Refex Industries Limited (REFEX.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Refex Industries Limited Q3 FY 2026 Earnings Conference Call. [Operator Instructions] This conference is being recorded. We have with us today from the management team, Mr. Anil Jain, Chairman and MD. We will begin the call with opening remarks from the management team. And post that, we will open the floor for questions. With that, I hand over the call to Mr. Anil Jain, Chairman and MD. Over to you, sir.

Thank you so much. Good evening, everyone, and thank you so much for joining us. It's been a great Q3 for us. Q3 FY '26 marked a very strong sequential recovery for Refex, led by a very significant improvement in activity levels across our Ash and Coal Handling business as site accessibility and ground condition normalized following the extended monsoon impact during the first half of the year. On a quarter-on-quarter basis, revenue increased by INR 160 crores, rising from [ INR 123 crores ] in Q2 to INR 583 crores in Q3, representing a 38% sequential growth. This improvement was driven primarily by higher ash and coal volumes handled during the quarter. Total income for the quarter stood at INR 590 crores compared to INR 431 crores in Q2. While cost of goods sold increased from 79% to 81%, this was largely due to a change in margin mix with no major operational deviation during the period. Despite this, operating performance improved meaningfully -- despite this, the operating performance improved meaningfully. Profit before tax increased to INR 89 crores compared to INR 71 crores in Q2, reflecting a 24% sequential growth, while profit after tax rose to INR 67 crores, up 29% quarter-on-quarter. In order to achieve stronger return profiles by redeploying capital and focus towards core businesses, the management has taken a strategic call to exit Power Trading and Refrigerant Gas business. Our Mobility business continues to strengthen its operational foundation with teams actively engaging enterprise clients and working towards calibrated fleet expansion with a clear focus on utilization and unit economics. The demerger of Refex Green Mobility Limited is progressing as per the approved composite scheme, following which the Mobility business will operate as a separate entity with enhanced strategic and financial flexibility. The Wind business continues to progress steadily with execution of initial customer orders underway, while internal capabilities are being strengthened to support future scale. The business has already secured a cumulative order of INR 1,860 crores. Looking ahead with multiple new ash projects commencing the site activity stabilizing across regions, we expect operational momentum to continue in the coming quarters. There is already an open order of close to about INR 1,500 crores for the Ash and Coal Handling business that the team is currently executing, while it continues to engage with large power plants to win newer contracts. Refex remains well positioned, supported by a strong order book, disciplined execution and a prudent capital allocation. We thank all of you for all the support and trust in us. Thank you so much. Over to you, Swapnil.

So may we begin with the question-and-answer session now?

Yes, we can.

[Operator Instructions] We take our first question from Ms. Ananya Khanna of Alpha Alternatives.

First of all, congratulations on a good set of numbers. I wish to understand the time line of the demerger scheme, how long it's expected to take and the expected synergies from the same?

On the demerger, I think we currently are waiting for some final NOCs from the lenders. As soon as it comes, the scheme is ready to be filed, and we are trying our best to ensure that this can happen as soon as possible. Once it is demerged, the Refex Mobility will run as a separate entity where it will have more liberty to do its own business. And also it will have its own -- all the debt, et cetera, will also move to that entity.

As we noted, time line, Mr. Anil, that it will -- we expect that by April end, it should get finished.

Our next question is coming from the line of [ Smith Jain ] of Flawless Family Office. Can you hear me?

I had a couple of questions. One is, I can see that we've started a new subsidiary, Refex Engineering Products Private Limited. What exactly is this for?

Yes. That is below the Venwind we do. That is again for the wind project only. There is no specific. This is all targeting the retail customer in the same Wind segment.

Okay. The second question was related to the Wind Energy segment only. Even the larger companies that I can -- that I know of are currently working on 3.3 and 4.2 megawatt wind turbines, right? And we are -- we've come up with 5. 2. And what they have said is that the size of 5.2 wind turbines is very difficult to transport. And again, it is also that the wind flow is not the same all across. So 5.2 is not a proven technology in India yet. So like why exactly are we wanting to be the pioneers and not work on something which has already proven and is working?

