IMFA Q2 FY27 Profit Drops 23% QoQ as Expansion Costs Bite
The ferrochrome leader's net profit fell sequentially despite record production, as higher input costs and startup expenses squeezed margins.
IMFA's Q2 FY27 revenue grew 35% year-on-year to ₹968 crore, but profit fell 23% from the previous quarter. The drop highlights cost pressures from new capacity and rising input prices, even as production hit a record high.
For India’s largest ferrochrome producer, the September quarter was a story of two speeds. Record production from new furnaces pushed revenue sharply higher from a year ago, but the cost of that expansion arrived just as quickly, taking a direct bite out of quarterly profit.
Revenue for the quarter ended September 2026 was ₹968 crore, up 34.7% from the same period last year. Net profit stood at ₹148 crore, a 51.7% year-on-year jump. Sequentially, however, profit fell 23.2% from the June quarter, even as revenue was nearly flat. The net profit margin compressed by 480 basis points to 15.3%.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 968.0YoY +35% | 960.5 | 718.7 |
| Profit (₹ Cr) | 148.0YoY +52% | 192.6 | 97.6 |
| Net Profit Margin (%) | 15.3YoY +13% | 20.1 | 13.6 |
The Cost of Scaling Up
The sequential profit drop was driven by a sharp rise in expenses. Total costs increased 8.2% quarter-on-quarter. According to the company's investor presentation, cited by Investing.com, the cost per tonne of ferrochrome produced rose nearly 3%.
Management attributed this to higher metallurgical coke prices, greater reliance on costlier underground mining, and startup expenses at its new greenfield site. An ₹8 crore foreign exchange mark-to-market loss from rupee depreciation also played a role.
A Volume-Led Outlook
Despite the margin squeeze, the underlying volume story remains strong. Ferrochrome production hit a record 86,652 tonnes, up 32% year-on-year, as reported by Business Standard. Management expects output to cross 100,000 tonnes next quarter for the first time.
In an earnings call, Managing Director Subhrakant Panda said any near-term margin contraction would be “more than made up with volumes.” The company maintains its full-year production guidance of 380,000 tonnes.
Key Points
- IMFA's Q2 profit fell 23% sequentially despite flat revenue, as costs rose 8.2%.
- Higher input prices and startup expenses at new capacity drove a 480 bps drop in net profit margin.
- Record quarterly production of 86,652 tonnes supports a volume-led growth outlook for the second half.
- Management expects Q3 output to exceed 100,000 tonnes, aiming to offset margin pressure with higher sales.
Hexa Perspective
The quarter reveals the transition from a high-margin peak to a volume-driven growth phase. The 20%+ net margin of Q1 was likely an outlier, flattered by strong pricing and lower initial costs. Now, the business is normalizing as it absorbs the expenses of its aggressive expansion.
The critical question is whether the promised volume surge in Q3 and Q4 can fully offset the twin pressures of rising input costs and moderating selling prices. The company's integrated model provides a cost buffer, but the next few quarters will test its ability to deliver on volume targets while preserving profitability.
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