Event Participants
Executives
2 Mohan Agarwal - Chairman and Managing Director, Yugal Garg - Chief Financial Officer
Analysts
11 Bhavika Singhvi - Niveshaay, Deepak Poddar - Sapphire Capital, Dhananjai Bagrodia - Alchemy Capital, Dheeraj Ram - 360 ONE Capital, Himanshu Bisani - PinPoint X Capital, Jigar Jani - Nuvama, Madhur Chaturvedi - MAIQ Capital, Nikhil Gandhi - Bajaj Life Insurance, Pranav Jain - Ageless Capital Finance, Raj Shah - Fident Asset, Vishnukant Muchhal - ICICI Prudential AMC
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹3,122 crores | Grew 65% YoY, supported by strong volume growth and higher LME prices, which are largely pass-through |
| Sales Volume | 25% YoY growth | Aluminium business grew 32% YoY; Billets grew 149% and UBC volumes grew 333% in ramp-up mode |
| EBITDA | ₹139 crores | Increased 27% YoY; includes ₹36 crores mark-to-market hedging cost booked as per accounting standards |
| EBITDA per kg | ₹12.40 per kg | Improved slightly despite commodity volatility; management highlighted per-ton EBITDA as more meaningful than percentage margin |
| Gross Margin per kg | ~₹27,250 per ton | Improved from ₹26,000 in Q1 FY26; before adjusting for mark-to-market items |
| Profit After Tax | ₹68+ crores | Rose 22% YoY |
| Inventory Days | 40 days | Reduced from 45 days in the previous quarter |
| Cash Conversion Cycle | 65 days | Improved from 69 days in the last quarter |
| Operating Cash Flow | Negative | Due to significantly higher working capital requirements from sharp metal price increases (~40% LME movement) |
| Capacity Utilization | ~65% | Management targets 70-75% utilization as plants ramp up |
| Capex | ₹53 crores in quarter | Invested in greenfield projects at Sulagiri and Bawal; brownfield projects at Tirupati and other locations |
Geographic & Segment Commentary
Automotive (60% of aluminium sales, 66% of FY26 volume mix): Passenger vehicle and two-wheeler sales grew ~26% and ~20% YoY respectively in Q1 FY27, supporting strong demand. EV penetration reached 8.26% of total vehicle registrations in FY26, and management is well positioned with Ather Energy as a new EV customer while existing customers transition from ICE to EV production.
Non-Auto + Other Metals (~34% of volume): Non-auto applications growing steadily across construction, renewables, electrical, and industrial applications. Billets (construction/extrusion) grew 149% and UBC grew 333% in the quarter in ramp-up mode.
Liquid Aluminium (>50% of aluminium sales): Liquid metal business growing faster than ingot sales, delivering lower melting losses, reduced energy consumption, and lower carbon emissions. Provides customer lock-in, predictability, and higher profitability, though management could not quantify margin differential.
Exports (~3.4% of FY26 turnover): Strategically focused on niche products to niche markets including Japan, Belgium, Germany, Thailand, and China rather than regular export volumes.
Company-Specific & Strategic Commentary
Capacity Expansion: Installed recycling capacity on track to exceed 7 lakh tonnes per annum by end of FY27, significantly strengthening leadership position (installed alloy capacity more than 4x nearest domestic competitor, who is estimated at under 1 lakh tons). Tirupati and Odisha plants commissioned earlier in FY27 are ramping up; Odisha plant (Hindalco JV) produced ~6,000 tons in the quarter toward a 4,000 tons/month target.
Hedging & Risk Management: Company follows strong hedging strategy balancing cost-plus customer pricing with LME hedging for secondary aluminium. ₹36 crores booked in other expenses is mark-to-market on hedging (not actual expense); management clarified it should be added back rather than subtracted from gross margins.
AI-Driven Working Capital Optimization: Implemented AI-enabled system for tracking imports to reduce inventory days from 45 to 40; target cash conversion cycle improvement continues with goal of reducing debt levels.
Product & Market Mix Strategy: FY26 volume mix was 66% automotive, 10% non-automotive, 24% other metals; targeting rebalancing to 60:20:20 over coming year for diversified earnings profile. Ligid Aluminium business exceeds 50% of aluminium sales and growing faster than ingot sales.
