India: GPIL posts 20% growth in pellet output in Q3FY'25

• Pellet sales rise by 20% in Q3FY'25
  
  
• Iron ore output increases 8% q-o-q
  
  

Godawari Power and Ispat Limited (GPIL), a leading steelmaker in central India, witnessed a 20% increase in pellet production to 610,800 tonnes (t) in Q3FY'25 against 508,200 t in Q2FY'25. This was declared in the company's Q3FY'25 results recently. Conversely, the company's pellet production stood at 1.77 million tonnes (mnt) in 9MFY'25, marginally down by 2% y-o-y, while sales fell 8% to 1 mnt in 9MFY'25 compared to 1.09 mnt in the year-ago period.

Iron ore production in Q3FY'25 was at 541,509 mnt, up by 8% q-o-q, However, iron ore production inched down by 2% y-o-y in 9MFY'25.

Notably, the FY'25 iron ore guidance was intact at 2.35 mnt.

Investors' call highlights

Financial performance

EBIDTA down q-o-q: The company's standalone EBITDA was recorded at INR 221 crore in Q3FY'25, a 10% drop as against INR 247 crore in the last quarter.

PAT falls y-o-y: GPIL's profit after tax (PAT) fell 9% to INR 145 crore in Q3FY'25 from INR 159 crore in Q2FY'25. Profitability declined due to reduced production of iron ore and pellets, along with lower realisations across most products, except for ferro alloys.

Sales, production guidance

Average pellet sales realisation decreases: GPIL's average sales realisation stood at INR 9,974/t in Q3FY'25, a drop of 7% from INR 10,681/t in Q2FY'25. The company's plan to establish a 2 mnt greenfield integrated steel plant has been put on hold. It is is now exploring alternative projects with lower capacity and reduced capital expenditure. An official announcement will be made once the project is finalised.

Green energy initiative: GPIL has signed an MoU with GAIL to transition its new pellet plant from coal gas to natural gas, reducing CO? emissions by 64%. The company may extend this transition to all three pellet plants based on commercial feasibility.

Upcoming capacities, projects

Iron ore mining and beneficiation: The company plans to expand its iron ore mining capacity from the current 2.35 mnt to 6 mnt. Additionally, GPIL intends to establish a 6 mnt iron ore beneficiation facility at the mine site.

Solar power expansion: GPIL has commissioned a 70 MW solar power plant and has started drawing power from this facility. Additionally, it is working on other solar projects to further reduce its carbon footprint and enhance sustainability.

Mining operations: The company has resumed operations at the Boria Tibu iron ore captive mine (0.7 mnt capacity) and commissioned a 0.6 mnt beneficiation plant as part of a planned 6 mnt capacity at the Ari Dongri Mines.

Focus on domestic market: GPIL has completed an export shipment in December but has now shifted its focus to the domestic market, where it sees a better realisation compared to exports. In Q4FY'25, the company will prioritise domestic sales and also liquidate the inventory remaining from Q3.

Pricing and realisations: Pellet prices were lower in Q3 due to exports and overcapacity in the market. However, with a shift to domestic sales in Q4, EBITDA is expected to improve, though no significant price increase is anticipated.