Gallantt Ispat Limited (GALLANTT) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Galland SPART Ltd Q4 FY26 Earnings Conference Call hosted by Ashika Institutional Equities. As a reminder, all participant lines will be in the lesson-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, then zero on a touchstone phone. Please note that this conference is being recorded. I now have the conference over to Ms. Jyoti Gupta from Ashika Institutional Equities. Thank you and over to you, ma'am.

Thank you, Yusuf. Good evening, everyone, and welcome to Gallant Espart Limited quarter 4 FY26 earnings conference call. Today on the call, we have with us from the management, Mr. Deem Jaljalan, Vice Chairman, Mr. Mayank Adarwal, Chief Executive Officer, Mr. Amit Jalan, Chief Accounts Officer, and Mr. Pradhiman Satpati, Chief Financial Officer. We will commence the session with the opening remarks from the management, after which we will open the floor for the Q&A session. I will now request Mr. Deem Yalzilian for his opening remarks. Over to you, sir.

Thank you, Jyoti, and good afternoon, ladies and gentlemen. A warm welcome to Gallant Spar's first earnings conference call. We see this as an important step in building a more open, consistent, and structured engagement with the investment community, and we look forward to making this a regular dialogue going forward. India's steel sector is at a genuinely exciting juncture. The structural demand tailwinds like government infrastructure spending, a robust construction cycle, a thriving automotive sector, and a nationwide build-out of railways and logistics are real, visible, and durable. This is not a one-year story. We are talking about a multi-decade opportunity, and Gallant, with its integrated manufacturing platform, its geographic positioning, and the foundation we have steadily built over 20 years, is well-placed to participate in it meaningfully. While the opportunity landscape remains compelling, FY26 was a phase of consolidation with marginal volume growth. Importantly, this period has laid the foundation for a meaningful scale-up, with ongoing expansions expected to drive strong volume growth in FY27. Parallelly, Gallant is actively taking a number of initiatives to make the company future-ready across capacity, raw material security, energy, and technology to ensure we can seize this opportunity at scale. As part of this broader transformation, we have also extended our governance framework through the induction of eminent independent directors, including Mr. Atul Kumar Gupta, former Chief Secretary to the Government of Uttar Pradesh, Mr. Ashmuja Prasad Sivasan, retired Chief Commissioner of Income Tax, Mr. Kishore Pariyar, former CGM and Regional Director, RBI, and Mr. Sanjay Kumar Jain, Practicing Chartered Accountants. For now, I will hand over to our CEO, Mayank Agarwal, to walk you through the business performance and the pillars that will drive our growth. Over to you, Mayank.

