Refex Industries Limited expects major pledge release in five months

Refex Industries Limited said during its Q2 FY27 earnings call that the substantial promoter-share pledge tied to business acquisitions, described as close to Rs 400 crore to Rs 450 crore, should be removed within three to five months. Management said principal repayments have started and that other pledge-related borrowings should reduce over 12 to 24 months.

When will Refex reduce its promoter-share pledge?

Refex expects the substantial acquisition-related secondary pledge to be completely removed within three to five months. Management said a small amount of principal had already been repaid, with additional repayments planned in the coming months.

The timeline applies to the large pledge connected with acquiring a new business, rather than to all promoter pledges at once. Management said the large part would close in three to five months, while the remaining pledge-related obligations would be completed over 12 to 24 months.

Management had earlier described only close to Rs 100 crore as money actually borrowed, while characterising the much larger acquisition-linked amount as a secondary pledge. The call did not disclose the total number of pledged shares, the precise value assigned to each pledge bucket, monthly repayment amounts or lender collateral conditions.

How does Refex classify the promoter-share pledge?

Refex classifies the pledge into three buckets: security for borrowing, security connected with borrowing used to acquire shares from the market, and secondary security for acquisitions of new businesses. Management said the borrowing for market share purchases had been disclosed during the previous quarter.

Management said the acquisition-linked component was security given for an acquisition and not money used elsewhere. It also said the acquired business was doing well and that the security would be released once the business was established, while describing the Rs 400 crore to Rs 450 crore component as the substantial portion.

The distinction sets out two different reduction paths. The acquisition security is due for release in three to five months, while monthly instalments are reducing borrowing-related pledges over 12 to 24 months. An analyst on the call described close to 50% of promoter holdings as pledged, but Refex did not confirm that percentage or provide a bucket-by-bucket share count.

What did Refex say about forced-selling risk?

Refex said almost no additional pledge had been created despite a decline in its share price. Management presented this as evidence of lender confidence and said monthly instalments and due amounts were being paid on time.

When asked whether a further 20%, 25% or 30% share-price decline could result in lender sales, management said no forced sale of shares would occur. This is a management assurance: the call did not disclose loan-to-value requirements, margin-call triggers, lender names, security-cover levels or waiver arrangements.

Management also said the wider group was well capitalised and had cash at the holding-company level, while the listed business was performing well. However, the Q2 FY27 call did not provide group cash balances, pledged-share valuation data or a debt-service measure that would independently quantify protection against a fall in collateral value.

What operating cash factors could affect the repayment plan?

Refex said its business is working-capital intensive and expects its working-capital cycle to remain at 130 days in FY27 and FY28. Management said receivables and contract assets can appear elevated because retention money is released on different schedules across contracts.

The company said billing and certification can sometimes take 70 days, while other collection stages can take 30 to 60 days. Management said it was adding automation to speed billing and certification, which it identified as areas under its control.

Refex said operating cash flow was positive and stated that no receivable was overdue or considered at risk of bad debt. These statements are relevant to the repayment schedule because management said principal payments had begun, but the call did not identify any customer receipt or operating-cash-flow amount specifically allocated to acquisition-related repayment.

What business plans accompany the pledge reduction?

Refex started ready-mix concrete, or RMC, operations at Pune on 1 October through an asset-light plant model. Management said the plant has capacity of 60 cubic metres per hour, involves no plant capital expenditure as such, and is expected to reach about 4,000 to 4,500 cubic metres of monthly volume.

Management expects RMC to begin contributing to overall profitability from the coming financial year, while the current financial year is focused on setting up plants and teams across locations. It said the RMC team was helping expand operations in Karnataka and Maharashtra, where Refex had previously had less presence.

In ash and coal handling, Refex maintained its full-year growth commitment of 20% to 25% and said it expected good growth in the second half of FY27 without providing a numerical target. Management also said wind-energy orders for KP Energy, Torrent and Jindal had been partly delivered, with a large portion of the remaining work due in the current financial year and a small contractual spillover into the next year.

Conclusion

Refex has given a defined framework for its promoter-share pledge, separating a substantial acquisition-related secondary pledge from borrowing-related categories. Management expects the Rs 400 crore to Rs 450 crore acquisition-linked portion to be released within three to five months, while the remaining pledge-related obligations are expected to reduce over 12 to 24 months.

The next disclosures to watch are whether the acquisition-related release occurs within the stated three-to-five-month period and whether Refex provides the size of each pledge bucket, pledged-share count and collateral terms. Management's planned 130-day working-capital cycle, the Pune RMC plant's targeted 4,000 to 4,500 cubic metres of monthly volume, and the demerger hearing scheduled for 11 November 2026 are additional disclosed milestones.