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Sharp hike in ferrochrome prices boosted Q1 performance, expect Q2 EBITDA around Rs 250 crore: IMFA

Indian Metals & Ferro Alloys or IMFA stock surged in trade on the back of solid first numbers. Profit rose four-fold and margins came in at a multi-quarter high. The year-on-year (YoY) revenues for the company in the quarter gone by were up 33 percent at Rs 538 crore versus Rs 405 crore.
EBITDA too was up 175 percent at Rs 173 crore versus Rs 62.94 crore. Throwing further light on earnings and outlook going forward, Subhrakant Panda, MD of the company said, the blowout performance is basis steady operating performance and due to sharp increase in ferrochrome prices due to supply-side issues.
“If one were to look at Q1 of last fiscal versus this, then stainless steel production has increased worldwide by 25-26 percent, while ferrochrome supply increased six percent and if one looked quarter on the quarter that is Q4 to Q1 then stainless steel production worldwide increased 3 percent while that of ferrochrome supply reduced by 6.5 percent and that was on account of supply-side constraints. The most prominent being electricity restriction in China, which is largest ferrochrome producer,” said Panda, adding that social unrest in South Africa, which is not only largest producer but also the largest supplier of ferrochrome to China and as a result of all these prices shot up.
The company has guided for an EBITDA of Rs 250-300 crore for the first half of FY22. Panda, said EBITDA depends on the way prices hold up and if they hold the way they are at the moment, then the company would do in excess of Rs 250 crore in Q2 itself but expect sanity to prevail in terms of prices for ferrochrome going forward.
“Even assuming a little bit of cooling off in prices going ahead, still expect, Q2 EBITDA should be around Rs 250 crore or little better than that,” Panda told CNBC-TV18.
On debt, he said, “As much as debt repayment is concerned after the first quarter, we are at Rs 360 crore of long-term debt and scheduled repayment will bring us close to Rs 300 crore of long-term debt at end of current fiscal but given the way situation is, we expect to prepay at least another Rs 40-50 crore if not more.”
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