So just to answer the question, [ Smith ], I think, first of all, logistics-wise, we don't see any major challenge in moving of these turbines. We have spoken to all the large logistics companies in the country, where we are executing close to about 400 megawatts of order in the next few months. All these logistics companies have confirmed that they can transport and move these equipments from the plant to the sites. Second, yes, just to give you a little color on the global market. If you take today, the average size of the wind turbine globally, it has reached almost 5 megawatts. So countries -- various countries even with low wind speed are actually moving to 6, 8, 10, 12, 15 megawatt wind turbine sizes. Also, these machines are at a 130-meter hub height, where actually the wind velocity is reasonably better. If you look at an apple-to-apple comparison of a per megawatt kilowatt hour generation between a 2.5 megawatt or 3.2 megawatt in one location to a 5.3 megawatt, this will definitely give you more than 3% to 3.5% of additional generation. Second, all our machines contain LiDAR, which actually detects the direction of the wind. So when you see the nacelle and the blades, et cetera, it actually moves the direction on which the wind is blowing, which is the first time in the country where these blades can move and can identify which direction the wind is blowing and can turn to that direction so that they get adequate wind to rotate and generate energy. So I think these technologies are definitely proven around the world. And the orders we have got are from the likes of Jindal Steel, Torrent and KP Green, who are all very large IPP companies and have done their detailed research and understood these products before even placing the orders.

Fair enough. Okay. So what we're saying is we don't see any problem in getting the right-off way to transport these machines and the technology, although it's proven all across, you see that the unit economics would work in India also for the same?

Yes.

We'll take our next question from the line of [ Smith ] -- sorry, that is from the line of [ Mitin Shah ]. He is an individual investor.

Sir, first question, what I would like to ask is what is the update on the income tax rate, what we've seen in the disclosure as well as in the media? And any impact regarding the same?

Thank you, [ Mitin ], for asking this question. Yes, we had an income tax search on 9th of December in our office premises and house of the -- my house and the senior executive. As such, there is no incriminating documents or anything seized or taken by income tax department. We do see that there is a process by which they have an investigation and they will be filing the reports with the central circle where the assessment will be done. We don't see any impact on the company or the business. The company has been having the highest governance as far as business and everything else is concerned. There was a fake news, which was in the press, one of the large newspapers carried. We have written to those newspapers and also written to the income tax department about these fake news and to clarify that this news is not officially released by income tax. We have also filed these documents with the SEBI sometime back as soon as the search got over. The search was ended very peacefully, and we don't see anything impacting the business or long-term growth of the company.

Sure. So you mean to say we are still yet to receive a formal completion from the IT department. Am I right?

Yes. Generally, it takes 3 to 6 months for them to file the report with central circle and the assessment order generally takes 1 or 2 years to be issued to us.

Sure. So the second question would be like, okay, it is good to see an increase or uptick in the business with respect to previous quarter as they come out from the monsoon period. But, however, if you compare our numbers with respect to the same quarter last year, we see a dip in the numbers basically. So is there any specific -- I mean, what would be the reason for that coming?

[ Mitin ], like we discussed, we have been discontinuing businesses which are very low margin or negative margin like Refrigerant Gas business and the Power Trading business, which actually contributed close to about INR 150 crores to INR 200 crores last year in the same quarter. And also, if you see while we were discussing that, most of the focus is going to be on high-margin Ash Moving Management business rather than any trading business which we were carrying on earlier. So as a conscious decision, we have ensured that while the revenues might not grow quarter-on-quarter to the same as last year, but the profitability will be much larger and bigger and better than last year even with lower revenues.

Yes, I can understand the reason for the discontinued operation. I'm even comparing for the ash handling sector, ash and coal handling sector as well. Even segment-wise, if you see, it has dipped quite -- 10% to 15%.

Yes, that's what I said. There are 2 reasons. One is, obviously, during H1, we had an extended monsoon, which actually did give a little bit of delay in starting some of the work. Second, on the coal trading front also, we have reduced the trading to a drastic extent to ensure that this low-margin trading business is out of -- is not contributing to a larger revenue or profitability.

Our next question is coming in from the line of Aniket Madhwani from Steptrade Capital.

Yes. So my question was regarding the Wind revenue. So in last con call, you guided that Wind revenue would start from Q3 or Q4 and we'll expect to contribute in FY '26. So any revenue executed in this quarter from Venwind?

Last quarter, we did not achieve any revenue. But yes, this quarter, as committed, this year-end, we will end with substantial revenue from the Wind business.

Okay. So can I have a breakup of the revenue in this quarter?

Obviously, we don't want to give a leading statement. Most of the contracts which we have, have to be executed between 9 months to 15 months. So hopefully, the first contract, the execution will start in the next few days. It's already in the progress, so it should start in the next few days.

Okay. And my second question was regarding the order book. So am I right, you have mentioned INR 1,500 crores order book currently outstanding?

For Wind or for...

No. Overall, overall.

Yes, Dinesh, go ahead.

INR 1,500 crores order book is in Ash and Coal Handling segment and INR 1,850 crores is there in the Wind supply side -- INR 1,860 to be precise.

Sorry, could you please repeat for Wind segment?

INR 1,860 crores.

We will take our next question from the line of [ Vivek Joshi ] who is an individual investor.

Yes. I have 2 questions. One is, what is the status update on the merger plan?

We just updated that to the previous caller that it is in progress, and we are expecting the NCLT order of the merger completion by maybe end of April.

