Godawari Power & Ispat stays on course to meet its FY27 targets despite higher raw material costs, project delays, and operational bottlenecks, with strategic relocations and environmental initiatives shaping its future growth prospects.
Godawari Power & Ispat said it remains on track to meet its full-year FY27 guidance after reporting a steady first quarter, even as higher raw material costs and weaker pellet market conditions weighed on near-term profitability. The company said volumes in the quarter represented roughly 16% to 29% of its annual targets, while revenue and operating performance were supported by stronger output from sponge iron, billets and gold. Livemint reported total income of ₹1,323.25 crore for the quarter, with operating profit of ₹280.21 crore and profit after tax of ₹215.96 crore.
Management used the earnings call to argue that the broader growth story remains intact, even though one of its biggest expansion plans has been put on hold. Executive director Abhishek Adarwal said the proposed 1 million-ton integrated steel plant will stay in abeyance until the company secures final water allocation approval from the state, turning it into an optional medium-term project rather than a committed capital programme. At the same time, the company has shifted its cold rolling mill complex to Maharashtra, where it expects better incentives and lower transport costs because of closer access to automobile customers. It now sees margins rising by two to three percentage points to about 10% to 11% once the new site is operational.
Operationally, the company is still dealing with several bottlenecks. Mining output fell in the quarter because of space constraints for overburden dumping, with final approval for tree cutting on government land still pending. Adarwal said the issue should ease by the end of September, with production expected to improve from the third quarter and reach fuller capacity by the end of FY27 or early FY28. The planned beneficiation plant is due to commission in the third quarter and is central to cutting the company’s reliance on merchant ore, which management expects to fall from 25% to 30% in the third quarter to below 10% in the fourth quarter. The company says that, once fully in place, the ore upgrade project should lower mining costs from around ₹3,000 to ₹3,500 a tonne to below ₹2,700.
The near-term cost picture remains mixed. Management said pellet margins were hit by higher market iron ore purchases and a sharp rise in coal and gas-related costs, with one pellet plant shut in July because operations were no longer commercially viable. Pellet prices briefly fell below ₹9,000 a tonne in early July before recovering by about 10%, while Adarwal said a ₹100 a tonne fall in pellet prices would trim annual profit by roughly ₹40 crore, based on 4 million tonnes of output. Even so, the company said it continues to fund its current projects from cash generation rather than external debt, as the steel plant pause has eased its borrowing needs. It is also pushing ahead with a battery energy storage system project, which it expects to commission in the first quarter of FY28, alongside a fleet electrification push and other environmental measures. Godawari Power has also maintained its AA- stable credit rating and said it was named among India’s 500 most valuable companies.
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