Backward Integration, Bigger Scale: ~2x Capacity Expansion Positions IMFA for the Next Upcycle
Established in 1961, Indian Metals and Ferro Alloys Ltd. (IMFA) is India’s leading fully integrated producer of value-added Ferro Chrome (FeCr) – a key input raw material for stainless steel manufacturing, and accounts for nearly 25% of India’s FeCr output. The company operates on a vertically integrated model spanning across Chrome Ore mining, Ferro Chrome smelting and Captive Power Generation. IMFA exports ~90% of its output with supplies catering to global majors like Jindal Stainless, POSCO, Nisshin Steel, etc. IMFA’s operational prowess stems from its two existing manufacturing complexes in Odisha which house a combined smelting capacity of 2,84,000 Metric Tonnes per Annum (MTPA), supported by captive chrome ore mines and 204.55 MW of power generation capabilities.
Going ahead, the company is undertaking a major capex spree, with an under construction greenfield project being set up at Kalinganagar, Odisha (KNR-1) which shall add 66 MVA (33 MVA + 33 MVA) furnace capacity by 2QFY27 – capable of producing 1,00,000 MTPA of Ferro Chrome (50,000 MTPA by Jun’26 and another 50,000 MTPA by Sep’26). The project cost is estimated to be around Rs 840 cr, funded through a blend of debt and internal accruals, and will increase the company’s overall smelting capacity from 2,84,000 MTPA to 3,84,000 MTPA.
Additionally, IMFA has recently acquired Tata Steel’s Kalinganagar plant (KNR-2) for a consideration of Rs 610 cr (plus GST), in what is expected to be an inflection point for the domestic FeCr industry. This facility will add 1,50,000 MTPA of FeCr production capacity (1,00,000 MTPA Operationalized in Apr’26, another 50,000 MTPA to be commissioned by Mar’27), positioning IMFA as India’s largest FeCr producer and the sixth largest globally with the aggregate capacity reaching 5,34,000 MTPA (3,84,000 MTPA + 1,50,000 MTPA). This acquisition is funded entirely through internal accruals.
Further, the company has secured Environmental Clearances (EC) to raise chrome ore mines output from 0.7 million tonnes (mnt) to 1.2 mnt, thereby ensuring raw material security for its upcoming capacity expansions by meeting 100% of its chrome ore requirement captively.
Going ahead, we believe Indian Metals & Ferro Alloys Ltd. has strong growth potential on the back of (a) Robust stainless steel demand in the domestic & international markets, (b) Strategic capacity expansions positioning the company as India’s largest producer of FeCr, and (c) Receipt of Environmental Clearance for expanding ore raising capacity at captive chrome ore mines to 1.2 mnt – strengthening backward integration.
We expect Revenue/EBITDA/Net Profit to grow at a CAGR of 38.5%/43.3%/34.9% between FY26E-FY28E to Rs 5,395 cr/Rs 1,192 cr/Rs 770 cr respectively. At a CMP of Rs 1,553, the stock is trading at 15.5x/9.9x/7.6x EV/EBITDA multiple for FY26E/FY27E/FY28E respectively. We have valued the business at 9.5x EV/EBITDA multiple based on its FY28E EBITDA and arrive at a target price of Rs 1,967, thus providing an upside potential of 26.7% and assign a BUY rating for the stock.
