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Refex Industries Ltd

| Q2 FY2026 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤6th Nov 25

Summary : Refex Industries reported strong Q2 recovery in ash/coal handling, is exiting low-margin power trading, and is strategically growing its mobility and wind energy verticals.

Management Perspective positive : Management highlighted 'steady improvement,' 'underlying resilience,' 'strengthens its foundation,' and 'scalable growth.' They expressed confidence in 'consistent long-term value creation' and a 'very good order book.'

Concall Report Analysis & Insights

Business Overview

  1. Q2 FY2026 total income grew 15% sequentially to INR 431 Crores.
  2. EBITDA nearly doubled to INR 74 Crores, net profit stood at INR 52 Crores.
  3. Core ash and coal handling operations show steady pickup post-monsoon disruptions.
  4. Mobility vertical is strengthening, with de-merger in progress for independent growth.
  5. Wind vertical is in the building phase, fulfilling initial orders and exploring new opportunities.
  6. Power trading operations are being wound down to focus on core businesses.

Future Growth Prospects

  1. Anticipate continued momentum with multiple new ash handling projects commencing.
  2. Ash handling capacity targeted to grow 60-65% in three years, reaching 105k-110k metric tons/day.
  3. Mobility vertical de-merger aims to unlock focused value creation and independent growth.
  4. Wind turbine manufacturing expects to scale up to competition in the next two years.
  5. Strong order book and diversified portfolio position for consistent long-term value creation.

Management Insights

  1. Q2 FY2026 showed steady improvement in coal and ash handling despite monsoon disruptions.
  2. Focus remains on disciplined execution and operational efficiency across all verticals.
  3. De-merger of Refex Green Mobility is in progress to unlock focused value for stakeholders.
  4. Power trading operations are being wound down due to extremely low margins and strategic misalignment.
  5. Ash and coal handling order book is strong, close to INR 1200 Crores.

Signs of Skepticism

  1. Vague guidance on wind turbine margins, stating they are 'still working on those.'
  2. Authorized capital increase rationale was not clearly tied to immediate fundraising plans.
  3. The exact timeline for NCLT and exchange approvals for the demerger is still 6-7 months.

Risk Factors

  1. Early and intense monsoon-led disruptions impacted Q1 and Q2 operations.
  2. Prolonged rainfall in some states continues to affect site activity.
  3. Potential spillover of wind turbine order execution into the next fiscal year.
  4. Refrigeration business is in the process of liquidation.

Good To Know

  1. Refex Renewables is a separate listed entity, not consolidated with Refex Industries.
  2. Contract assets represent recognized revenue awaiting certification and billing completion.
  3. Other current assets increased due to retention money in power plant contracts and advances to suppliers.
  4. Power sector PSUs are now considered good paymasters, with delays mainly from certification processes.

Key Drivers

  1. Strong ash/coal order book.
  2. Mobility demerger unlocks value.
  3. Wind turbine orders commencing.
  4. Ash handling capacity expansion.

Key Analyst Discussions

Competitive Environment

  1. Competitive in wind turbine market, secured orders from marquee customers.
  2. Ash and coal handling market has ample space for multiple players.
  3. No overcapacity seen in the wind turbine segment; good active market exists.

Market Trends & Consumer Behavior

  1. Good demand for wind IPPs, government tenders are frequent.
  2. Ash handling demand is on track, post-monsoon season.
  3. Power sector PSUs have improved payment timeliness.

Financial Highlights

  1. Ash handling margins typically range 8-11%, Q2 saw 10-12% due to product mix.
  2. No immediate plans to raise funds despite increased authorized capital.
  3. Contract assets are recognized revenue, billing occurs after certifications.
  4. Cash on balance sheet will be deployed towards working capital.

Product Composition

  1. Better product mix in Q2 led to higher ash handling margins.
  2. Future ash handling margins expected to be 8-11% with higher volume.

Strategic Considerations

  1. Mobility vertical de-merger process is expected to take 6-7 months.
  2. Power trading business is permanently exited due to low margins and strategic focus.
  3. Wind turbine orders are for supply only; O&M will be a separate contract.
  4. Refrigeration business is in the process of liquidation.
Refex Industries Ltd (REFEX) Concall Report Analysis & Insights | Dhanarthi