Refex Industries Ltd Q4 FY2024 Concall Summary

Key Takeaways

• Revenue down on coal price, not volume: Revenue fell ~45% YoY as coal prices dropped ~₹5,198 per metric ton, even though volume rose 3,137 metric tons.
• Margins expanded despite the top-line hit: EBITDA margin grew 112 bps and PAT margin grew 236 bps YoY in Q4, driven by a richer ash-heavy product mix and cost management.
• Ash & coal handling order book at ₹1,000 crores: The order book, to be executed this fiscal year, underpins management’s expectation of 30–40% volume-led CAGR for the segment over the next 2–3 years.
• Green mobility fleet scaling fast: The EV fleet will grow from 479 to 2,000 vehicles by March 2025, with an internal target of 5,000 by March 2027, funded by ~₹130 crores of bank-funded capex.
• What to watch next quarter: Whether the 660-vehicle Bangalore airport taxi deployment completes by July, the pace of ash daily disposal scale-up toward 60,000 metric tons, and any progress on splitting coal and ash segment data.

Ash & Coal Handling: The Core Engine

• Volume-led growth story: Management expects a 30–40% CAGR in this segment for the next 2–3 years, driven entirely by volume as prices are sustained and not expected to change much.
• Product mix shift boosted margins: The current year’s margin expansion came because ash, a higher-margin service, grew as a share of the mix while coal shrank, plus increasing operational efficiency.
• Scaling daily disposal: The plan is to scale ash disposal from 35,000 to 60,000 metric tons per day by year-end, supported by expanding the owned vehicle fleet from 39 to nearly 119.
• Order book visibility: The current ₹1,000 crore order book is just as of today, with much more visibility expected over the next few months as tenders come up and the company targets new states and customers.
• Long-term cement contracts in progress: While tying up ash supply with thermal power plants, management is simultaneously working to secure long-term offtake contracts with cement companies.
• Market size is large and fragmented: Management’s assessment suggests the national market for ash handling alone exceeds ₹25,000 crores annually.

Anil Jain: "Our assessment of this sector suggests that market size exceeds INR25,000 crores annually nationally for ash handling alone."

Green Mobility: The Adjacent Growth Bet

• Fleet deployment accelerating: The EV fleet stood at 479 vehicles at quarter-end and is targeted to reach 2,000 by March 2025, with an internal ambition of 5,000 by March 2027.
• Bangalore airport taxi is the flagship: A step-down subsidiary won the tender for preferred airport taxi at Bangalore airport, with 660 vehicles to be deployed by end of July; 176 were already operating in B2C airport taxi at the time of the call.
• Geographic expansion underway: Operations commenced in Bengaluru and Chennai for employee transportation, with Pune and Hyderabad targeted to start by September 2024.
• Early ESG traction: The fleet has already run 73 lakh km and abated ~4.38 lakh kg of CO2, and management sees corporate ESG compliance, especially Scope 3, as a structural demand driver forcing the shift from ICE to EV fleets.
• Capex is bank-funded: The ~₹130 crores capex required for 2,000 vehicles this year will be majorly bank-funded, alongside ~₹55 crores for all other businesses.
• Adjacency logic, not diversification: Management views the shift from coal and ash logistics to EV fleet operations as a natural adjacency because the core process, moving vehicles and managing logistics, is very similar even though the end customer changes.

Anil Jain: "When lot of these, most of these corporates want to fulfil their ESG compliance or a Scope 3 ESG, they will all have to shift from ICE vehicles to electric vehicles over a period of time."

Refrigerant Gases & Power Trading: The Smaller Legs

• Refrigerant gases took a one-time hit: The segment posted a loss in the current year due to very frequent price fluctuations and a 5% additional customs duty, which was a one-time absorption now passed on to the customer.
• Steady growth expected: The business is expected to grow at a 10–12% CAGR with profit margins upward of 6–7%, consistent with previous years, though it remains seasonal with summer demand peaks.
• Power trading is thin-margin but scaling: Margins are less than a percentage because it is a licensed commodity play, but the company has tied up with a generator for close to ₹500 crores of power commitment over the year, and volume can add up.
• Power trading outlook is unformed: Management declined to give an outlook, saying the business is just starting to mature and it is very difficult to forecast currently.

Margins & Profitability

• Margin resilience in a down-revenue year: EBITDA margin expanded 112 bps YoY in Q4 and PAT margin expanded 236 bps, driven by the richer ash mix and prudent cost management despite the coal price collapse.
• Incremental improvement expected: Management expects EBITDA margins to go a little bit better in the current year, with a few basis points higher possible from efficiencies and learning, but gave no specific target.
• Coal and ash profitability to keep rising: Profitability in the core segment is expected to grow because of more knowledge, deeper understanding, and use of technology, with a possible little bump in percentage of profit.
• No numbers guidance given: Management explicitly declined to comment on top-line and bottom-line guidance for the next 1–2 years, and also declined to give a specific return-ratio or margin target.

Data Gaps & Pushback

• Coal and ash profitability not split: Management declined to segregate coal and ash business profitability because logistics are cross-utilized, making the split very difficult, but committed to trying to share a value split going forward.
• Pond ash inventory unknown: When asked about the quantum of pond ash lying in thermal power plants, management said no data is available across plants nationally, though there could be millions of tons.
• Revenue guidance withheld: An analyst asked for FY25 revenue guidance for coal and ash handling; management gave only qualitative "better growth" and repeated the 30–40% CAGR range, with no specific revenue number.

Anil Jain: "To be very honest, this data is not available across the thermal power plants in the country… there could be millions of tons of pond ash lying in ponds in thermal power plants, but there is no data which is available."

Guidance & Commitments

Key Metrics