GALLANTT Q2 FY27 Earnings Call: Coal Block Allotment Extends Integration, Capacity To Touch 1.23 Million Tons

GALLANTT held its Q2 FY27 earnings call on October 19, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Revenue Growth Holds, But Margins Compress Sharply on Shutdowns

• Revenue of Rs.1,146 crore, +13% YoY — up from Rs.1,013 crore in Q2 FY 2025-2026 and flat sequentially vs Q1 FY 2026-2027, as better realizations offset the volume impact of shutdowns; other income was Rs.18 crore.
• EBITDA fell to Rs.111 crore at 9.64% margin — vs Rs.185 crore / 16.19% in Q1 FY 2026-2027 and Rs.135 crore / 12.91% in Q2 FY 2025-2026; EBITDA per tonne declined to Rs.6,150 from Rs.8,010 QoQ.
• PAT of Rs.61 crore at 5.3% margin — vs Rs.124 crore / 10.8% in Q1 FY 2026-2027 and Rs.89 crore / 8.8% in Q2 FY 2025-2026; PBT was Rs.83 crore, EPS Rs.2.51, finance costs stable at Rs.9 crore.
• H1 FY 2026-2027 revenue grew 7% to Rs.2,292 crore — vs Rs.2,141 crore in H1 FY 2025-2026; H1 EBITDA was Rs.296 crore at 12.91% margin (vs 17.85% in H1 FY 2025-2026), PAT Rs.184 crore, EPS Rs.7.63.
• TMT sales of 1,65,000 tons in Q2 — down from ~1,92,000 tons in Q1 FY 2026-2027, shaped by the deliberate synchronized shutdown at Gorakhpur; Kutch rolling mill utilization improved to 68% from 66% QoQ.
• Balance sheet remains net cash positive — net worth Rs.3,487 crore as of 30 September 2026; borrowings of Rs.592 crore are mostly working capital with no project term loan, against ~Rs.426 crore in bank balances/liquid investments plus Rs.266 crore in short-term treasury deployment.
• Final dividend of Rs.2 per share for FY 2025-2026 — approved by shareholders at the AGM held on 30 September 2026.

Shutdown Overrun and Coal Costs Drove the Q2 Miss

• Two shutdowns hit Q2 margins — a planned Gorakhpur shutdown to integrate expanded capacity, plus an unplanned extension caused by a turbine issue requiring specialist support; lower captive power availability raised power cost. Management characterized these as one-time effects.
• Coal pricing added ~4.5-5% of sales revenue to raw material cost — roughly Rs.2,500/tonne on TMT prices, plus ~1% on the iron ore side; management put the combined raw-material-side increase at ~Rs.33,000/ton in Q2 FY 2026-2027, while finished product prices rose ~20%.
• Price benefit arrived too late for Q2 — the finished-product price increase came only in September (late Q2 FY 2026-2027), so higher realizations had minimal Q2 impact; the benefit is expected to flow into Q3 FY 2026-2027.
• Turbine work is complete — the plant was set to resume operations within a week of the call; management expects recovery as new capacity comes on stream in Q3 FY 2026-2027.
• Inventory rose ~Rs.118 crore in H1 FY 2026-2027 — to Rs.669 crore (from Rs.551 crore in March 2026), driven by prolonged shutdowns and higher plant stocks; management expects normalization in Q3 FY 2026-2027 once the new plant is operational within 15-20 days of the call.
• Input costs remain a watch item — coal and freight stayed elevated and sponge iron/pig iron prices rose sharply in H2 of Q2 FY 2026-2027; management remains watchful of input costs into H2 FY 2026-2027.

Coal and Iron Ore Blocks Extend Integration to Both Key Inputs

• Singuradi coal block allotted in August 2026 — disclosed via stock exchange; the company has about one month from allotment to conclude due diligence and decide whether to proceed, after which the block would ideally take about 2-3 years to become operational.
• Import substitution plan for Gorakhpur — once the coal block is operational, management intends to shift the Gorakhpur unit entirely onto block coal, eliminating imported South African coal, as block coal appears much cheaper than current market purchases.
• Iron ore blocks targeted operational in FY 2027-2028 — exploration is progressing with environment and forest clearances underway; management expects captive mines to add ~Rs.2,000/tonne to EBITDA once operational, though in the first one-two years post-FY28 the mines will not feed the steel plants at 100%, with full benefit accruing as utilization ramps up.
• Both key steelmaking raw materials now held — with the coal block alongside iron ore blocks in Uttar Pradesh and Rajasthan, management expects supply security and a structurally lower cost base over time; CEO Mayank Agarwal said securing both raw materials "could mark the next phase of growth for Gallantt".
• Medium-term growth plan deferred to Q4 FY 2026-2027 — previously slated for disclosure this quarter; the company is evaluating a larger greenfield opportunity built around its raw material base, dependent on land acquisition and incentives from the state government.
• Funding philosophy unchanged — Vice Chairman Bheem Dayal Jalan said the capital structure is still being worked out and will depend on project size, capacity and opportunities, relying largely on internal accruals with less external borrowing.