Okay. End of April. And roughly, what will be the division of the assets within these companies?

No, it is a 100% subsidiary and Refex Industries doesn't own any assets of the Refex Green Mobility. So it is a 100% subsidiary and it will be a parallel separate listing completely.

Okay. Since it's consolidated, what percentage of the assets are in -- sits in this, just to get an idea from the balance sheet, because right now, we can see the consolidated numbers.

INR 220 crores.

Okay. So from the net assets, INR 220 crores were transferred to Mobility, right?

Yes.

Okay. Could you also update the recent pledging of shares by the promoters? Any particular reason for the same?

No. We have -- I mean, we have done 3 months back. That is a borrowing at the holding company level.

We'll take our next question as a follow-up question from [ Smith Jain ].

This is again regarding the pledge that we have done. With the current fall in the share price, will we have to double down on the existing pledge that we've given because I'm sure we'll have to service the difference also, right, like how much we've borrowed and the collateral that we've given?

Yes. Company has taken a step, prepaid, you are right, the margin call came, and we have paid from the own stores, and we have securitized the lender.

Okay. Fair enough. The second thing was in the presentation, I can see that we've given the TAM for the Ash Handling business to be INR 68,000 crores. So is that opportunity available per year? Or is that the current -- is that the total market size that is available and only a part of it can be realized each year?

Can you tell me -- I mean, can you...

The page number?

No, no. Question. Can you again repeat the question?

So I was saying that in the presentation, we've given the total available market size for the Ash Handling business to be INR 68,000 crores. I wanted to understand, is that the opportunity available each year, like INR 68,000 crores is the market size available each year? Or is that the total available market size at this point in time and only a certain part of it can be realized by any of the company each year? How does it work?

We have to divide this market opportunity into 2 segments. One, every year, which gets accumulated is the -- what is generated in the particular financial year. Every year, 340 million metric tonnes of ash gets generated. And that is a different -- that is another INR 10,000 crore market every year. And that is INR 50,000 to INR 55,000 crores of the legacy ash, which is accumulated and available in the pond of the various power plant. So that INR 55,000 crores of market will -- every year, it will keep -- I mean, it will reduce and also increase because all the power plants are not able to dispose off 100% of the ash, which is generated every year, 340 million metric tonnes of ash. And -- I mean, it will be INR 67,000 crores, you can divide like INR 10,000 crores to INR 15,000 crores is the market every year is there. Out of INR 50,000 crores, some will reduce, some will increase -- keep on increasing. This market size, to my knowledge, at any point of time, INR 50,000 crore market will be there for next 10 years.

Okay. So INR 15,000 crores incremental value, which is going to increase each year and will be available with companies to book and like the INR 55,000 is the legacy, which will keep getting amortized and like there would be additions to it also as the entire reserve is increasing?

Yes, yes.

Fair enough. Okay. And how do we see this business evolving for us? Like -- is this going to be like a strong business area, focus area for us for the next few years? And how do we see us growing in this segment?

Yes. Government of India, again -- I mean, after a few years, again, they are pushing the thermal power plant. 50 gigawatt capacity has been targeted in the next 5 to 7 years. And again, everybody -- all top CPSUs are setting up and including a few private companies like Adani, JSW, they're all setting up the new power plant. And another big opportunity is majority with the power plant were in NCLT where that is getting resolved and capacity addition is also happening in the existing power plant, where 10 years back, they have done -- like capacity, they took a permission of 3,600 megawatts, but they have commissioned only 1,800 megawatts. That 1,800 megawatts has never seen the days. Now that 1,800 megawatt, new company, new group, which has taken over are adding to the capacity. It will -- close to 40 to 50 megawatt will get added in -- though government target is 5 to 6 years, I see another 10 years, this will get added. I mean it may not happen in 5 years, but it will happen in next 10 years. New capacity will get added. That again, that is an additional opportunity for all of us. And I mean, coal is going to stay -- coal power plant is going to stay for the next 20 to 30 years. Though renewable portfolio also will increase, but coal power, it is not -- will get completely...

We'll take our next question from the line of [ Gaurav Jain of H&I ]. It seems we don't have a response from that line. We'll move to our next participant, [ Mr. Kadaru Sahit of Kadaru Securities ].

For Q3 FY '26, we have seen the EBITDA margin as 16.1%. And in last quarter as well, we have seen it as 17.42%. So can we expect this as a sustainable one? Or is it a one-off thing? Like in last year the same quarter, we have got it at 7.52%?

Yes. This will continue. I mean this will be anywhere between -- as I said in my last quarter call, it will be between 11% to 12%. 12% is a sustainable one. I mean this is due to a lot of realignment. This will be there. Though our target is to do better year-on-year -- quarter-on-quarter. But we can safely assume 12% -- 11% to 12% will be the number which will keep continuing.

