Ashapura Minechem Limited
Q1 FY26
Call date · September 04, 2025
1 · Management Commentary
Key Positives
- Record quarterly export of over 2 million metric tons of bauxite, the highest in company history.
- Consolidated income from operations at INR 1,355 crore, up 89.8% YoY, driven by Guinea operations.
- EBITDA of INR 187.73 crore (+106.8% YoY) and margin expansion to 13.85%.
- Guinea business accounted for 79.3% of topline; strong infrastructure with three ports and 300+ km of roads.
- Largest bentonite and bleaching clay producer in India, with global leadership in several mineral categories.
- Strong R&D capabilities with 75+ scientists and a robust pipeline of value-added products.
- Low attrition and experienced workforce; focus on corporate governance and transparency.
Key Negatives
- No specific annual or quarterly guidance provided for FY26; management refrained from sharing detailed forward numbers.
- Seasonal disruptions expected in Guinea due to heavy rainfall, impacting Q2 volumes.
- Iron ore business in Guinea still in ramp-up phase; no immediate financial contribution disclosed.
- No detailed capex breakup between mines and ports provided.
Forward Guidance
- Capex plans: Over $135 million invested in Guinea to date; most major capex completed, with incremental investments for port expansion to 27 million tons capacity by Q1 FY27.
- New products/segments: Focus on high-value, technology-driven products in animal care, environmental protection, foundries, paints, and coatings.
- Expected client wins/losses: China remains the largest bauxite consumer; long-term contracts in place with reputed logistics partners.
- Revenue/margin outlook: Expectation of linear growth in bauxite exports toward 15 million tons by FY27-28; margins expected to improve with scale and operational efficiencies.
- Other strategic initiatives: Continued resource acquisition for sustainability; openness to acquisitions but no immediate plans for demerger or inorganic growth.
2 · Q&A Highlights
Q 1 (Composite): What is the total investment in Guinea, and how is capex split between mines and ports?
A (Management):
• Over $135 million invested in Guinea to date; detailed split not disclosed but significant portion allocated to port development.
• Most major capex is complete; incremental investments planned for port expansion.
Q 2 (Composite): What is the timeline and outlook for the iron ore business in Guinea?
A (Management):
• Iron ore business is in final stages of development; expected to ramp up in the next 1–2 quarters.
• Will contribute meaningfully to profitability over time, but no specific numbers shared.
Q 3 (Composite): How will bauxite export volumes ramp up to the 15 million ton target by FY28?
A (Management):
• Expect a linear progression in volumes from current levels to 15 million tons by FY27-28.
• Growth dependent on infrastructure ramp-up and seasonal factors; Q2 typically lower due to rains.
Q 4 (Composite): What is the pricing structure for bauxite sales and the mix of spot vs. long-term contracts?
A (Management):
• Long-term contracts are volume-based, but pricing is linked to market indices (primarily China bauxite index); no fixed multi-year prices.
• Spot and long-term contracts both follow index-based pricing.
Q 5 (Composite): What are the key cost elements in Guinea bauxite operations, and how will costs evolve with scale?
A (Management):
• Mining cost is a small portion; majority of costs are logistics (transportation, shipping, port operations) and government royalties.
• Expect some cost efficiencies as volumes scale and infrastructure partnerships mature.
Q 6 (Composite): Are the Guinea ports exclusive to Ashapura, and how are logistics managed during the rainy season?
A (Management):
• Ports are 100% owned and operated by Ashapura, used exclusively for company cargo.
• Rainy season causes some disruption, especially in Q2; efforts made to maintain some volumes, but impact depends on rainfall severity.
Q 7 (Composite): Any plans for acquisitions, demergers, or unlocking value?
A (Management):
• Focus remains on organic growth in Guinea and India; open to strategic opportunities but no immediate plans for acquisitions or demergers.
Q 8 (Composite): What is the debt outlook and plans for becoming debt-free?
A (Management):
• Healthy EBITDA expected to support debt reduction over time; India operations have minimal or no long-term debt.
3 · Other Key Numbers
- Bauxite exported in Q1 FY26: over 2 million metric tons
- Bauxite exported in FY25: 3.37 million metric tons
- Consolidated income from operations (Q1 FY26): INR 1,355 crore
- EBITDA (Q1 FY26): INR 187.73 crore
- EBITDA margin (Q1 FY26): 13.85% (up 114 bps YoY)
- PBT (Q1 FY26): INR 131.84 crore (PBT margin 9.73%, up 61 bps YoY)
- EPS (Q1 FY26): INR 11.5
- Guinea business share of topline (Q1 FY26): 79.3%
- Guinea bauxite reserves: 700+ million tons
- Guinea iron ore reserves: 300+ million tons
- Guinea port capacity: 16 million tons (targeting 27 million tons by Q1 FY27)
- Target bauxite exports: 15 million tons by FY27-28
- Total investment in Guinea: over $135 million
- Current bauxite price: $74.5 per ton (C&F China, dry metric ton)
- Current shipping freight (C3 route): $24 per ton
- R&D team: 75+ scientists
- Employees: 2,200+
- Bleaching clay plant capacity: 200,000 tons (largest single-location plant globally)
- Bentonite processing capacity: 700,000 tons (largest single-location plant globally)
- Mining concessions in Guinea: 3 (two operational, one under development)
- Mining lease tenure: 15 years + 15 years renewal
- Attrition rate: Very low (average tenure 10–15 years)
- Exports from India to USA: Negligible (no impact from US tariffs)
- No specific annual guidance for FY26; quarterly bauxite volume disclosures to be provided going forward.