Thank you, sir, and a very good afternoon to everyone here. Let me start with a brief view on the industry before walking you through to our own performance across the four pillars that I believe best capture where Galen stands today and where we are headed. The global steel industry is at an inflection point. After a prolonged period of subdued demand, weighed down by China's real estate correction, geopolitical disruptions in the Middle East, and a cautious investment climate in developed markets, we are beginning to see a recovery taking shape. China remains a key variable, the real estate correction has been deeper than anticipated, and the Chinese exports have kept global prices under pressure. However, the rate of demand decline is moderating, and developed markets in Europe and the U.S. are gradually stabilizing on the back of infrastructure spending and improving financial conditions. India stands apart in this landscape. Our domestic demand drivers are structural and not cyclical. The government's infrastructure push, the construction and housing cycle, the automotive sector, the railways built out, all of these are creating a compounding and sustained demand environment. India has also, for the first time, become a net exporter of steel. A milestone that reflects the scale and competitiveness that domestic producers have built. This is the environment we are operating in, and I believe it strongly favors disciplined, integrated players like us at Gallant. I will now take you through our four pillars that define our performance. The first one being volume growth. While FY26 marked a phase of consolidation, our focus has been on building a strong foundation for the next phase of growth through ongoing capacity expansions and operational improvements. These initiatives are expected to support a meaningful scale-up in volumes going forward, positioning us well to capture the demand momentum in our key markets. In addition, we are evaluating a medium-term growth plan. Alongside the ongoing 3,000 crore CAPEX program and intend to present this opportunity in Q2 FY27. The second is the cost efficiency and the integration depth. One of the most important integrators of how well an integrated steel business is running is the proportion of semi-finished product that ends up being sold externally rather than being consumed internally. Our clear objective is to progressively reduce these proportions by deepening integration and channeling more of our upstream products into finished TMT, thereby capturing the full value addition at every stage of the chain. Our raw material costs, I want to share something that I think speaks to the resilience of our cost structure. Despite significant volatility in input prices, particularly coal and iron ore, and the impact of currency movements on import cost, we have maintained our raw material cost as a proportion of the net realization at approximately 72%, and this has been consistent across both FY24-25 and FY25-26. Holding that ratio steady through a volatile cost environment is not easy, and it reflects the advantage our integration and procurement discipline gives us. We are also making significant progress on de-bottlenecking our iron ore supply chain. We have secured captive iron ore blocks in both Rajasthan and Uttar Pradesh. We are actively developing these assets. Once operational, these mines will fundamentally change our raw material economies, providing security of supply and taking out a significant layer of procurement and logistic cost. We expect this to translate into an EBITDA improvement of approximately Rs. 2000 per ton, which is a very material step up for a business of our scale. The next pillar number three being the margin expansion. The margin expansion story at Gallant has multiple layers, and they are all reinforcing each other. Let me walk you through them. First is our EBITDA per turn, which has already improved meaningfully from Rs.8,300 per turn in FY25 to Rs.8785 per turn in FY26. This improvement has come through a period of softer realizations, which makes it particularly significant. It reflects the integration benefits flowing through, better raw material procurement, and efficiency improvement across our plants, structural gains that are not dependent on the steel price cycle. The ongoing CAPEX scheduled for commissioning in the current financial year Includes the bottlenecking of upstream operations at the Gujarat unit, which is expected to enhance EBITDA per turn. Additionally, our renewable energy program remains a key margin lever, wherein we are investing about 225 crore in solar capacity, comprising 18 megawatts at Gujarat, which is scheduled to be commissioned in Q2 FY27. And 60 megawatts at Gorakhpur, Uttar Pradesh, expected to commission in Q427. The next pillar four would be capital discipline. The fourth pillar perhaps best defines how we approach running this business. Gallant is a net cash surplus generating company. We carry no term loans and our borrowings are limited to working capital facilities deployed in the normal course of operations. Every rupee of capital expenditure incurred over the past five years, which is about 1200 crores approximately in total, has been funded entirely through internal accruals. During this period, our gross block has nearly doubled, although CE has improved from 13% to 23%, and our debt-to-equity has consistently remained below 0.2x. This combination is both strong and relatively rare. Our current expansion is part of Rs. 3000 crore CAPEX program spanning further steelmaking capacities, mine development, and renewable energy. We will be pragmatic about financing. Internal accruvals remain our first preference. However, we will also consider debt and equity capital where appropriate. Ensuring that growth is funded efficiently and the balance sheet remains healthy. What will not change is the discipline with which we approach returns. I will now hand over to Mr. Pradeemana Sadhpati for the financials. Over to you, Sadhpati.

Thank you, Mr. Mayank. Good afternoon, everybody. I will take you through our financial performance for Q4 and full year FY26. For the full year, our consolidated revenue from operations 2.4418.92 crore, with other income of 59.59 crore, taking total income to 4,478.52 crore. This represents year-on-year growth. of 3.95% supported by volume growth of 1.7%. EBITDA for the year was 776.04 crore with margin of 17.56% and EBITDA per ton of Rs. 8785. Profit after tax to 484.27 crore, with back margin of 10.81%. Now, we will discuss and just inform about Q4 financial year 26 per month. Coming to the fourth quarter, revenue from operation was 1,204.81 crore, with other income of 24.5 crore. Taking total income to 1,229.34 crore. This reflects a sequential growth of 12.93% over Q3 FY26. Ibiza for Q4 was 208.92 crore with margins of 16.99% compared to 1 rupees 168.694 and 15.5% in Q3. Perfect after track, for the quarters could add 100 rupees 122.884 pro. Now, let us discuss balance sheet and capital allocation. On the balance sheet, we remain net debt free as of 31st March 26. With net debt to EBITDA at zero. Our borrowing unlimited working capital requirements in normal course of business. CapEx dividend year was 320 crore. Primarily for capacity of depersonal making, integration initiatives, and initial work on our renewable energy program. We expect our leverage to remain comfortable through financial year 27. As we progress on our medium-term category, we continue to maintain a frequent approach to capital allocation, supported by a mix of internal accruals and external funding as required. With that, I'll hand, I'll hand over the call, I'll hand the call back to the moderator.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Participants to ask a question, you may press star and 1. First question is from the line of Githart, London, an individual investor. Please go ahead. Yes, please. Go ahead.