Gorakhpur Expansion Nearing Commissioning; Rs.3,000 Cr Program Internally Funded

• Capacity expanding from 1 million to 1.23 million tons in FY 2026-2027 — being integrated at Gorakhpur (a 1.3 million tons p.a. expansion cited in the volume discussion), adding capacity at every stage of the chain except sponge iron, plus 22 MW of additional generation at the existing 78 MW captive power plant; enhanced capacity expected operational in November 2026.
• Gorakhpur ramp-up proposed by 10 November 2026 — management expects a 1-1.5 month ramp, with the plant stable at 85-90% utilization by end-December (Q3 FY 2026-2027), subject to no major commissioning issues; full potential expected in Q4 FY 2026-2027, partly from Q3.
• Gujarat debottlenecking on two tracks — captive power debottlenecking was completed in September 2026 (Q2 FY 2026-2027) with benefits expected in EBITDA per tonne from Q3 FY 2026-2027; the sponge iron plant is expected to commission in Q4 FY 2026-2026-2027 window (Q4 FY 2026-2027), with its impact effective from FY 2027-2028.
• Solar plants expected operational in FY 2026-2027 — the 18 MW plant at Sindpur, Gujarat is completed with operations expected by November 2026; the 60 MW plant at Prayagraj, UP (feeding Gorakhpur) is on track for Q4 FY 2026-2027; together expected to save Rs.30-40 crore annually in power cost once operational.
• H1 FY 2026-2027 capex of Rs.278 crore — ~Rs.141 crore spent in Q2; cumulative Rs.650 crore of the Rs.3,000 crore program spent up to September 2026 (program completion period unspecified); CFO Amit Jalan indicated ~Rs.500 crore balance to be spent during FY 2026-2027 — Rs.400 crore for Gorakhpur, ~Rs.240 crore for mines, ~Rs.170 crore for solar and ~Rs.100 crore for Kutch, per the board-approved ABP plan, all funded internally.
• Utilization expected to improve 3-5% in FY 2027-2028 — with all Gujarat capacities synced in FY 2026-2027 (sponge unit synchronization in Q4 FY 2026-2027 requires a shutdown), while added capacity contributes incremental volumes.

Strong Domestic Backdrop; Brand Premium Holding Through Price Rises

• India's finished steel consumption grew 7.5% to ~85 million tons in H1 FY 2026-2027 — ahead of domestic production growth, with India remaining a net importer of finished steel; demand driven by infrastructure, housing and urbanization.
• TMT prices ~21% higher YoY in September 2026 — prices firmed post-monsoon; CEO Mayank Agarwal said the sharp rise since August came during the monsoon lean period, is broadly based on the domestic demand cycle with a portion linked to energy prices amid geopolitical situations, and with construction peaking December onwards (Q3 FY 2026-2027), management expects prices to remain strong, leading to good margins and incremental EBITDA.
• Gallantt holds >25% of the serviceable Uttar Pradesh market — with the Gallantt Advance brand (endorsed by Ajay Devgan and Janvi Kapoor) providing a ready dealer channel to place additional Gorakhpur volumes.
• Brand premium of 5-6% over unbranded TMT in UP and 3-4% in Gujarat — holding up through price rises, supported by the ambassadors (added for 4 years), national and regional advertising, and the dealer/distributor network.
• Digitization initiatives to plug leakages in FY 2026-2027 — integrating vendor management, compliance portals and GST return tools with SAP, plus AI-enabled main gate entry/exit and weighbridge systems removing human interference; management said resulting savings are difficult to quantify and gave no numeric target.
• Rolling mill utilization improved only 2% in Q2 FY 2026-2027 — after being flagged as a focus area in the prior quarter; management expects structural improvement in Q3 and Q4 FY 2026-2027 as demand recovers from the lean season.

H2 Recovery Hinges on Ramp-Up, Power Restart and Firm Prices

• Management guides to "much better EBITDAs" in H2 FY 2026-2027 — if prices remain strong as expected; recovery drivers are the expanded Gorakhpur capacity, the power plant restart, and firmer steel prices as construction picks up post-monsoon.
• Outsourced power requirement drops to ~5-7 MW (~5-6% of total) — with the additional 22 MW at Gorakhpur, bought from Power Corporation and the Energy Exchange until the 60 MW Prayagraj solar plant is commissioned in Q4 FY 2026-2027.
• Three short-to-medium-term growth drivers cited — the iron ore block, the solar contribution, and the capacity addition from 1 to 1.23 million tons in FY 2026-2027, with plant efficiency also improving.
• Balance sheet expected to remain strong through FY 2026-2027 — internal accruals to remain the primary funding source for the current capex program; the company continues to carry no term loans for its projects.
• Macro backdrop remains uncertain — the Middle East conflict is keeping energy, freight and coal costs elevated and shifting trade flows; India is not fully insulated, though domestic fundamentals remain strong, with Uttar Pradesh and Gujarat among the fastest-growing markets.
• Medium-term growth plan disclosure due in Q4 FY 2026-2027 — covering a potential larger greenfield opportunity built around the raw material base, contingent on land acquisition and state government incentives.