaped by a deliberate decision at Gorakhpur. As part of our expansion to 1.3 million tonnes annually, we are adding capacity at every stage of the chain at Gorakhpur except sponge iron, including a 22 MW of solar out of our proposed 78 MW solar sorry, including 22 MW of additional generation at our existing 78 MW captive power plant. Because Gorakhpur is a fully integrated plant from pellet through to TMT bars, new capacity cannot simply be added alongside running units. It has to be synchronized with them, and that required a shut down. We planned for this and used the same window to bring forward our maintenance of our existing units so that we avoid a second interruption later in the year. Reflecting this, TMT sales for the quarter were 1,65,000 tonnes compared with about 1,92,000 tonnes in Q1 FY27. At Kutch, rolling mill utilization, which we identified as a focus area in the last quarter, was 68% in quarter 2 compared with 66% in quarter 1. The enhanced Gorakhpur capacity is expected to be operational in November '26
Mayank Agarwal (Gallantt Ispat Limited): advance, endorsed by Ajay Devgan and Janhvi Kapoor, and our dealer network in Uttar Pradesh, where we hold more than 25% of the sub-civil market, we have a ready channel to place the additional volumes. The, alongside the input cost pressure, our costs were affected by an extended shutdown at our Gorakhpur plant plant. What began as scheduled maintenance took longer than planned, as a turbine issue required specialist support. That work is now complete, and the plant is set to resume operations within a week. During this period, lower power captive power availability raised our power costs, which is one of the main reasons margins were compressed this quarter. Our structural cost lever continue to build. Our 18 megawatt solar plant at Siddhpur in Gujarat is completed and set to resume operations by November '26, and the 60 megawatt plant at Prayagraj, UP, which will serve to our Gorakhpur unit, remains on track for Q4 '27. Together, these are expected to save INR30 to INR40 crores annually in power costs. Upstream debottlenecking at our Gujarat unit remains on track for completion this financial year, and with the coal block that Sir mentioned, alongside our iron blocks, our integration now extends to both key raw materials. At the iron ore blocks, exploration is progressing, and the environment and forest clearances processes are underway, and FY '28 remained our target for them to become operational. Margins were compressed this quarter by the two shutdowns at Gorakhpur and by higher input costs, partly offset by better realization. Our CFO, Mr. Amit Jalan, will take you through the numbers. Looking ahead, the drivers of recovery are clear. In the near term, the expanded Gorakhpur capacity, the restart of the power plant, and the firmer steel prices as construction picks up after the monsoon should all support the second half. Over the medium term, solar, the Gujarat debottlenecking, and captive mines, which we expect to add about INR2,000 per ton to EBITDA once operational, will lift our margins structurally. Our INR3,000 crore capex program continues to be funded entirely through internal accruals, and we carry no term loans for our projects. Capex in the first half was INR278 crores as our projects at Gorakhpur and in renewable energy moved towards completion. We remain watchful of input costs, but we enter the second half with a larger and more integrated asset base than before and with the disruptions of this quarter largely behind us. With that, I hand over to Amit to take you through the financial highlights.
Amit Jalan (Gallantt Ispat Limited): Thank you, sir. Good afternoon, everyone. Let me take you through our financial performance for the second quarter and the first half of FY '27. Revenue from operations for the quarter was INR1,146 crores, an increase of 13% from INR1,013 crore in Q2 FY '26 and in line with INR1,146 crores in the previous quarter. Other income for the quarter was INR18 crores. EBITDA for the quarter was INR111 crores with an EBITDA margin of 9.64%, compared with the INR185 crores and 16.19% in Q1 FY '27 and INR135 crores and 12.91% in Q2 FY '26. EBITDA per ton was INR6,150 against INR8,010 in the previous quarter. The decline was driven by the planned and unplanned shutdowns at Gorakhpur and by higher input, input cost, partly offset by better realization. Employee costs were INR42
Amit Jalan (Gallantt Ispat Limited): quarter is 2.51. For the first half, revenue from operation grew 7% to 2,292 crores compared with 2,141 crores in H1 FY26. EBITDA was ₹296 crores with a margin of 12.91% compared with ₹320 382 crores and 17.85% a year earlier. Profit after tax was ₹184 crores compared with ₹263 crores in H1 FY26. And earning per share for the half were 7.63 per share. Turning to the balance sheet, as of 30th September 26, our net worth stood at ₹3,487 crores, up from 3,316 crores in March. Borrowing were 592 crores, mostly working capital facilities and we continue to carry no term loan for our project. Against this, we held about 426 crores in bank balances and liquid investments along with 266 crores in short-term treasury deployment, so we remains net cash positive. Inventory rose to 669 crores from 551 crores in the March. Capital work-in-progress increased to 598 crores from 349 crores in March, reflecting the project underway. Capex during the first half was 278 crore of which about 141 crore was spent in quarter two all funded through internal accruals. Up to September 2026, we have spent ₹650 crores of the 3,000 crore capex program. Shareholders approved a final dividend of ₹2 per share for financial year '26 at the AGM held on 30th September 2026. We expect our balance sheet to remain strong through FY27 with internal accruals as our primary source of funding for the current program. With that, I hand the call back to the moderator to open the floor for questions. Thank you.
Moderator: Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all, you may press star and one to ask a question. We have the first question from the line of Vidhi Jain from JN Investments. Please go ahead.
Vidhi Jain (JN Investments): Hi. Congratulations on the coal block award. So my question to you is, could you explain what it means strategically now for Gallantt? You have both iron ore and coal resources. How does it change your cost positioning over the next few years?
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