Regulatory Tailwinds & Partnerships: India's proposed EPR framework expected to raise minimum recycled content in aluminium from 5% in FY28 to 10% over time; EU CBAM accelerating low-carbon material adoption. India's aluminium extrusion industry expected to grow at 12% CAGR through FY29.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | 25% for FY27 | Largely driven by ramp-up of Tirupati and Odisha plants plus growth in existing auto customers; achievable but management cautious about over-promising |
| Installed Capacity | Beyond 7 lakh tonnes per annum by end of FY27 | Greenfield projects at Sulagiri and Bawal plus brownfield projects and technology initiatives at Tirupati progressing as planned |
| EBITDA per kg | ₹12 per kg maintained as sustainable guidance | Management expects potential improvement from capacity utilization but holds ₹12 as commitment |
| Debt-Equity Ratio | Maintain ~0.5 historically; currently ~0.86 | Expected to normalize as commodity prices stabilize and working capital cycle improves |
Risks & Constraints
| Risk | Context |
|---|---|
| Working Capital Inflation | Sharp LME price increases (~40% QoQ) drove operating cash flow negative and temporarily elevated debt-equity to ~0.86 vs. historical ~0.5. Management expects normalization as prices stabilize, supported by inventory day reductions. |
| Scrap Sourcing Challenges | Increasing export restrictions on scrap from certain countries pose supply risk. Management mitigating through expanded sourcing base, increased domestic sourcing, and diversified import network. |
| Commodity Price Volatility | Extreme LME movements create hedging complexity; secondary aluminium follows primary with lag. Geopolitical tensions (Hormuz crisis) impacting oil prices and energy costs, though pass-through mechanisms exist. |
| Regulatory/Policy Risk | India's EPR implementation timing and CBAM evolution could impact demand dynamics; Hindustan Zinc partnership is only an MOU with no definitive timeline for plant construction. |
Q&A Highlights
Aluminium Price Dynamics & Scrap Sourcing
- Question: Does LME price increases drive higher recycled aluminium demand? (Dhananjai Bagrodia, Alchemy Capital)
- Answer: Large metal price increases usually attract substitution, but with the entire metal complex rising, substitution risk is not present. Recycled aluminium demand is driven by inherent qualities (1/3 weight of steel), carbon advantage (under 300 kg CO2/ton vs. ~16 tons for primary), and structural growth - India consumes 40% recycled content, growing at 13% vs. 7-8% for primary. Short-term price disruptions don't change consumption patterns. Scrap availability is not price-dependent. (Mohan Agarwal)
Hedging Complexities & Cash Flow
- Question: How does CMR hedge aluminium when peers say it can't be done? Also, what is operating cash flow? (Pranav Jain, Ageless Capital)
- Answer: Secondary aluminium hedging is more complex due to lag vs. primary and cost-plus customer pricing. CMR maintains fine balance - keeping part of exposure for cost-plus pricing and hedging part on LME. Cash flow was negative during the quarter due to ~40% price increase driving up working capital requirements. (Mohan Agarwal, Yugal Garg)
EBITDA Restatement & Guidance Confirmation
- Question: There's a difference in EBITDA numbers between last PD and this PD. Is FY27 volume guidance still 25%? (Vishnukant Muchhal, ICICI Prudential AMC)
- Answer: Adjusted EBITDA reclassification due to accounting standards - some operating-nature items (foreign exchange gains, ineffective portion of commodity hedging) reclassified to other income. FY27 volume growth guidance of 25% confirmed. (Yugal Garg, Mohan Agarwal)
EBITDA per kg Trajectory & Capacity Utilization
- Question: What's the EBITDA per kg trajectory given ~65% capacity utilization improving? (Himanshu Bisani, PinPoint X Capital; Deepak Poddar, Sapphire Capital)
- Answer: EBITDA improvement from ₹6.9/kg in FY24 to ₹12.4/kg driven by operational efficiency, hedging mechanism, and better capacity utilization. Management maintains ₹12/kg for guidance while targeting internal improvement. Historically business utilizes 70-75%; currently at 65%. (Mohan Agarwal)
Hedging Cost Clarification
- Question: Is the ₹36 crore other expense a recurring hedging cost? (Raj Shah, Fident AMC; Deepak Poddar, Sapphire Capital)
- Answer: ₹36 crores is mark-to-market on hedging as per accounting standards, not actual hedging expenses. If removed, incremental expense vs. last quarter is minimal. It works reverse to physical profit/loss and should be added back, not subtracted from margins. (Mohan Agarwal, Yugal Garg)
Hindalco & Hindustan Zinc Tie-ups
- Question: What is the capacity and ramp-up status for Hindalco (Odisha) and Hindustan Zinc partnerships? (Bhavika Singhvi, Niveshaay)
- Answer: Odisha plant has 48,000 tons/year capacity, ramping up from ~6,000 tons in the quarter to ~4,000 tons/month target, expected to reach full capacity within FY27. Hindustan Zinc is only an MOU with no definitive agreement; construction hasn't started and remains in discussion. (Mohan Agarwal)
Liquid Aluminium & Cost-Plus Model
- Question: What percentage of revenue is cost-plus, and how do liquid metal margins compare to ingot? (Jigar Jani, Nuvama; Himanshu Bisani, PinPoint X Capital)
- Answer: Auto (~60% of aluminium sales) is usually on cost-plus model but combined with hedging. Liquid aluminium exceeds 50% of aluminium sales, is more profitable per ton, but more importantly provides customer lock-in, predictable sales, and entry barriers. Difference is hard to quantify definitively. (Mohan Agarwal)
Scrap Sourcing Challenges
- Question: Peers face scrap sourcing challenges; how is CMR mitigating this? (Dheeraj Ram, 360 ONE Capital)
- Answer: Scrap sourcing is indeed getting more challenging with countries restricting exports. CMR has expanded sourcing base and increased domestic sourcing in India. Management is confident quantity requirements for growth projections will be met. (Mohan Agarwal)
Key Takeaway
CMR Green Technologies delivered a strong Q1 FY27 with revenue up 65% YoY to ₹3,122 crores, EBITDA up 27% to ₹139 crores, and PAT up 22% to ₹68+ crores, alongside 25% volume growth led by 32% aluminium volume growth. Management emphasized EBITDA per kg of ₹12.40 as the more meaningful performance metric, supported by improved gross margin of ~₹27,250/ton and disciplined hedging. Strategic focus remains on capacity expansion to beyond 7 lakh tonnes by FY27 end, liquid aluminium growth (>50% of sales), EV exposure through Ather Energy, and rebalancing the end-market mix to 60:20:20 (auto:non-auto:other metals). The company confirmed FY27 volume growth guidance of 25%, driven by Tirupati and Odisha plant ramp-ups, and maintained EBITDA guidance of ₹12/kg. Key watch points include working capital inflation from volatile LME prices (operating cash flow negative, debt-equity elevated at ~0.86), scrap sourcing restrictions globally, and the Hindustan Zinc partnership still at MOU stage. Management is implementing AI-enabled inventory tracking to reduce working capital cycle from 65 days and normalize leverage as prices stabilize, positioning the company to benefit from favorable regulatory tailwinds including India's EPR framework and EU CBAM.