Yeah. Congratulations. Good set of numbers. I wanted to understand like going forward through two to three years down the line. Where do you see yourself? What is the top line growth and bottom line growth you are expecting?

Thanks, Mr. Tandon. I think a very good question. Definitely, as of now, like what I mentioned in my opening remark also, the current expansion plan, which is there with 3,000 crore rupees, that will increase our capacity to 1.3 million ton production. And I think the overall revenue should go up to somewhere around 5,300, 5,400 crore rupees with that. And obviously, the cost should come down. That is what is one phase. And the second phase is that we are evaluating how to seize the opportunity further. And what we expect that sometime in the quarter two, we should be coming back to you guys to inform what is our medium to long-term plan.

Okay, all right. And what about the margin front, sir?

Margin front, we have already seen that we are somewhere around 16-17%, and we should, with the completion of the projects and the mining integration, we should be somewhere around 20%.

And, sir, last question from my side, how are you funding your APEX, which you are expanding your capacity?

So, the current phase of CapEx funding is from the Internal Actuals, largely from Internal Actuals.

Sure, sure. Thank you so much, sir.

Thank you.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one. Next question is from the line of Nathik Mohata from Sequent Investments. Please go ahead. Sorry to interrupt Mr. Mahata, your voice is very low.

Good evening, sir. Thank you for the opportunity and congratulations on a good set of numbers. Sir, I have a couple of questions. First, if you could provide some volume data with respect to pilot production, DRI production, and steel, as well as sales data for FY26.

So, I think that data is already part of the presentation, but nevertheless, Amit, you have the numbers ready. Can you just talk about what is the billet production, what is the pallet production, and what is the sponge iron production in FY26? Is that the number you are looking at?

So, just a minute.

I will give you.

The production in FY26 for pellet is 222 kt. For sponge iron it is 245 kt. For the binet steam melt shop it is 235 kt. And the TMT bar is 210 kt. For example, this is for the Q4. For the FY26 the pellet production is 819 kt. Sponge iron is 915 kiloton, bilet is 883 kiloton, and the KMT bar is Thank you, Amit. The cell volume is in 26 days. Thank you, sir.

Mr. Motha, does it answer your question?

Yes, sir, continue on the cell volume as well.

Okay, Amit, talk about the cell volume also.

Right, sir, thank you. Sir, the cell's volume is 49 kiloton of pellet cells. Ispanjayan is sold 125 kiloton, billet is sold 81 kiloton, and the TMT bar is 766 kiloton.

Thank you.

Secondly, with respect to the expansion that we are planning for the steel plant and also for the expansion or probably the commencement of the mines, so could you provide some timeline when do we expect these capexes to start, you know, commercial production to start and these mines and the steel plant to expand?

So, there are three parts for 3,000 crore rupees capex plan. One part is the capacity expansion of the steel, which is somewhere around 1,200 crore rupees, which is underway, and this should come into production sometime in X2 of this financial year. The second part is 300 crore rupees, the solar plant, which is likely to be completed within this financial year. And the third part is the mine with a capex of somewhere around 1,500 crore rupees that is likely to be completed by FY28. As of now, you know that the opening of the mine in India is a little time-taking initiative, But we have taken a very challenging time period with us. Let's see how we are able to achieve our internal timeline now for 38. Sure, thank you.

Thank you. Next question is from the line of Jeenal Shah, an individual investor. Please go ahead.

Hi, thanks for the opportunity. Just one question from my side. I wanted to understand if we are planning to get into any export market.

So, Jinal, I think maybe so long there is an opportunity to sell in India, and unless it is compelling by way of added margin, there is no reason for us to export. But sometimes, I think seldom we get an opportunity wherein the realization in export market is better than Indian market. So, at that point of time, definitely we keep on evaluating, and we shall evaluate.

Thank you so much.

Thank you, Jinal.

