/** Title: Jai Balaji Industries Q1 FY27: Strong Ferro Alloys, Waiting for DI Pipes Recovery */

Jai Balaji Industries Q1 FY27: Strong Ferro Alloys, Waiting for DI Pipes Recovery

Jai Balaji Industries Limited (JBIL) started FY27 with a clear improvement in profitability, even as one of its key end-markets, ductile iron (DI) pipes, remained subdued. For Q1 FY27, revenue from operations rose to Rs. 1,683 crore, up 24% year on year. Adjusted EBITDA increased to Rs. 154 crore, up 46%, and profit after tax (PAT) came in at Rs. 85 crore, up 21%. Adjusted EBITDA margin stood at 9% and PAT margin remained at 5%.

Management attributed the performance to operational efficiencies and price normalization. Realisations improved across key products, with the sharpest move in ferro alloys, where the company reported a 46% year-on-year increase in realisation during the quarter. Pig iron realisation also rose 16% year on year, while sponge iron and billets were broadly stable.

A quarter led by ferro alloys and a mixed revenue basket

The quarter’s product mix shows why profitability improved faster than revenue. On the earnings call, management provided a revenue breakup of the Rs. 1,683 crore quarterly revenue. Ferro alloys were the largest contributor and DI pipes remained meaningful despite weak industry demand.

Specialized ferro alloys were called out as a high-grade product set with long-term customer relationships, premium pricing versus benchmarks, and exports to more than 40 countries. In the investor presentation, the company stated that specialized ferro alloys contributed 27% of revenues in Q1 FY27.

DI pipes, on the other hand, continued to face muted ordering and execution from government-linked projects. Management described the industry environment as subdued due to slow government ordering and project execution, although it remained constructive on medium- to long-term demand.

Capex nearing completion and commissioning expected by Q3 FY27

A central part of the company’s “Jai Balaji 2.0” narrative is capacity strengthening, with a push toward value-added products and a stronger balance sheet. The company disclosed that it has already spent about Rs. 1,076 crore of capex, mostly through internal accruals. The project outlay has been revised upward from Rs. 1,000 crore to Rs. 1,112 crore.

Management attributed the increase to technical upgrades, addition of ancillaries, inflation and time overrun. In the concall, it also referenced import delays, freight increases and currency movement as contributing factors. The remaining spend is small relative to the completed work, with the balance Rs. 36 crore expected to be completed by end of calendar year 2026. Management also described the balance as roughly Rs. 35 crore to Rs. 40 crore.

On capacity, JBIL highlighted multiple ramp-ups:

• DI pipe capacity increased from 5.0 lakh tons to 5.5 lakh tons per annum
• Specialized ferro alloy capacity is being enhanced to 1.9 lakh tons per annum from 1.66 lakh
• Blast furnace capacity is targeted to increase to 7.5 lakh tons per annum from 6.3 lakh
• Sinter capacity is targeted to rise to 12.08 lakh tons from 9.08 lakh tons

The company stated that enhanced blast furnace, sinter and specialized ferro alloy capacities are expected to be commissioned by Q3 FY27.

DI pipes: demand is the missing piece, but management expects recovery post monsoon

The DI pipes market is the key swing factor for JBIL’s product mix ambitions. Management said the company’s plant is designed for a higher contribution from value-added products, but weak DI pipe order flows have pushed it to sell more commodity-oriented products such as pig iron, TMT and billets.

In Q1 FY27, DI pipe production was 41,000 tons and sales were 44,000 tons. Management stated that capacity utilisation for DI pipes in the first quarter was around 30% of the enhanced capacity. It also said it would hope to achieve more than 60% utilisation when demand normalizes, while calling 60% a good level and 80% a practical ceiling for “100%” operations.

On timing, management linked recovery to fund releases and execution restarting after monsoon. It said that with Jal Jeevan Mission 2.0 funding releases, it expects a post-monsoon recovery in dispatches and payments and that from the third quarter things should improve.

The company also indicated that some pending dues have started to come in. When asked to quantify receivables, management did not provide exact numbers but stated that around 25% to 35% of outstanding money has been released, with the flow improving in the last month and expectations of liquidation of older outstanding over the next two to four months.

For near-term visibility, management said the current order book for DI pipes is equivalent to around four months at the current dispatch position.

Ferro alloys: strong momentum and higher-margin positioning

Ferro alloys continued to be the most supportive segment in the quarter. Management said realisations have been improving consistently over the last five quarters. It connected the trend to healthy steel demand and increasing requirements for specialized and high-performance steel where ferro alloys play a critical role.

For utilisation, management said it achieved more than 80% capacity utilisation in the last quarter and guided that, as the new module is commissioned, utilisation in ferro alloys should remain around 80% to 90%. It also stated it exports to more than 42 countries.

On profitability, management provided a simple margin profile comparison: conventional steel products were described at 5% to 7% margin, while specialized ferro alloys were described at around 15% to 18%. In another response, it indicated that as specialty share increases, ferro alloy margins could sustain between 15% and 20%.

Balance sheet: deleveraging remains a core narrative

JBIL’s deleveraging story remains prominent in both the investor presentation and the call. Net term debt declined sharply over the last five years, from Rs. 3,408 crore in FY21 to Rs. 188 crore in Q1 FY27. At FY26-end, net term debt to equity stood at 0.07x.

Management also noted that the company has a sanctioned working capital loan of Rs. 425 crore. On the call, it indicated repayable term debt at Rs. 188 crore and working capital usage in the range of Rs. 375 crore to Rs. 400 crore, while also stating that net utilisation remains below Rs. 500 crore due to an always-maintained cash or unutilised position of Rs. 70 crore to Rs. 80 crore.

Takeaways from Q1 FY27

JBIL delivered a strong profitability quarter driven by better realisations, especially in ferro alloys, and steady operational execution. At the same time, the company’s DI pipes business remains constrained by government ordering and payment cycles.

The key monitorables over the next few quarters are the pace of post-monsoon project execution in water infrastructure, the conversion of fund releases into fresh DI pipe dispatches, and the commissioning of the ongoing capacity enhancement program by Q3 FY27. Management’s commentary suggests it is preparing for a cyclical uplift in DI pipes, while ferro alloys continues to provide near-term earnings support.