We have a follow-up question coming in from Ananya Khanna.

So I wish to understand 2 things. First of all, can you explain to me how exactly your multiyear tie-ups work with the companies that you cater to in the Ash Handling and Coal Handling segment? In the sense that what are the contractual -- what are the terms of the contract? What is the tenure of the contract? And how does it exactly work? Is there some sort of a bidding involved, et cetera, et cetera? Secondly, I want to understand what's your outlook on the Mobility segment with respect to, say, the model that you currently follow? Do you expect the demand aggregator and the ride-hailing part of the segment to grow by any chance?

I'll answer that, Ananya, on the Mobility business. I think we can talk about our business. We are a pure B2B business where we do employee transportation and rent-a-car service. So both these businesses are growing very fast in the country, and we don't see any chance of this -- the demand reducing because mobility is something which is growing continuously. We don't have any inputs on the ride-railing apps or the business, what is happening around. On the second part, I think Dinesh can take up the question obviously and answer that.

Yes. Ash business completely -- ash and coal business, completely through a bidding process only. And contract period is anywhere between 5 months to 3 years. Majority of the INR 1,500 crores of contract will get executed over next 9 months to 12 months. I mean majority -- I mean, like 50% will get executed in next 4 to 5 months, 50% in the 12 months and around 30% of INR 1,500 crores is over a period of 3 years. We are now tying off the long-term contract and bidding for the long-term contract working with many private plant and the government plant to, I mean, work on a comprehensive ash management where we take complete O&M of the ash handling plant. We also do certain CapEx so that we tie up anywhere between 3 to 10 years with the power plant and handle the comprehensive ash management, handling the ash, taking care of the O&M of the ash handling plant and also setting up the -- taking care of their silos area. So we also put people there so that we become a solutions provider to these power plants, and we are working towards that 3 to 10 years of the -- signing for the 3 to 10 years for the contract.

All right, sir. Understood. So you do an end-to-end -- you provide end-to-end solutions to your customers in the Ash Handling segment, right?

Yes. That is -- as of now, we are handling one part of Ash Handling. Few contracts which we have signed is an end-to-end. Our target is -- all new customers, we are targeting for the end-to-end solutions so that we sign any -- all contract for a long-term contract like 3 to 10 years.

We have a follow-up question coming in from Aniket Madhwani.

So I just want to know about the current daily handling capacity. As you mentioned previously that you are ramping up towards 90,000 per day. So I just wanted to know the current daily handling capacity?

Yes. Capacity, there is no constraint on handling any capacity because it is very -- I mean very -- I mean, we have kept a bench of -- set up a team where we keep adding it to that bench. And as of now, on a daily basis, we are handling close to 72,000 tonnes of the ash. And we are ramping up this quarter, we'll cross 90,000 tonnes. And capacity, we can handle more than 1 lakh tonnes also. Capacity, there is no constraint because it is only increasing the manpower there -- trained manpower there and also putting additional fleet there where we work -- anyway fleet, we worked on a hybrid model of own and the attach, that is hiring model. That challenge is not there in the -- increasing the capacity.

Got it. And as you mentioned, the Venwind will be contributing significantly in this quarter -- coming quarter. So could you just give an insight -- I mean, what are you expecting to close in FY '26 on an aggregate level?

As a policy, we are not doing a -- I mean, leading number. But to tell you, Venwind will be a crown in the jewel. It will be -- it is really doing well. We have signed with a top-notch company in India, top IPP player in India. We are well progressing towards the -- we are meeting the time line what is committed to all the customers. Delivery is starting from February 15 onward. Part of the delivery will happen in March -- within the March. And again, it will keep adding because from now, it is a continuous delivery will happen. Initial period of -- from the order date till now, engineering happens, there is a lot of other work happens on the ground. Delivery getting started from -- every month from February onward, we have a delivery. It will contribute significantly to the Refex group. I mean we expect Wind business will be a crown in the jewels for the Refex Industries.

Got it. Got it. And what margins are we expecting in that segment?

Yes. I mean, we'll be like other competitor, what they are reporting. Initially, we have -- we are setting off. We're working at a very, very competitive price to win the order, but we'll be making a very decent profit in the Wind segment.

We have another follow-up question coming in from the individual investor, [ Mitin Shah ].

So correct me. If we see the TAM of the Ash and Coal Handling business, as we also discussed last time that presently, I think we are handling about not even 1% of the total TAM basically we are serving. So we not even scratched the surface in that context. How have we grown in terms of handling this metric per tonne in terms of CAGR? And could you please also elaborate on the realization per metric tonne? As I see, it is roughly around INR 400 per metric tonne. How has this also panned out over the years? What was it earlier and how is it now? And what do we expect going ahead?