Thank you. Participants to ask a question, you may press star and 1. Next question is from the line of Pranav Bastawala, who is an individual investor. Please go ahead.

Yeah, thank you for the opportunity. Sir, two questions. One is, in your balance sheet, I can see that in the cash flow also, 294 or 297 crores have been given from 5 years of loans. What is it? That is one question. And second thing is, you have earned some around 600 to 700 crores from operating activity this year. Now, this is sizably a very good amount. And looking at that, you have a borrowing of 550 crores. So, how you are looking at the steel market in the subsequent years, and what you are planning to use with this cash flow, this kind of cash flow you are going to generate. And we are talking about 2,000 rupees, again, additional savings, unperred terms. So, can you just show some light on this? Thank you.

Thank you for your question. I think two, three points. Let's try to look at the current year surplus. In fact, we have got somewhere around 800 crore rupees surplus as on 31st March, and out of that, the borrowing is 440 crore rupees. So the net cash is almost 360 crore rupees. As part of treasury management, we have deployed the money in

the inter-corporate market at an interest rate

of 12%, and this amount is the payable on demand within three months. So, I think we have evaluated the counterparty risk, and we are quite confident that there is no counterparty risk. So, I think... And 12% interest rate is a very good opportunity. So, that's part number one. Part number two, you asked about that how are we going to use the generation. So, this cash surplus is a temporary phenomenon. As we said that we have got the CapEx program of 3,000 crore rupees, and this is supposed to be funded from internal generation. So I think the cash flow is going to be primarily deployed for CapEx and partly for the dividend payment. I think as of now, this is what is our priority. So, these are the two points. The third point, you said that, I think the steel market is generally good, and we are quite... Well positioned in the area of our operation, that is UP and Gujarat, the areas where we are selling the material, we have got almost 25% of the market share, and on top of that, we realized some premium over our peer group because of the branding what we have created for Valen. So, we see as a well-placed opportunity for us, and that is why we have said that we are evaluating further opportunities as to what we can do in the medium term.

Sir, can I ask for one more question? Is it okay? Yes, please go ahead. So, one more question is, okay, 3,000 crore capex, and we are on 5,000 crore turnover. So, what is looking like, what is the real game plan after, I'd say, around 4 to 5 years, where, not I'm not talking about the turnover, but are we looking at some... Where will be number in this business or we are looking at some other business also and looking at some other mines to diversify?

I think we are quite focused. We want to remain and build in the steel industry. That's number one. And number two, we want to see that to the extent possible, it is fully integrated steel plant. So, definitely, we like to go for acquisition of more mines so that the integration story is complete.

And, sir, last question, are you looking at any, what are the challenges you are looking at, major challenges in the next two years?

I think if we just try to look at the challenges, the challenge is once we crystallize the CapEx plan, implementation of that, because it will be a sizable investment. So, though we are going to go through the curve of complete insulated from the external risk, but since it is going to be the project of good economic size, So, I think implementation of that project from a balanced funding proposal with equity and external borrowing, that is what I see as the first step. Opportunity also and implementation within the time period ahead of others. I think that is a little bit of challenge to us.

Okay. So, sir, you are looking at some equity portion also in the 3000 pro program?

No, in 3000 rupees, there is no equity program. It is all from internal generation.

Okay.

Thank you very much for my side. Thank you. Thank you, sir. Thank you. Thank you, Karnoji.

Thank you. Next question is from the line of Nayan Gala from Etika Wealth. Please go ahead.

Yeah, thank you for your opportunity. So my question, sorry I joined in late, and it might get repeated as well. But taking the cue from the previous participant, where you know you highlighted that you have a plan of a KPS of 3,000 crores spread over the next four years. So, sir, can you help us understand in terms of, you know, how you are going to deploy this 3000 and, you know, what kind of top-line potential it will have while we deploy this?

So, Nan, There are three pieces to this 3,000 crore rupees capex plan. The first piece is the expansion in the capacity from 1 million to 1.3 million at a capex of almost 1,200 crore rupees. That is going to be completed in the current financial year, and from S2 onwards, the impact of that will flow in the bottom line. And, uh... Okay. The second part is the 300 crore rupees solar plant, which is likely to be completed in the end of this financial year or by the quarter one of the next financial year. And the third part is the 1,500 crore rupees mine development. We have been allotted We have four mines in Zupi and in Rajasthan. So we have earmarked 1,500 total rupees for that. Whereas we have taken a very aggressive challenge of completing it by FY28, I think we are still working on that, on the approvals and all that part. So, these are the three parts. And with that, what will happen? With the first part, there will be revenue increase, and the revenue should go up from 4,500 crore rupees to somewhere around 5,300, 5,400 crore rupees. And with the mine integration, our cost of production should come down by almost 1,000 degrees.

