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Kirloskar Ferrous reported 3Q consol. EBITDA of INR1.86bn, below JMfe of INR2.12bn. EBITDA was down ~13% sequentially driven by lower scale of ops. Blended EBITDA/t came in at ~INR8.6k/t, down ~INR0.5k/t QoQ driven by higher staff costs/t and higher other costs/t partially offset by marginally higher realisations. Company registered consolidated revenue of INR16.2bn, down 8% QoQ driven by lower revenue from tube segment (-21% QoQ) and steel segment (-7.5% QoQ). Adjusted PAT stood at INR710mn, down ~18% sequentially. Key takeaways from the call are –1) on casting front, sales volume guidance for FY27 at ~180k-190k tons (including Oliver); 2) current run-rate for castings stands at ~14-15k tons per month 3) recovery in pig iron prices in Jan’26 is expected to improve margins in coming quarters; company has coking coal coverage for 3-4months at earlier lower prices 4) company plans to merge the Punjab foundry (Oliver) in KFIL by Mar’26; 5) company plans to order equipment for Kopal steel plant by end of FY26, with commissioning expected in two years. Company plans to upgrade the Hiriyur blast furnace to 900k tons hot metal capacity in the next two years. We revise our earnings estimate downwards by 5% / 5% driven for FY27E / FY28E driven by lower volume growth – leading to a revised TP of INR590/sh (implying an upside of ~31%). Maintain BUY.

? Margins under pressure driven by higher costs: KFIL registered consolidated revenue of INR16.2bn, down ~8% QoQ driven by lower revenue from tube segment (down 21% QoQ) and steel segment (down 7.5% QoQ). EBITDA came in at INR1.86bn, below JMfe. EBITDA was down ~13% sequentially driven by lower volumes and higher per ton costs. Blended EBITDA/t came in at ~INR8.6k/t, down ~INR0.5k/t QoQ driven by higher staff costs/t and higher other costs/t partially offset by marginally higher realisations. Adjusted PAT came in at INR710mn, down ~18% sequentially. In 3QFY26, due to new labour codes the company has recognised an estimated incremental impact of INR176.6mn under exceptional items.

? Recovery in pig iron prices to aid margins: Pig iron segment continued to face margin pressure in 3Q, but recovery in pig iron prices in Jan’26 is expected to improve pig iron margins in coming months. Company has coking coal coverage for 3-4months at earlier lower prices. The price of pig iron in both North and South India with North India prices up by ~INR4k/t. On casting contracts, company uses price variance mechanism linked to commodity prices, which mitigates margin compression/expansion driven by fluctuation in RM cost, providing stable margins. The current utilisation of manufacturing facility for Kopal / Solapur stood at 93% / 68%.

? FY26 volume guidance; outlook optimistic: Company expects to order equipment for Kopal steel plant by end of FY26, with commissioning expected in two years and plans to upgrade the Hiriyur blast furnace to 900k tons hot metal capacity in the next two years. On castings front, sales volume guidance (including Oliver) for FY26 is ~180k-190k tons with expected growth of 15-16%. Current run-rate for castings stands at ~14-15k tons per month. The company anticipates growth in casting volumes due to robust demand across all sectors, setting production goals for the Solapur facility at 50ktons for FY26 and 62k tons for FY27. By Mar’26, company expects to merge the Punjab foundry (known as Oliver). By 2QFY27, company expects to commission ~70MW solar plant and 25MW wind power plant to reduce power cost.

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SEBI Registration Number is INM000010361