IFGL’s FY26: Higher revenue, tighter margins, and a bigger capex runway

IFGL Refractories closed FY26 with clear top-line momentum but visible pressure on margins. On a consolidated basis, total income rose to Rs 1,904.0 crores in FY26 from Rs 1,670.4 crores in FY25, a 14 percent year-on-year increase. Q4FY26 also showed a solid finish with total income of Rs 485.9 crores, up 7 percent YoY.

Profitability, however, did not scale with revenue. Consolidated EBITDA stayed flat at Rs 145.8 crores in FY26 versus Rs 146.0 crores in FY25, and the EBITDA margin declined to 7.7 percent from 8.7 percent. Adjusted PAT (excluding the labour code exceptional item) stood at Rs 39.9 crores in FY26 versus Rs 43.0 crores in FY25.

Management described FY26 as a period of resilient execution amid a challenging environment marked by elevated raw material costs, intense competition, geopolitical uncertainty and subdued export demand. The company stated that several of these headwinds have begun to stabilize heading into FY27.

Standalone story: domestic strength offsets export softness

The standalone numbers show how strongly IFGL’s domestic business performed and why export softness mattered.

Standalone total income increased to Rs 1,116.5 crores in FY26 from Rs 1,013.9 crores in FY25, a 10 percent rise. But profitability declined. Standalone EBITDA fell to Rs 125.7 crores from Rs 140.4 crores, while EBITDA margin dropped to 11.3 percent from 13.8 percent. Standalone gross margin also reduced to 44.8 percent from 48.5 percent.

Geography-wise, domestic revenue grew sharply. Standalone domestic revenue rose to Rs 864 crores in FY26 from Rs 721 crores in FY25, up 20 percent, while export revenue declined to Rs 245 crores from Rs 277 crores, down 11 percent. As a result, domestic contribution increased to 78 percent from 72 percent, and exports reduced to 22 percent from 28 percent.

Management linked margin compression to higher raw material costs, employee cost increases, changes in product mix and lower export contribution. The company also recorded an exceptional impact related to implementation of the new labour code, about Rs 0.4 crore in Q4 and Rs 5.2 crores for the year.

International operations: US strength, Europe recovery focus

The consolidated commentary highlights improving traction across international businesses, even as Europe remained a profitability challenge. The presentation stated that international operations delivered strong double-digit growth during the year, with the US region leading at around 25 percent growth and Europe at around 15 percent.

A key positive is the continued strength of the US business. Management stated that the US business delivered robust growth with healthy double-digit margins and continues to be a key growth and profitability driver. Europe, in contrast, saw profitability remain impacted due to slower demand recovery. Still, the company stated confidence in reaching near-breakeven profitability by the end of FY27.

Among group companies, Sheffield Refractories in the UK was highlighted for steady progress. The company stated that Phase 1 of the technology transfer has been completed and Phase 2 implementation is underway, positioning the UK operations for long-term capability strengthening.

Capex and accounting milestone: bigger runway, cleaner reported earnings ahead

The most concrete strategic disclosures in the deck are the two large capex projects in India.

First, IFGL has kicked off a greenfield project at Khurda focused on dolomite bricks, with an estimated capex of Rs 300 to 350 crores. The company expects the project to be operational by the end of FY28.

Second, the company disclosed a greenfield joint venture project in Bhachau, Gujarat (IFGL-Marvel JV) for basic bricks, with an estimated capex of Rs 300 crores. The project is under regulatory approval and is expected to be operational in FY29.

The presentation links these investments to building new product capabilities and, over time, unlocking efficiencies and operating leverage.

FY26 also marks an accounting transition point. Management stated that legacy goodwill from the 2017 amalgamation is now fully amortized. From FY27 onwards, reported earnings will no longer be impacted by the annual non-cash goodwill amortization charge of about Rs 26.7 crores.

On the balance sheet, the deck shows that net debt increased over the last two years. It reported cash and equivalents of Rs 121.9 crores in FY26 and net debt of Rs 73.7 crores as of 31 March 2026. Net debt to EBITDA was shown at 0.51 times.

What to track from here

IFGL’s FY26 presentation sets up a clear near-term investor checklist.

The first is margin recovery. The company delivered growth, but profitability has lagged due to input cost pressure, product mix and export softness. Second is working capital. The deck shows consolidated working capital rising to Rs 604.4 crores in FY26, with receivables at Rs 425.1 crores and inventories at Rs 411.4 crores.

The third is execution on the capex pipeline. Both projects have stated timelines, end of FY28 for Khurda and FY29 for the Bhachau JV. The fourth is Europe profitability, where management has explicitly stated an aim to reach near-breakeven by end FY27.

Finally, FY27 will be the first year without the goodwill amortization charge of about Rs 26.7 crores. While it is a non-cash item, it is a meaningful change to reported earnings.

Overall, the FY26 narrative is straightforward: IFGL is growing, the domestic business is strong, international operations are improving, but margin and working-capital discipline will be central to translating growth into better returns as the industry cycle improves.