So, you will have an operating leverage once we do the effects on them? So, there is a room for margin expansion?

Absolutely. Absolutely right.

And sir, when you said you want to, you plan to increase the capacity from 1 million ton to 1.3 million ton, so what is the peak utilization level that, you know, you can achieve? And after you achieve that certain percentage, then again, you'll have to keep on, you know, expanding the capacity. So what's that optimal utilization level?

So basically, I think maybe in past, we have been achieving a capsidum utilization of almost 80%, but we have taken a lot of initiatives, and now we are at 88%. So we, even though our endeavor is to cross the barrier of 90%, but we expect somewhere around 90, 92% will be a good level of capsidum utilization.

Okay. Okay. Understood.

Understood.

Sir, you highlighted, you know, some capex onto the solar, you know, plant as well. So this will be for internal consumption, and what is the megawatt that you are planning to, and where is this project coming up?

Mayank, you would like to take this question?

Yeah, so, hello, sir. So, 18 megawatt is what we are doing for the Gujarat plant, and it's coming up near the plant only in a place called Sidhipura, and 60 megawatt is for Gorakhpur UP plant, and it is coming in Prayagraj area, and both the units' generation would be self-consumed in the steel manufacturing.

Okay, and what kind of savings that, you know, you envisaged onto the power cost through this?

So, there would be a total of about 30 to 40 crores is what we are expecting as a saving yearly from this 78 megawatt of total, yeah, generation. Okay, okay.

And any further plans to further bring it down? And this would be how much percentage of your power cost?

This, so in terms of installation, it would be about 78 and 150 to 20, I think about 30%, but when we see it on the unit basis. What will be the percentage, Amitji, do you have it in front of you, in terms of percentage? So, it is not a very substantial percentage, but the whole idea of the group is that whatever power requirement we come across while we are building the capacities, So, there are two aspects to look for the power. One is the waste heat recovery from the steel-making process. So, that we are using. And the rest where we need to fire the coal is the part where we are trying to replace it with the solar for the current expansions also and going forward also.

Okay. Okay. Understood. And, sir, apart from the existing, you know, states that we operate in, over the longer term, do we, you know, further plan to expand into different geographies?

So, in the short to medium term, we don't feel the need of it because we are in the two markets, UP and Gujarat. Which are broadly having the infrastructural spending substantially higher than the national averages, and the demand side is very, very good. And we have certain gaps in terms of where we can further expand our capacities and fill up those gaps as the brand is established, the network is established, and we see a good potential in further expanding the capacities. So, in the short to medium term, we are not looking at it, but definitely in the medium to long term, we are open for it.

Okay. Okay. Got it, sir. Got it. This is very helpful. Thank you and all the best. Thank you.

Thank you. Next question is from the line of Disha Parikh from Family Office. Please go ahead.

Thank you for the opportunity. Sir, I just wanted to understand how are we managing high-null sourcing currently? Is it mostly through long-term contracts for purchases or a mix of both?

May I, can you take the question? Yes, sure. So, hello, ma'am. So, for Gorakpur and Gujarat, both the units, the sourcing patterns are totally different. In Gorakpur, our iron ore finds is being broadly managed in different proportions by Odisha, MP, and also Maharashtra, a little bit. And for the Gujarat unit, some part of pellet is being purchased from Rajasthan, and from NMDC, we also do have a long-term off-take contracts, and sometimes during the year, based on the viability, we are also importing. So both the plants have a very different dynamics of iron ore sourcing.

Okay, sir. Got it. That's helpful. Okay, this answers my question. Thank you, Disha. Thank you so much. Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over Thomas Jyoti Gupta from Ashika Institutional Equities for the closing comments.

Thank you so much, Yusuf. Thank you, audience for participating and the management for attending the session. Thank you.

Thank you. On behalf of Ashika Institutional Equities, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.

Thank you very much.

Thank you.